Coffee Part II - "It's not my Problem"

This is the second of a three part series on my findings in Aceh, Indonesia. First, I examined a failure in the Fair Trade system and the "negative implications" it has on farmer cooperatives. In this post, I will examine a recent case presenting the cooperative perspective of their dealings with a Fair Trade coffee importer and based on that, explore ways for Fair Traders to keep the system in check. In Part III, I will present how I worked with the cooperative to create positive and sustainable solutions.

Disclaimer: for legal purposes, the name of a particular Fair Trade Coffee importer has been removed from the post below.


I must admit that I had always been under the naïve assumption that Fair Traders did not speculate on market prices. Why did I hold this assumption? I believed that as Fair Trade certified coffee importers they sought to be fair and understood the historic and current issues faced by coffee cooperatives and small producer groups. Fair Traders have principles that are far above the conventional traders! Not only that, they are certified as Fair Trade, and in that certification they have our trust! 

Much to my surprise, when I met with a Fair Trade exporter and later with an organic Fair Trade certified cooperative in Aceh, I learned of a case that I would have expected from a conventional trader, not a Fair Trader. Sadly enough, it is not an isolated case.

This blog post is dedicated to the Fair Trade importer who cost a coffee cooperative in Aceh tens of thousands of dollars. He is also the author of a rather blunt statement I heard repeated to me as his response to a request for dialogue from the cooperative:

"It's not my Problem"

On their website, a particular importer in question, based in USA, appears to embrace the principle of long-term relationships. However, what I discovered was quite the contrary. 

With that stated, I would like to reiterate the purpose of my research and blog: This blog is the story of a journey with a purpose; a journey to present the voices of Fair Trade producers, artisans, weavers, farmers, and craftswomen and men. All too often the voices of producers are drowned out when it comes time for their voice to be heard. 

This post is committed to giving a cooperative's side of the story that was fact checked locally.

Current conventional market coffee prices are quite high. So high, as a matter of fact, that FLO-Cert has had to raise the minimum pricing standards from US$1.25/lbs to US$1.45/lbs. (for kg, multiply by 2.2) Other value-added payments such as organic certification were also increased. Perhaps the time for coffee farmers has come around!

Ready-for-export organic coffee from the
Tunas Indah Cooperative in Aceh.

When I met with FLO-Certified Arvis Coffee Exporters in Medan, I spoke with owner and Director, Mr. Sadarsah about my research. Firstly, I wanted to inquire of his experiences in Fair Trade; and secondly, I was in search of Fair Trade cooperatives in Indonesia. Immediately he introduced me to a couple cooperatives and put me in touch with a terrific translator in Aceh who was quite knowledgeable about Fair Trade, Mr Faisal.

Next, I began to inquire about his dealings with Fair Trade importers. Much to my surprise he immediately responded, "There is a lot of speculation on the Fair Trade coffee market." 

But how could this be? A Fair Trade speculator? I honestly didn't get it. Then I thought to myself, "Ok, so a guy speculates and secures a price - a Fair Trade price. What is wrong with that? The farmers still get a Fair Trade price regardless."

Mr. Sadarsah explained to me that it is an increasingly common practice for Fair Trade coffee importers to contract a quantity and lock in a price three to four months ahead of harvest time. So far I could see no wrong in this, so I continued to listen. 

He presented me with a case of one importer. In July, 2010, an importer had made a contract with Arvis Coffee to buy three containers of Organic, Fair Trade coffee. The harvest season is in October, and in turn Mr. Sadarsah contracted with Tunas Indah Coffee Cooperative to fulfill the order. The contracted price was US$4.50 per kg of ready-for export Arabica green bean. Mr. Sadarsah requested a prepayment from the importer on behalf of Tunas Indah Cooperative, and was told that it was not possible. No reasons or rationale was offered; no negotiations. Simply, "Not possible." Within a week the conventional market prices began to rise. 

To provide context to the story, when I inquired about some of the problems cooperatives faced, one repeated mentioned was a lack of capital. Capital was needed to 1) pay farmers for their coffee beans on delivery; and 2) to value-add by further processing the beans locally which they can sell to the exporter as export-ready with only a 12% moisture content versus an 18% that is normally presented to an exporter, who then has to hire workers to separate and dry them further. 

