Fair Trade and Volatile Markets

Earlier this week, IATP met with leaders of coffee farmer cooperatives from Latin America who sell in the certified Fair Trade market. In this case, they sell to Cooperative Coffees, a fair trade, green bean importer. Peace Coffee - a 100 percent, organic and fair trade company owned by IATP - is a founding member of Cooperative Coffees and hosted the farmers.

The representatives came from farm cooperatives in Bolivia, Peru, Mexico, Columbia and Guatemala. The challenges they described brought on by rising prices of all types of commodities were similar. Like other sectors, the coffee market has also been extremely volatile in recent months.

"In our lives we have to deal with changes all the time. But we haven't had any kind of contingency plans in our country for these changes," said Carlos Reynoso, of Manos Campesinas in Guatemala.

Policarpio Ali Cruz, from FECAFEB in Bolivia, told us that the price of gas there is about $8 a gallon, and the country is experiencing a 17 percent increase in inflation from last year. Despite the fact that the country exports oil, its citizens are still paying a high price.

Cruz described the results of U.S. aid policies in Bolivia over the years. Unfortunately, the story is similar in many developing countries around the world who have become dependent on imports. "Donated U.S. flour has eradicated wheat producers in Bolivia," said Cruz. "There are now plans for government support to try to bring back wheat producers."

Wilman Sotelo from Fondo Paez Cooperative in Columbia told us, "The volatility in prices has to do with global commodity exchanges." He pointed to speculation of commodities in global markets as a source for rising prices. Sotelo explained that one of the strengths of the fair trade system is more direct relationships with buyers, "so that we can get out of this system of commodity markets. We are building strong organizations where people are aware and think long-term, rather than getting taken in by a little more price" in the short-term.

Elmer Pena Silva, of CENFROCAFE in Peru, pointed to the damage caused by the devaluation of the U.S. dollar. "In spite of the fact that prices for coffee have been at high levels, the farmers are receiving less value," said Silva. He called for a more open-pricing system in commodity markets that would include more open contracts, rather than secretive, private contracts that allow for big buyers to manipulate the market.

The response to rising commodity prices was similar among these fair trade producers."The dialogue with our producers is to encourage more sustainable practices, protecting the forests and water and using less fertilizers," said Reynoso.

Sotelo emphasized the need to diversify further what cooperatives grow to include more food as a response to the volatile prices.

The meeting brought home once again how rising commodity prices, particularly oil and food, are affecting everyone - even within a fair trade movement built on economic and environmental sustainability.

Comments

[bec]

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