International farm leader Jack Wilkinson thinks Canadian consumers should know that most of the extra dollars they spend for fair trade commodities are not getting back to developing world farmers.
Across Canada, consumers increasingly are shelling out double or in some cases triple the price to buy coffee that is certified as fairly traded.
“I don’t want consumers to get cynical about it because it clearly is helping and poor farmers are getting some more. But they should not think that if they pay twice as much, farmers are getting twice as much,” the president of the International Federation of Agricultural Producers said in a recent interview. “The evidence is clear that well over half and in some cases up to 90 percent goes to the company.”
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At a Saskatoon supermarket in mid-March, fair trade coffee brands were selling for more than double the 1.5 cents per gram cost of regular coffee.
At an Ottawa supermarket, regular no-name brand coffee was priced at .93 cents per gram while one brand of fair trade organic coffee was priced at 20 cents per gram and a package of Guatemalan fair trade coffee was priced almost four times higher at 34 cents per gram.
Recently The United Church Observer featured an enthusiastic cover story on “coffee with a conscience” that had reporter Mike Milne visiting Ethiopian coffee growers and workers and reporting on how fair trade contracts return them a base price comparable to open market prices with a later dividend that increases their incomes and improves their village infrastructure.
It reported that the fair trade dividend increased the farmers’ income by between 16 and 25 percent.
Wilkinson said that is welcome additional income in many subsistence farm economies.
But he also noted it is a far cry from the doubling and tripling of prices at the supermarket.
“There will be some additional costs in the system for inspection and tracing and certifying,” said the IFAP president. “But really, those procedures should not be consuming that much of the additional money.
“Clearly there is significant profit taking going on here. It is a very appealing product that helps consumers feel better about themselves and they clearly are willing to pay a premium for that.”
While the fair trade movement has been growing in North America, he said it has been active in Europe for years and includes coffee, tea, bananas and sugar.
In some coffee producing countries, including Ethiopia, farmer co-operatives sell coffee that meets European-established fair trade standards for quality and growing conditions. The product then works through the roaster, processing and distribution system organized to handle fair trade commodities.
“Profits that would otherwise go to middlemen and exporters are returned to farmers and their communities in the form of fair trade dividends,” Milne wrote in the Observer.
But Wilkinson said it has been impossible for IFAP to find out what prices companies pay to farmers or what share of the value of the product they retain.
“They cite confidential contracts and I know in some cases, these companies insist that some of the money back to the community be invested in schools or other infrastructure, rather than back to farmers, which is fine. But it seems a bit patronizing to assume they know better than the farmers what should happen to the money that they earn,” said Wilkinson.
He said the IFAP message to farmers is that the only way they will be able to keep more revenue is to organize and negotiate a bigger share of the profits with the companies.
“It is helping and it is a good thing but we have been telling farmers in these countries that considering how much more these products cost at retail, they are not getting a fair share,” said Wilkinson.