Coffee drying done locally in Takengon, employing local
community members with a "living wage." An example of
promoting Fair Trade through local employment opportunities

Again, referring to Part I of this series, in her publication, Coffee, Co-operatives and Competition: The Impact of Fair Trade, if Anna Milford had evaluated the "negative implications" of not receiving a prepayment, she would have easily seen that there are lost income generating opportunities for a community when a prepayment is not given. It is not simply an inconvenience for farmers to have to wait for payment as Milford claims.  

Additionally, I have found that by involving communities in value-added local processing it will greatly increase a local communities knowledge of Fair Trade by experience in the system. After all, another principle of Fair Trade is to promote Fair Trade, and what better way to do that than to offer income generating opportunity! More about this and the future of Fair Trade in Part III of this series!


Whether a prepayment is requested or obligatory is not the issue. Within the context of Fair Trade, the onus to provide a prepayment should be on the importer, not on the producer. There is a power imbalance that needs to be addressed - especially when all the initial costs are taken by Southern producer cooperatives. That is the purpose of having a principle in the first place.

Back to the Findings: The problem for the cooperative was in fulfilling the contract made in July, 2010. The harvest came in October, 2010, and the conventional market prices were at US$7.00/kg, which is much higher than the contracted price US$4.50/kg. This put the cooperative in a difficult position. 

From the cooperative's perspective, it will lose credibility with its members if there is no sale to any importer, and this was the one deal they had secured.

Secondly, if the cooperative offers only US$4.50/kg when the local market price is US$7.00/kg, the members will sell their organic green Arabica beans on the conventional market for $7.00/kg where it is mixed in with whatever else came in the door. Furthermore, why retain membership in a cooperative that doesn't sell your product? The cooperative faced a suddenly stark possibility - with no members, how could it continue to function? 

Directly stated, the cooperative's very survival is suddenly at stake. Understand that the income generation for the cooperative itself is from this transaction from farmer to exporter who in turn ships to the importer. The cooperative is the voice and union of the individual farmers, but where it generates much needed income is with value added activities.

Answer me this, would you willingly buy at $7.00/kg from cooperative members, process the beans to be export ready, and sell at $4.50? Obviously not, so the cooperative and the exporter went to the importer to renegotiate the contract. 

Let's review the possible outcome from a renegotiation: 

A) the price is renegotiated to the current market value and the cooperative can value-add by processing it locally, employing local members of the community, and send to the exporter soon afterwards. On the other hand, while the importer is concerned about his profit margin in this lucrative commodity, when the market price goes up on this end, undoubtedly it goes up on the other end as well. So it is not that the coffee importer will lose money by increasing the contract price to the current market level. I would be very surprised if the importer made contracts with Fair Trade roasters locking in a July price, but if this was the case, this price can be renegotiated as these are Fair Trade roasters with a social conscious, or so we hope.

B) the importer is reluctant to come to the table for renegotiation, but in the end, does so and agrees to split the loss with the cooperative (although the importer doesn't really lose here because his sale prices have gone up with the market as well), but at least there was an understanding made and hopefully lessons learned by the cooperative not to let an importer lock the price on the next contract. 

C) the importer replies to a request for renegotiation with a curt, "It is not my Problem."

As you may have guessed, C was the answer received by the cooperative. 

The end result: What the importer did offer was an additional month to fulfill the contract. Unfortunately for Tunas Indah, the price on the conventional market did not retreat. Unfortunately for the importer I am bringing their business dealing to the surface by presenting the view of Tunas Indah Cooperative whose pleas for renegotiation went unheard in the office of an importer in the USA. 

How much did Tunas Indah Cooperative lose

           in the deal with the importer?
 

US$20,000. 

So, Mr. "It's not my Problem", let's take a look at your impact because it is your problem now. Essentially, you made the cooperative subsidize your purchase. Yes, a cooperative of farmers living off less than US$200/month subsidized your purchase. Where is the justice in that? You didn't even consider renegotiation, much less consider the impact your stance had on the cooperative itself. 

