Fair Trade versus Multinational Coffee - Essay Example

Fair Trade versus Multinational Coffee Coffee is a plant believed to originate from Ethiopia where it was used around 500A.D. It is one of the beverages obtained from baked or roasted seeds of various species of an evergreen bushy shrub belonging to the genus Coffea (Fairtrade Canada, 2013). Coffee beans are derived from two common sources known as Coffee arabica and coffee robusta. This plant is grown in over 70 countries mainly in equatorial Southeast Asia, Latin America, and Africa whereby small families produce over half of the coffee consumed in the entire world. The major countries that are producing coffee include Brazil Vietnam, Ethiopia, Colombia, and Indonesia. Once the seeds ripen, the berries get collected, processed, and later dried to collect the seeds. The collected seeds are roasted to varying flavors extents depending on the preferred. The seeds are later grinded and then brewed to produce coffee that is sold and consumed worldwide. Coffee is among popular drinks liked by many in the world. It has become a booming industry with an average of 12,000 cups of coffee being bought every second in North America (Fairtrade Canada, 2013). Because of this demand, coffee farmers are forced to work for less than fair wages averaging $0.45 per pound of coffee produced. The farmers work extra hard to meet the high demand for coffee in the world yet receive peanuts from their labor. This is quite demoralizing, insensitive, and inhuman considering the amount of time, energy, as well as resources spent in cultivating the product. For instance, coffee farmers spend massive resources fighting over 900 coffee pests, use fertilizer to boost yields as well as spend time caring for the plant until it matures after four years and readies for harvesting. Coffee farming is, therefore, labor intensive with frequent little financial return. Considering the energy, time, and resources spent in coffee cultivation is such effort worth $0.45 per pound of coffee. Thus, the majority of coffee farmers incur losses since they receive fewer payments compared to the cost incurred in producing the coffee since they cannot respond promptly to the fluctuating world coffee prices (Haight, 2011). This compels them to sell their hard labored produce at low prices to the intermediaries who ferry them to the multinational companies for processing. From concerns above, it is true that coffee farmers are underpaid and thus leave in deplorable conditions characterized by cycles of debt and poverty despite their massive effort in ensuring that the world does not experience shortage of the coffee product (Haight, 2011). However, multinational coffee companies such as Nestle, Dunkin Donuts, Red Diamond, Costa coffee, Caribou Coffee, Strauss, Starbucks, Tully’s Coffee, and Van Houtte claim that they are not underpaying coffee farmers and that their coffee is fair trade. This issue has been controversial and, therefore, the paper explores both the arguments from the coffee farmers as well as that from the multinational coffee companies and attempts to establish the real situation of the matter. The grievances of the coffee farmers led to the emergence of Fair Trade Coffee. This is a recent movement that demands farmers be offered above average wages to sustain themselves, their farms and their families (Haight, 2011). It achieves this through the fair trade labeling that guarantees coffee farmers a reasoned pre harvest price. It sets out price standards for various coffee products with a mindset of improving the profits of the farmers thereby improving their living standards. For instance, Fair Trade Canada has offered various coffee prices to be accepted by the multinational companies. First, the movement asserts that a floor price amounting to US$1.40 per pound for Fairtrade licensed washed Arabica coffee, as well as US$1.35 for the natural Arabica (Fairtrade Canada, 2013). Further, floor price for washed Robusta coffee should be US$1.05, while that of natural Robusta be $1.01. Therefore, if the prevailing market price is higher, then farmers should receive it. It sets out coffee prices that enable coffee farmers gain from their hard work thereby increasing their economic and financial capability (Fairtrade Canada, 2013). However, multinational coffee companies insist that they will pay coffee farmers the average wage of $0.45 per pound. Secondly, the movement introduces a Fairtrade Premium amounting to US$0.20 per pound be added to purchase price. Producer organizations apply the premium for economic and social investments at both community and organizational level. Third, the movement calls for an extra US$0.30 differential payment for coffee purchased as organic. Fourth, the movement strives at ensuring that producers get organized in co-operatives, which they own and govern. Thus, the cooperatives should be managed in a democratic manner whereby everyone has an equal right to cast a vote (Fairtrade Canada, 2013). Fifth, the movement claims that the use of environmental standards should limit use of agrochemicals as well as encouraging sustainable agriculture. Thus, it advocates for its adoption since it promotes sustainability of coffee production as it avoids the use of pesticides and herbicides in the production. Finally, it advises that pre-harvest lines of credit be offered to the co-operatives when requested, and should reach a maximum of 60% of purchase price. This will improve the bargaining power of farmers and thus increase their profitability and welfare (Fairtrade Canada, 2013). The fair trade coffee should, therefore, be produced attains the above criteria as well as be licensed for a profit assessment organization. Through the initiatives, the Canada Fair trade aims at assisting farmers earn worthier remunerations from effort. However, multinational coffee companies do not meet the above criteria and claim to be emulating fair trade. This is pure irony and misleading consumers whose purpose is to assist the poor farmers. They oppose the initiatives and argue that their price is sensitive to the companies as well as the farmers and that they cannot adjust it (Haight, 2011). The companies claim that the market forces determine the price, and forces them to offer such prices. If truly the companies such as Nestle and Starbucks claim that they are sustainable and offer fair trade coffee brand, then why do they sell their products at much higher prices and still maintain low coffee buying prices from the farmers? This clearly proves that the companies are not genuine in their claim to improving the welfare of the farmers. Thus, these companies only seize the opportunity to increase coffee prices and disguise the customers that the extra amount goes into improving the living standards of the farmers. Therefore, the companies use the fair trade brand or logo to mislead customers into believing that they are indeed assisting poor coffee farmers who struggle to produce coffee (Haight, 2011). If claims from the companies could be true, then an increase in prices of processed coffee products could at least lead to an increase in the prices of unprocessed coffee from farmers. However, it is sad this is not the case. These companies, therefore, reap billions and billions of dollars by disguising to be assisting farmers yet their support is insignificant. It leaves coffee farmers dwelling in their perpetual poverty. With multinational coffee companies pretending to be adhering to Fair trade regulations, it goes against the promise and purpose of Fair Trade of reducing poverty among coffee growers by setting fair prices for their farm produce. Moreover, it contradicts their mission of helping farmers establish safe working conditions, offering decent wages, as well as guaranteeing their right to organize. Therefore, the situation calls for prompt intervention in order to stop economic sabotage on both the farmers and their respective countries resulting from unfair and insensitive poor coffee pricing by the multinational coffee companies. Without such intervention, then there is no need or purpose of the Fair Trade since it serves the interests of the multinational companies who continue to make supernormal profits at the expense of the poor coffee farmers. Reference Fairtrade Canada. (2013). Web. Retrieved February 28, 2014, from http://Fairtrade.ca Haight, C. (2011). The Problem with Fair Trade Coffee. Stanford social Innovation Review. Web. Retrieved April 8, 2014 from http://www.ssireview.org/articles/entry/the_problem_with_fair_trade_coffee Read More