Integrated Regional Information Networks | September 3, 2012
Ethiopia is regarded as the birthplace of arabica coffee. But while the country’s high-quality coffee is drunk in coffee shops around the world, many of its growers remain poor. Tadesse Meskala is general manager of the Oromia Coffee Farmers Cooperative Union. He says, “The main reason for poverty is trade. It is not a lack of natural resources but the formulation of trading mechanisms that makes us poorer and poorer.”
The history of coffee is intertwined with Ethiopia’s own. The story goes that after coffee was discovered in Ethiopia, it was traded to Yemen around the sixth century. By the 17th and 18th centuries, coffee had reached Europe and the Americas. But it can all be traced back to an Ethiopian shrub.
Coffee is Ethiopia’s primary export and largest generator of foreign capital, totaling $840 million in 2010. But this is not enough for a struggling economy and a country where an estimated 39 per cent of the population lives on less than $1.25 a day.
Many Ethiopian coffee co-operatives have gained access to international coffee markets through the fair trade movement. But questions remain about what constitutes a fair price for farmers. Fair trade is intended to be a transparent system of business that is beneficial to both consumers and producers. The movement began in the 1960s. Today, an organization known as Fairtrade International, or FLO, is the most widely recognized fair trade certification system and label.
FLO sets the minimum price of fair trade green coffee beans at either $1.60 per pound or the New York Stock Exchange Commodity price, whichever is higher. It also mandates an additional Fairtrade social premium of $0.20, plus another $0.30 for organic coffee.
Tsegaye Anebo is general manager of Sidama Coffee Farmers Co-operative Union. According to him, there are two types of fair trade buyer. One type of buyer, such as Starbucks Corp., will buy only if the fair trade price is low enough. Other buyers, such as the smaller roasting companies, will buy whatever the price, and absorb any changes in cost.
But how are farmers affected by these dealings and regulations? Mengesha Wocho is a coffee farmer with the Kelaitu Hase Gola Cooperative in southern Ethiopia’s Abaya highlands. He says, “My home has totally changed, my personal health and income have improved, and I’m expanding my farmland.” His community built a shop and a school with the benefits from fair trade. But they still lack health facilities and potable water.
Shibru Worera lives a couple of kilometres from Mr. Wocho’s farm. He plans to join the local co-operative because he cannot afford to feed his wife and six surviving children. Four of his children have already died. He says, “I hope to have a chance to improve. There are no other opportunities.”
Despite farmers’ praise, some remain concerned that fair trade represents a form of charity that discourages self-sufficiency. Abdullah Bagersh is a director of the Ethiopian Commodity Exchange, which regulates much of the coffee industry. He says that the cost of Fair trade certification can limit the number of markets available. Farmers must adhere to strict practices or risk losing the fair trade market they have committed to and now depend on. Others argue the system splits communities, with some farmers qualifying for fair trade premiums while others do not. Some commentators believe that the quality and uniqueness of the coffee should determine the price, instead of an external system.
Direct trade has emerged as one alternative. In this system, coffee roasters buy directly from growers. Roasters may insist on fair trade principles and sustainable growing practices, but reject what some criticize as expensive certificates and imposed methodologies. Direct trade relationships are often face-to-face and built on trust.
Willem Boot is a coffee consultant who has managed many coffee development projects. He believes that Ethiopian coffees are still too moderately priced. He says, “Their specialty coffees are … better than others and are really undersold. If Ethiopia could do a better job selling its unique story, it could make significantly more money for farmers.”