Whether "It's not my Problem" were the actual words you uttered in response to a request for negotiation does not really matter, as that was definitely the impression you left on your trade partner. So much for your claim that you are utilizing a progressive approach to coffee sourcing worldwide because your action was more reflective of colonial era traders and does not follow Fair Trade principles. 

Again, let me reiterate, when I inquired if there had been a prepayment of any amount with the contract, the answer was no. How can you, as the importer, refuse to renegotiate a contract when you didn't even provide a prepayment when it was requested by your trade partner? 

When I made further inquiries into the current issues faced by local cooperatives, I learned that five of the twelve cooperatives in Aceh may collapse as a result of speculators like Mr. "It's not my Problem." A lot of time, effort and capacity building has gone into building up our Fair Trade cooperatives in the South, and it is the work of speculators that will tear it down.

Why I think it is your problem now... 

           Because I still believe in Social Action!

To a Fair Trade coffee importers guilty of speculation: As a Fair Trade certified organization, when you and other coffee importers are speculating on Fair Trade markets, more Fair Trade cooperatives will collapse. Furthermore, your callous attitude defending your speculating activities does not hold up to the principle of maintaining long-term relationships. When the Fair Trade certified cooperatives are wiped out due to speculators, that leaves no organization to certify as organic or Fair Trade. How will you supply the high demand for organic Fair Trade certified coffee from Sumatra after the last cooperative has closed its doors?

Is it your problem yet?

FLO-Cert: Here are some suggested areas for improvement, and these are suggestions coming from the COFFEE FARMERS, so pay attention:

Firstly, re-evaluate and upgrade your auditing and monitoring of Fair Trade Coffee importers to the extent you audit and monitor coffee cooperatives. Push them out of their comfort zones with frequent four or five day audits detailing their actions and policies like you do with the cooperatives. If it increases your cost to do so, increase their fees to cover the cost of policing their fellow importers unscrupulous behaviors and disregard for the cooperatives they deal with.

Fair Trade cannot support a system that scrutinizes one part of the supply chain and dismisses the behaviors of another.

Secondly, this issue of prepayment. For several years there has been a flagrant disregard for any prepayment when requested. Let's re-evaluate this principle in light of the recent global economic crisis where it was difficult for Fair Trade Organizations regardless of where they were.

I suggest that FLO-Cert utilize a democratic system in which members, from farmer cooperatives to exporters to importers and yes, to coffee roasters, are engaged to arrive at a new principle establishing a lower minimum percentage prepayment that is realistic and acceptable to all. It is better to have a minimum prepayment that is agreed upon than a payment that is frequently disregarded for years and detrimental to Southern partners, as is the current situation.

Thirdly, to protect Fair Trade cooperatives from the likes of Mr. "It's not my Problem" there needs to be communication system integrated for cooperatives to contact and report speculative behaviors directly to FLO-Cert; and in turn for FLO-Cert to investigate with threat of revoking an importers certification. This has got to end now, and it is within the grasp of FLO-Cert to do it.

Fourthly, Make Trade Safe. Establish acceptable contract templates for Fair Trade importers, exporters and cooperatives to utilize that has your stamp of approval. Formalize the contracts so as to remove speculation! Mr. Johannes Egger, your auditor in Indonesia shared his challenge in tracking down these contracts because they are made over the phone. In short, as an auditor he has no paper trail to follow.  I suggest you make a simple, easy-to-understand contract which specifies the quantity, but not locking in the price. Make trade safe for both parties. This is within your grasp! 

Fifthly, end the certification of corporations that have long histories of labor and human rights abuses (i.e. Nestle). See their efforts to generate a brand that is Fair Trade certified for what it is: A Public Relations bid with Corporate Social Responsibility as the rational. How can you certify one hand as Fair Trade while the mindset and activities of the corporation remain unchanged with the other hand in a firm stranglehold on the throats of workers and farmers? There are so many issues with this company, in the South your certification of them has left a serious rift in the Fair Trade Movement and you need to know that! For more on your Fair Trade certified company, have  a look at the Corporate Watch list on Nestle's corporate activities  

Make Trade Fair to both the South and the North

and with that said, What can we do as Fair Trade advocates, supporters and consumers?

I still believe in Social Action!

