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Firms serve up coffee with a conscience

Once a fringe trend, so-called "Fair Trade" and "relationship" coffees that preserve quality and fair prices for farmers are becoming a boon to many roasters.
/ Source: Reuters

In 1996 Maria Cristina de Gonzalez was about to shut down her Guatemalan coffee plantation, sinking under the weight of bank debt and the strain of raising teenage sons.

The owner of the 116-acre El Valle finca in Antigua could no longer survive on the prices that bargain-hunting exporters were paying for her beans.

That was when David Griswold, the president of Portland, Oregon-based green coffee importers Sustainable Harvest, came along and made her a novel offer.

He said he would buy all of her high-altitude, strictly hard bean shade-grown coffee. He asked her what she needed to harvest the beans properly and maintain the quality of coffees he had cupped, or tasted, at her farm.

"I began by asking for money," De Gonzalez told Reuters during a meeting of coffee industry players in Mexico last week. "And with no questions asked, he sent us an advance payment, with no interest."

For people like Griswold, who is also the president of the trade group Specialty Coffee Association of America (SCAA), the deal with Gonzalez was not charity. It was a business proposition that involved paying her enough so she could cater to the increasingly sophisticated tastes of today's coffee drinker.

A fringe trend grows
Once a fringe fashion drink for aging hippies sipping java in tiny specialty cafes, so-called "Fair Trade" and "relationship" coffees are today the fastest growing part of many roasters' businesses.

That's encouraging for coffee growers around the world who are in the fourth year of what they say is the worst coffee crisis in history. The crisis, caused by a sudden influx of mostly lower-quality producers onto global coffee markets, has plunged coffee prices to historic lows.

Bean prices remain below production costs and growers are either being driven out of the business altogether or are having problems keeping their plantations healthy.

Griswold's coffee buying model, called the relationship coffee model because it involves maintaining direct and ongoing relationships with producers, is a variation on the Fair Trade version of coffee that demands importers buy from cooperatives and pay a fair price for their beans.

"All of our Fair Trade coffees are also relationship coffees," said Griswold.

Major roasters of Fair Trade coffees include such household names as Seattle's Starbucks Corp., the world's largest coffee shop chain, and Vermont-based Green Mountain Coffee Roasters Inc., among many others.

"This is not just about charity," Ward Fowler, a partner with Milwaukee-based Alterra Coffee Roasters, said during the meeting between coffee roasters and growers from across Latin America in Oaxaca City, near Mexico's Pacific coast. "Fair Trade is an incredible marketing tool."

Preserving prices
Fair Trade certified coffee guarantees growers minimum prices of $1.26 per lb. for regular coffee and $1.41 a lb. for organic coffee, about double the international market price, as well as advanced credit from importers and some technical assistance.

Quality roasters are willing to pay the Fair Trade price and more to their suppliers, even if the coffee is not Fair Trade certified, because they want to guarantee supplies of top quality beans.

Fowler says he pays between $1.30 and $1.50 per  of green coffee, compared to the going market price of about 60 cents a , and that one of his favorite coffees is from a Panama farm that is not certified Fair Trade.

Lindsey Bolger, coffee manager at Green Mountain, says organic and Fair Trade coffees are leading the company's growth, and that they will likely make up about 25 percent of the 20 million lbs. of green coffee it expects to roast this year.

"One of the things we know is that the world coffee stage has changed dramatically with the advent of these large producer countries," she said, referring to a country like Vietnam which burst onto the global coffee scene as a major producer in the late 90s.

Indeed, in recent years Vietnam has jockeyed with Colombia for the second-place spot after No. 1 Brazil. Currently, Vietnam is behind Colombia.

For Bolger, that means the fluctuations of supply and demand will become a thing of the past as lower-quality beans are traded as a commodity, and higher-quality beans are sold between partners who have formed a buyer-seller relationship.

By all accounts, that is already happening and Fair Trade and other relationship coffees are leading the way.

"The hope is that if this works now, when times are hard, then that loyalty will be returned when things turn around," said Larry Challain of Olympia, Washington-based Batdorf Bronson Coffee Roasters.