Bitter Debate Inside Fair Trade Coffee Movement

Bitter feelings over coffee bean prices
By Brian MacQuarrie, Gboston Globe Staff, 11/18/2003

In Dean Cycon's mind, the low prices that US coffee roasters pay to struggling
farmers amount to a lot more than a hill of beans. That's why, from his small
coffee company in the Central Massachusetts town of Orange, Cycon is roiling
the trendy world of upscale coffee sellers with allegations of hypocrisy and
exploitation of impoverished growers around the globe.

It's a fight in which Cycon's company, Dean's Beans, took out a full-page
magazine ad that asked liberal icon Paul Newman, without consulting him, to
pressure coffee roasters such as Vermont-based Green Mountain Coffee to buy
more beans at higher "fair trade" prices.

The tactic prompted fiery responses from the Newman family, Green Mountain,
and the "fair trade" organization TransFair USA, which asked Cycon to stop
brewing trouble.

"If this was a lifestyle choice about whether a farmer would buy a red truck
or a dishwasher, it wouldn't be such an issue to me," said Cycon, who ran his
controversial ad in the alternative magazine Arthur. "But when the price of
coffee is not only below the cost of production, but inhibits the farmer's
ability to feed his family, it becomes a very, very serious issue."

In Cycon's view, coffee roasters are taking advantage of one of the most
depressed markets in the industry's history to make a financial killing. The
worldwide market rate is about 60 cents a pound, he said, alarmingly below
the "fair trade" standard of $1.26 per pound for conventional coffee beans
and $1.41 for organic. At the lower market price, Cycon said, farmers in Latin
America, Africa, and Asia cannot hope to lift their families out of poverty.
TransFair USA launched its "fair trade" certification in 1999, and the
organization expects to have 300 companies under contract by the end of the
year, said Paul Rice, TransFair USA president and chief executive officer.
Under the contract, TransFair puts its "fair trade" label on coffee that has
been bought at the higher price from registered cooperatives of small
farmers.

Green Mountain, a publicly traded company that bought about 9 percent of its
coffee at "fair trade" prices last year, cannot afford to make a sudden,
full-bore switch to the higher rate without alarming its shareholders, company
officials said.

"I think that the focus for current `fair trade' companies is, first, to grow
their own sales, and, second, to try to urge those companies who are selling
`fair trade' coffee to consider it and get on board and make a difference in
these farming communities," said Rick Peyser, a spokesman for Green
Mountain.

In 1999, TransFair certified 2 million pounds of coffee as "fair trade"
brands, Rice said. By 2002, the number was 10 million pounds.

In the coffee shop, the price difference between coffees bought at "fair
trade" levels and those bought at much cheaper prices is not significant, said
TransFair USA officials and Darby O'Brien, a spokesman for Dean's Beans. The
difference, O'Brien said, lies in the profit margins.

"Corporations are only concerned with money," said Cycon, who estimated his
company will do $1.5 million in sales this year. "Although I acknowledge
that's a perfectly worthwhile goal, it has to be balanced to true responsibility to
all the people you work with."

To Rice of TransFair USA, the important number is a company's total "fair
trade" purchases and not its percentage of such coffee. For example, he
said, although Starbucks buys only 1 percent of its coffee at "fair trade" prices,
that number translated into more than 1 million pounds last year, Rice said.

"After five years of building the market, TransFair has succeeded in
propelling fair trade into the consumer mainstream," Rice said. "And in doing so, we
have essentially set up the foundation for benefiting literally hundreds of
thousands of farmers at a time of the worst price crisis in the history of
coffee."

To Nell Newman, Paul Newman's daughter, who sells coffee through Newman's
Own Organics, which she cofounded, Cycon's view of the industry does not reflect
the half-full picture she touts.

"There are different tactics," Newman said from her headquarters in Santa
Cruz, Calif. "I'd rather just smile, set a good example, and sell a lot of `fair
trade' coffee" with Green Mountain. Newman's Own Organics buys 100 percent
of its beans at "fair trade" prices, said Newman, who stressed that her father
does not have an ownership position in the company.

"I was peeved at Dean for using my father's name and image to catch people's
attention," she said.

Although Paul Newman is not financially linked to his daughter's organic
company, Nell Newman devotes all aftertax profits to charity, just as her
father's food company does. But Newman's Own Organics hired Green Mountain
to be its exclusive roaster and distributor, and therein lies the rub for
Cycon.

"Newman's Own [Organics] is a welcome addition to the fair trade community,"
Cycon's ad said. "The problem is, Paul has come to our community through a
partnership with Green Mountain Roasters . . . a company that doesn't really
practice the principles of fair trade."

Green Mountain officials adamantly defended their commitment to
environmental and social justice principles, and said they are increasing the share of
their "fair trade" market. The company, which did $100 million in sales in
fiscal 2002, intends to buy from 25 to 30 percent of its coffee beans at
"fair trade" prices in five years, Peyser said.

© Copyright 2003 Globe Newspaper Company.
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