XX Coffee Importer XXXXX Xxxxxxxxx Xxx Xxxxxxx, Xxxxxxxxx  Phone: XXX.XXX.XXXX XXX.XXX.XXXX Fax: XXX.XXX.XXXX Email:  xxxxxx@xxxxxxxx.com

FLO Bonner Talweg 177 53129 Bonn Germany Email: info@fairtrade.net Telephone: +49 228 949230 Fax +49 228 2421713

Fair Trade consumers, advocates and activists, 

       it is up to us to Keep Fair Trade Fair!

If you are reading this blog, I encourage you to take direct action!!! Fire off an email or call FLO! Let them know that the days of speculation, callous attitude toward Southern Trade partners, double standards, and utter disregard for established Fair Trade principles are over! As a Fair Trade certified organization, an importer must be held accountable! Call for transparency and demand social justice! The importer in question can begin by returning the US$20,000 owed to the Tunas Indah Cooperative! 

That is what makes Fair Trade different. There is a system of accountability throughout the supply chain from farmer to cooperative to exporter to importer to roaster and to retailer. What a marvelous and empowering system!

Write your views about the status quo to FLO-Cert. Take action and contact your favorite Fair Trade coffee roaster and ask them if their importer provides a pre-payment, then ask to see the actual contracts! You can make sure your Fair Trade Coffee importer is not speculating by locking in a price three or four months ahead of the harvest and essentially destroying the coffee cooperatives in the South!

Part III in this series will exemplify where the future of Fair Trade must go in order to be sustainable.

Mitch Teberg, MA

Coffee Part I - "You can betray a Principle"

This is the first of a three part series on my findings in Aceh, Indonesia. First, I examine a failure in the Fair Trade system and the "negative implications" it has on farmer cooperatives. In Part II, I will examine a recent case presenting the cooperative perspective of their dealings with a Fair Trade coffee importer and based on that, explore ways for Fair Traders to keep the system in check. In Part III, I will present how I worked with the cooperative to create positive and sustainable solutions.

On April 1^st, I arrived in Takengon, Aceh, in search of FLO-certified Fair Trade coffee cooperatives. Takengon is a slice of heaven; a picturesque green mountain valley lies cradled 1,300 meters above the sea surrounding a crystal clear lake. A natural mountain high! Much to my delight most of the farming here is done organically and to my surprise, I found not one, but twelve cooperatives united under the Indonesian Fair Trade Producers Association. 

A FLO-Cert Audit

I selected three FLO-Certified coffee farmer cooperatives to meet with, one of which was busily preparing for an audit. For the cooperative, there a lot is at stake and there is constant concern about the “findings” of the audit. I could best describe the atmosphere as one in which the cooperative management was walking on eggshells. An audit lasts four or five days and closely examines the practices of a farmer cooperative. 

Admittedly, it is a rare opportunity to be in the area when an audit was occurring, but I had the chance to meet Mr. Johannes Egger from Germany, the FLO-Cert auditor in Indonesia for the past couple years. The cooperative leadership had explained to me that a single mistake by a single farmer will get their certifications suspended. 

When I asked Mr. Egger about this, he explained, it was not a single finding, but a repeated theme had to be established. If he discovered three similar incidents, then this was considered a finding, but a single incident was not enough to suspend a certificate. Additionally, a finding had to be made a few times before a certification would be suspended. Through my discussion with the auditor, I saw the fairness in the system; once a finding was established, FLO made gave written warnings in the audit and allotted ample time for the cooperative to make corrections.  

He also explained the audit not only examines the cooperative in light of Fair Trade standards, but he reviews their constitution and the cooperative is held accountable to their own set of rules and regulations. Each cooperative is quite unique, so he must spend time reviewing and analyzing each cooperative and preparing questions regarding their adherence.  

As often happens when Fair Traders come together, they learn much from the work of another. During our discussion we shared experiences and found many similar concerns and views regarding Fair Trade – him from his work in Indonesia and me from my research over the past several months. What I learned in meeting Mr. Egger was the rigorous audit the cooperatives undergo is actually what I had hoped for because we put a lot of faith into this certification and verification system. Although it pushed the cooperative out of its comfort zone, I felt a relief that the auditor held them to high standards to include their own; these are the very standards we believe are so important in Fair Trade that we label them as "principles."

