The farmers said they left the building feeling dejected. Their application for a coffee export license had been denied by Anacafé a third time. The process started about six months before when Jorge, not a coffee farmer himself but a resourceful man who had offered to help, went to the Anacafé office to learn what was required and to pick up the appropriate application forms. Anacafé, the national Guatemalan association for the coffee industry, is the entity responsible for issuing all coffee export licenses, like the ones these farmers were seeking.
The farmers were part of a seven-member cooperative of coffee producers from the Panchoy Valley surrounding Antigua. All of the farmers were on the small-end of the production scale; each farmer had, on average, about a quarter-hectare planted to coffee. The larger plantations in the Valley have several hundred hectares.
Jorge had helped the farmers complete the forms and prepare the necessary documentation prior to their first meeting with Anacafé, yet when the farmers went to the Anacafé office they were told that they had completed the wrong forms. They were given another set of the exact same forms. Two months later the farmers returned for the second time with the forms completed. Anacafé told the farmers they needed a bank statement showing that they had Q20,000 in capital reserves. In addition, Anacafé told them they needed a specific form from their mayor, which they could get in their local municipal offices, certifying that they each had at least five hectares already planted to coffee. Anacafé documentation does not list any of these requirements.
The farmers were clearly frustrated, but the Anacafé assessor told them that they need not worry. They did not need an export license. They could sell their coffee to Anacafé, instead. Legally, Anacafé is a private, non-profit entity. Officially, it does not purchase or sell coffee.
The farmers met with their mayor, who told them that the form they were requesting did not exist. The mayor said that he could, for Q200, perform an onsite inspection of their farms and write a letter. The farmers could not afford the “fee,” so they returned to Anacafé for the third time with their original documentation. Anacafé rejected the farmers’ application again, though this time it was not because they didn’t have the proper paperwork from their mayor, or because they had less than five hectares each, but because their land titles were recorded in cuerdas (a widely-recognized unit of land measurement in Guatemala equivalent to 33 meters on a side) rather than in meters. Jorge and the farmers told me that when they questioned this logic the Anacafé assessor held up a sheet of paper and pointed to a few lines of text, indicating where it said that all documentation was to be in meters.
The assessor had assumed that none of the farmers could read. In reality, the paper was an intra-office memo inviting staff members to a farewell event.
When I set out to investigate this story, I intended to write about the trade certification models for Guatemala’s largest export commodity, but along the way I discovered much darker truths. After working for several years in a non-government organization on coffee-related issues, I had become skeptical about the benefits of international trade certification programs. I suspected, and still believe, that the concept of “fair trade” is more a marketing ploy to assuage the conscience of consumers than a regimen to ensure ethical trading. But after hearing these farmers’ stories, I realized that unfairness in the coffee industry is far more profound and far more maddening.
“Fair Trade Certified” is a trademark of TransFair USA (a member of Fairtrade Labeling Organizations International). The principles of Fair Trade state that a fair price must be paid to producers, fair labor conditions must be afforded to workers, trade must be direct and conducted by democratic and transparent organizations, and community development and environmental sustainability must be central to the process. TransFair USA has certification programs for coffee, tea, cocoa, fresh fruit, sugar, honey, rice, vanilla, flowers and wine.
I had intended to investigate how, and how well, TransFair USA’s coffee certification model was being implemented in the local coffee industry, but soon found out that there actually were no Fair Trade Certified producers in the Antigua Valley. Fundamentally, this is because Fair Trade certification is costly and brings no measurable benefit to Antigua coffee plantations nor to small coffee farmers.
First, to attain certification, a coffee producer must pay application and certification fees totaling over $2,000 for their first year of operation and over $1,000 for each subsequent year. Depending on the number of products, processing installations and members in the producer’s organization, these amounts can increase significantly. To put these costs in perspective, the national legal minimum wage for Guatemalan agricultural workers is equivalent to $1,715 annually. Minimum wage for agricultural workers, Q52 per day, is currently the same as minimum wage for non agricultural workers. Historically, however, it has been significantly lower.