When I had met with the Indonesian Fair Trade Forum (FFTI) in Bali, the General Secretariat, Agung Alit, explained to me that every year he receives many inquiries and applications from handicraft exporters who simply want to buy a Fair Trade certification, but not adhere to the principles. For FFTI, it means turning away applicants because Fair Trade is not like other certification systems - it is about making an impact, and that is not for sale!  

"Principle, a word behind which it is easy to hide, and which often leads to some sort of failure. You can betray a principle"  - Paul Hawkins

Prior to arriving in Takengon, I met with a FLO-certified coffee exporter in the port city of Medan. Here I learned of a common practice that raised my eyebrows at first, but only when I went to meet with the cooperatives did I understand the full impact. 

During my inquiry with each of the cooperatives I not only learned about their organic farming practices, but I also asked about their experiences with certified Fair Trade coffee importers. In particular, I asked if they ever received the 60% prepayment stipulated as mandatory by FLO-Cert. 

None had. 

I asked if they had ever heard of a single cooperative in Aceh ever receiving a prepayment of any amount. 

None had. 

I met with Mr. Mustawalan, Chair of the Indonesian Fair Trade Producers Association, and he verified my findings. 

I discussed this with Mr. Egger, the FLO-Cert auditor, he also stated that to his knowledge, no cooperative in Aceh had ever received a prepayment of any amount, much less a prepayment of 60%.

With this, I went in search of answers on the FLO-Cert website where I found a 2004 paper on Coffee producers in Chiapas and Mexico, Coffee, Co-operatives and Competition: The Impact of Fair Trade by Anna Milford. She writes, “Fair Trade licensees are obliged to pay 60% of the total payment in advance, so that the co-operative does not have to make its members wait too long for payment. It thereby reduces the membership cost of delayed payment, with all its negative implications. The cooperatives appreciated the prepayment and said it was of great help to them. But despite this being compulsory as part of the Fair Trade regulations, not all of the customers complied with this rule”  (p.60). 

Compared to my own findings, Milton was putting it mildly. Like so many Fair Trade researchers and auditors, Milton closely scrutinizes the farmer cooperative, but does not seriously review the betrayal of a principle by Northern Fair Trade coffee importers. The term "obligated" is even stated, yet this violation is glossed over. 

What is the purpose of utilizing such strong wording when there it is simply cast aside? Furthermore, Milton regards their noncompliance as simply being an inconvenience to farmers and does not examine the "negative implications."  These are important findings but she does not take them seriously, and evidently neither does FLO-Cert because seven years later I found a much worse behavior being reported to me. 

In Paul Hawken’s highly acclaimed publication that should be on every Fair Trade Organization's bookshelf, The Ecology of Commerce, he eloquently writes, “We often hear about business standards and principles, but perhaps a better word… is ‘practices’. I am drawn to the word not only for its practical sense but because it implies that there is something to be learned, and that through consistent and applied practice, one improves one’s ability, get’s better at a skill, strives for understanding. Practice seems more humble word than principle, a word behind which it is easy to hide, and which often leads to some sort of failure. You can betray a principle, but you can always keep on practicing. (p. 68-9)”  

Perhaps it is time to examine the purpose of a Fair Trade principle...

Firstly, since the days of colonialism, which this era of Globalization replicates in so many ways, there exists a systematic imbalance in international trade. This imbalance has given much weight to conventional Northern importers. Essentially, the importers dictate the terms and conditions. If they don't get their way, they simply bring their business elsewhere. For this reason Fair Trade embraces a prepayment to farmers as a principle to correct this historic imbalance that remains a commonplace in the conventional trade system.

Secondly, it is a recognition of the risk involved in the trade deal and that the producer is at a disadvantage from the onset. Many of poor producers lack capital, and without capital on hand they have to raise funds, and typically it means to borrow from local loan sharks at high interest because banks are frequently closed to small producers. This is the entry point into a vicious debt cycle that burdens many impoverished producers around the world. A principle of prepayment is to address this situation by empowering producers and strengthening their independence.

Thirdly, this principle is tied to the principle of establishing long-term trade relationships. In conventional trade systems, the short-term gain is often the focus, and this can be a one-sided benefit. By building up our Southern trade partners, the relationship is one of mutual respect and trust based on long-term benefits for both the farming community and for the importers.

From my research, it seems to me that FLO-Cert closely examines organizational practices of its Southern partners who undergo a strenuous and exacting audit on their practices, while dismissing the flagrant disregard of established and agreed upon principles by Northern Fair Trade coffee importers to the extent that a principle is seldom, if ever, upheld. Frankly stated, there appears to be a serious double standard in the system.

But it gets worse. From here is where it is time to provide findings, name names, and identify behaviors for what they are... Part II will reveal my findings and look at ways to address the situation so as to present a win-win solution. 

Mitch Teberg, MA

Introducing Fair Trade high above the Clouds

In the last posting, I wrote about Vie and Basil Reyes’ approach to localizing Fair Trade as a step-by-step process. I was interested to learn more about their work so we went to the northern mountains of the Philippines to meet their partners and see their coffee roasting machines in local communities. What I found clarified much about the step-by-step process they were speaking of when I met with them.

Chou and I took the 9-hour overnight bus to Banaue, one of the Seven Wonders of the World. It is only an hour up the curvy mountain road from Lagawe in Ifugao province, so I might as well enjoy the sights while conducting my inquiry! Besides, this trip is self-funded, so I can set my own agenda... Perks aside, the inquiry went forward a day later.

In Lagawe, I met with Father Valentin and Father Marion, priests at the local Roman Catholic parish. I was interested in what they were doing and how they came about forming a local farmer’s cooperative, CoRDI, which is  both a short reference for Cordillera Mountain range and Coffee Research and Development Institute. We met over a freshly brewed coffee sitting at the KAPEHAN, the small café situated on parish grounds between the church and the school. Father Valentin holds Master’s in Development Management and established the Social Action and Development Center which is run out of the parish. Upon meeting him I quickly realized this was no regular priest! 

He explained his involvement in the local community, “Since 2001, I involved myself in the promotion of Indigenous Peoples Rights by conducting Indigenous Peoples Rights Act (IPRA) education… I also involved myself with environmental education and monitoring of government projects because we are trying to promote good governance. Later we tried to do political education, especially during the elections. We are trying to explain to people regarding the patronage politics that influences all aspects of our life, especially in development direction.” 

Like many countries around the world, patronage politics is the Achilles heel of democracy. Father Val explained, “Politicians run for office, but it is too expensive, so who will support them? Contractors, gamblers… [Once in office] politicians decide on development projects based on the needs of the contractors. We call them ‘juicy projects’ because instead of responding to the real needs of people, they are responding to the financial interests of the contractors.”

 

I could understand the interest a Catholic priest would have in promoting good governance, but I was curious how the Social Action and Development Center got involved in coffee production. He shared his experience in conducting environmental education with people living high in the cloud forests of the Cordillera Mountain Range. “They were converting their forests into vegetable gardens. Of course we asked why. They said that it is because they also wanted to survive. We asked them what were the alternatives, and our approach was from the perspective of faith and religion. We said, ‘Look, God created everything, and He made everything for us to survive. Now we are destroying it.’ They said, ‘How can we survive also? We have needs like food, education for the children, health.’ I asked them to list their existing resources and they named several fruits and coffee. For the fruits, we convinced them to have training in Sante Fe on how to harvest fruits, to turn fruits into jam, juice and fruit preserves. They went back and they were successful. We thought since they were successful, we needed to introduce another source of income, and we went into coffee.”

Father Marion, interim manager of Cordi Cooperative

I was impressed! I was speaking with a Father who was very in-tune with the needs of his flock. Typically the people in this area needed only one hectare to support their family, and Father Val inquired as to why they needed more and turned to tearing down the forest. “I found that the rich people, the capitalists, come in and offer capital for the farmers. They would say, ‘do you have a forest?’ The farmer would say yes. ‘Do you want to convert the forest to vegetable garden?’ And the farmer would say yes. ‘Then cut down the trees’ and later come in with the heavy equipment to level the land. Then they would say, ‘here is your capital for vegetable seeds and inputs like fertilizer and pesticides’. At harvest time the capital provider would say, ‘I will bring the truck and carry your vegetable to the trading post.’ Then afterward, the capitalist would say, ‘this is the remaining balance.’ It was a very small income for the farmers for four months labor. The farmers realized one hectare is not enough, which was the intention of the capitalists.

My question is this; why is it that you hear in Manila the price of the cabbage is around 30 or 40 Pecos per kilogram, even 60 Pecos, but here in the trading post it is 5 or 10 Pecos? It is a very big difference. No wonder the farmers say that one hectare is not enough and have to clear more and more.

Ifugao Kape, product of the Social Action and Development Center

Father Val went on to discuss the role of a syndicate that is controlling the local trading posts and shipping the mountain grown vegetables to Manila. We also discussed possible alternatives, such as his fruit jam and preserves project. Those are sold by the Sisters at the Good Sheppard in Baguio, the nearest city halfway to Manila. “The sisters are trying to help the farmers and for those producing organic food. Good Sheppard Sisters is an established outlet. There are many food products there, and one on display is Ifugao Kape.”

Father Marion, me, Father Valentin and the user-friendly Bote Central Coffee Roaster

With the coffee roaster from Bote Central, the enterprising priests have set up two coffee brands made by CoRDI. Lagawe Blends is made by the cooperative and sold locally at KAPEHAN. Ifugao Kape is the brand made for the Social Action and Development Center, and the market range for this premium blend reaches into neighboring provinces. In the discussion, they confessed their need to work on the marketing side of the venture. Chou and I decided that one thing we could do was buy ten bags of the Ifugao Premium Blend, and give them away to possible buyers and retailers we come across in the journey. 

When we returned to Banaue, we sat with the owners of two lodges listed in the Lonely Planet – that influential guidebook that exerts an inordinate amount of influence over backpackers from all over the globe. Both were receptive to our sales pitch advocating they buy and promote coffee grown and roasted by their neighbors. We even did the calculations of scoops per cup. Selling a cup of freshly brewed coffee for 35 Pecos (US $0.80) would net them over 500 Pecos per bag in profit. Admittedly, it was a bit strange for the lodge owners to be given a sales pitch by a couple of dusty tourists toting the coffee roasted from an hour down the road, but we had fun. We gave away all ten coffees on our journey back south with contact information to reach Father Val. 

During our two day stay at the Parish, the Fathers also shared with me the inner workings of the cooperative, prices paid to farmers for Robusta and Arabica coffee beans,  limitations and profit margins, challenges they have encountered since they were established a little over a year and a half ago, and the origins of the project.  Father Marion noted, "planting coffee in Lagawe as a business venture began in the 50's, years before any roaster was introduced in the community."

Sharon in Coffee Heaven!

The Philippines adopted a One Town One Product promotion to encourage rural development. The OTOP promotion for Lagawe was designed a team led by Sharon Grace. “Fortunately when the new mayor was elected he came to me to ask what the OTOP should be. He wanted to change to making handmade brooms but I was able to convince him to stay with coffee. The new mayors usually want to change everything, to make their own mark on the community.” Father Marion added, "He did not change it but made the program more strategic. Mayor Cabbigat of Lagawe and his team proposed a new direction for its OTOP--to produce Arabica-Based Coffee Blends or in short Lagawe Arabica Blends...Thus,in partnership with the department of Trade and Industry and SN Aboitiz Power Inc, the coffee program in Lagawe began to take shape. Lagawe Blends became the brand that preceded coffee brands in Ifugao. Another brand -Terraces Brew by Unique Cooperative was also introduced almost at the same time and it was generally marketed in Banaue, Ifugao."

Under Sharon’s guidance, the LG, or local government unit spearheaded the development of Lagawe’s coffee enterprise, establishing minimum prices paid to farmers for organically grown high quality beans. Father Marion explained, “When the time came to make it a business, the government had to create a cooperative, or to tap local investors to put into the OTOP. So we created a cooperative.  We have 71 members now.”

Although Arabica brings in twice the price per kilogram, the farmers have 2-3 Robusta coffee trees on their lands left over from the Halcyon Days when the Philippines was the number 2 exporter of coffee in the world. To revive those neglected trees takes an effort, but it is an immediately available resource. In addition, CoRDI farmers are planting Arabica with great care to ensure they meet the requirements for organically grown. 

 

Father Marion explained that CoRDI had to accept a few provisions set by the LG in order to take over the business venture started by the LG. One was to maintain the prices paid for green coffee beans. “Last year when the farmers realized when we bought their coffee direct from them, they were surprised. The LG started buying for 100 Pecos / kg for Robusta while Nestle was paying 65/kg at that time. They were surprised, but it was in the general interest of the farmers.  LG set the pricing and we had to keep up all the programs and the pricing.” 

Arabica Seedlings!!!

Another requirement was to continue the reforestation efforts. After our discussion they showed me around the premises. Walking by a nursery on the way to the coffee roaster behind the church Father Val noted, “We have already produced over 20,000 Arabica seedlings and distributed them to the farmers who ask.” Reforesting with Arabica coffee, what a great idea!  It takes three years for the trees to produce, and in a few years, there will be a lot of Arabica produced in the nearby area of Tinoc. To this, Father Marion added, "In Lagawe, most of the 53,000 Arabica seedlings distributed and planted in 2009 died during the drought in 2010." Despite the setback, I see their ambition is far ahead of their marketing strategy, but in doing the work of the Lord, I suspect they will have an advantage in what will amount to be a venture in Fair Trade coffee.   

While learning about the challenges and functions of a cooperative, I inquired about Fair Trade. New to the concept, Father Marion admitted he was still in the process of learning about the principles beyond providing fair prices for farmers. Over the time we shared, my research with CoRDI Cooperative turned into an opportunity for capacity building and experience sharing. I spent many hours with Father Marion as he graciously took me around the area to meet local farmers, and allowed me to join him and Sharon Grace on a coffee buying expedition to a village near Sagada, a few hours’ drive away from Lagawe. 

For those interested in the coffee buying expedition, please go to my facebook page where Chou has posted many photos of our journey. Also feel free to connect with me there, I am always interested in meeting the people who read my blog.  

Sharon Grace and Father Marion let Chou and I join them on a coffee buying expedition

Father Marion summarized the mission of CoRDI, "We are working to establish a real local coffee industry in Lagawe, in Ifugao Province and in the Cordillera, in partnership with as many who share our vision and our concept that coffee can be a sustainable fuel for growth and that can be seen from a myriad of lenses or from many perspectives....from enterprise, from sustainable agriculture, from environment conservation, from eco-tourism..."

During my stay in Lagawe and in Sagada, I began to see more clearly the reason Vie and Basil Reyes make Fair Trade a step-by-step process that can take a period of 2-3 years depending on the community.

To say,

      "Fair Trade is about Social Change"

                                       is an understatement!

Locally, Fair Trade challenges a myriad of issues: the concept of business as usual; the role of women in the household, in society and within an organization; the participation of children in family operations; the role of organizational management and levels of participation by members/producers; and how to deal with partnering organizations and suppliers. Fair Trade is a game changer. Nothing remains the same once these concepts are adopted.

For Bote Central to introduce Fair Trade first by technically supporting local partners which depend 100% on their local economies, is as practical as it is useful. Their undertaking is nothing short of a commitment to initiating social change in every community they engage. Meeting with the partners, I saw directly the challenges and social issues they embrace. I also saw the value of localizing Fair Trade. 

I believe that Vie and Basil have begun moving Fair Trade in the direction it needs to go in the future if it is to be a sustainable endeavor. Complete dependence on trade with the North has proven to be unsustainable. Reflecting on the lessons learned from the recent Global Recession, I believe more attention has to be focused on developing Fair Trade in local communities.  Local outlets supported by local economies. I am not advocating for the end of trade with the North, but to introduce Fair Trade as a locally applicable model for doing business.  To diversify markets. 

As for introducing Fair Trade to a community, providing practical support and easily integrated guidelines is a good place to start. Fair Trade in action more than words.

Imagine this: 

Local beans, local processing, local roasting, local sales, 
and local consumption all contributing to a local economy. 

Not one bean exported, but Fair Trade localized! 

Thank you for joining me in this journey. Feel free to follow this blog and to add your comments, ideas or suggestions as we go.

Sincerely,

Mitch Teberg, MA