Second, the current Fair Trade Certified price for washed Arabica green coffee from Central America is $1.35 per pound or the current New York Commodities Market price, whichever is higher. At the time of this writing the Commodities Market price per pound was $1.13. The reality, however, is that coffee cultivated in the Antigua Valley commands a much higher price on the international market. Antigua coffee is mostly the highly-prized Arabica variety and is grown at an altitude of 4,500 feet or higher. Coffee grown at this altitude is classified “Strictly Hard Bean.” This means that it is widely considered to be of specialty or gourmet grade. Prices for green coffee grown in the Antigua Valley generally range between $2.00 and $8.00 a pound.
Third, to attain Fair Trade certification producers must demonstrate that they have the ability to export their product, which the vast majority of them, as will become clear, cannot do. Thus, the only producers who might benefit from the protections of a Fair Trade Certified price are the ones currently selling their coffee for less than $1.35 a pound. These farmers, clearly, are the most disadvantaged and vulnerable to exploitation. Less advantaged producers are also, generally, those who lack the education and capital necessary to develop the skills, purchase the machinery and nurture the connections necessary to successfully export their product. But if they cannot demonstrably convince TransFair USA that they can export their crop, they cannot attain Fair Trade certification. Didn’t Joseph Heller once write a book on this subject?
Evidently, TransFair USA’s Fair Trade certification doesn’t address the underlying problems of unfairness in local coffee production. But there is another model in use in the Antigua Valley: the Coffee and Farmer Equity (CAFE) standards.
CAFE is the model used by Starbucks, the world’s largest coffee house and buyer of 25% of Guatemala’s coffee exports. The stated objectives of CAFE are to ensure that coffee is responsibly grown and ethically traded. Integral to these standards is the concept of “sustainability,” which is defined as “an economically viable model that addresses the social and environmental needs of all the participants in the supply chain from farmer to consumer.” Participating producers are required to pay a CAFE approved verifier to conduct annual audits of their plantations.
A friend of mine, whom we will call Luis, is a member of the seven-member cooperative mentioned earlier that tried to obtain a green coffee export license from Anacafé. He, like his other friends in the cooperative, which, three years after their dealings with Anacafé, has grown to 20 members, now has about one and a half hectares dedicated to coffee. Luis owns his land and works it himself with the help of a few seasonal employees. His farm is dwarfed by a nearby plantation of several hundred hectares, which, incidentally, supplies green coffee to Starbucks. I wanted to investigate how “ethical, responsible and sustainable” this Starbucks supplier was, so I asked Luis to connect me with a staff member of the nearby plantation for an interview and tour.
At first glance, I was impressed. The premises were clean and well organized. They recycled their water and re-used their organic waste as fertilizer. And they had an employee benefits package that rivaled the perks of my old corporate career. Moreover, there was an elementary school onsite and the plantation paid bonuses twice a year. The plantation paid full-time employees overtime, and these workers accrued credit in the Guatemalan social security system. Further, the plantation provided full-time employees with housing and, to round out the image, no full-time employees were under 18 years of age.
I saw a man turning coffee, laid out in perfect arcs on a soccer field sized concrete patio. I asked my guide, whom we will call Edgar, how much someone like the coffee turner would be paid. He said he was a full-time employee, and imagined he was paid about Q50 per day – which is just shy of minimum wage for agricultural workers (Q52 per day). Less promising, when I later talked to Luis, he reported that about a year ago one of his friends, who was a full-time worker at the same plantation, was paid Q35 per day. Minimum wage in 2007 was Q44.58 for agricultural workers.
The only real discrepancy I saw between the CAFE standards and the plantation’s practices were with the working conditions of seasonal employees. However, this is vitally important because during harvest time (typically November to March) this plantation increases its labor force by up to 600%.
CAFE standards require that producers pay all temporary/seasonal workers the nationally or regionally-established minimum wage. (In Guatemala, minimum wages are set by the federal Ministerio de Trabajo y Previsión Social. Wages vary by industry, not by region.) Also, if there is insufficient access to public education, the producers must provide the primary school age children of seasonal workers who live on site with access to instruction, facilities, and materials that meet national education standards. Producers must not directly contract any persons under the age of 14 and workers who live onsite must be provided with habitable dwellings by the plantation owner.
Locally, seasonal workers are called cuadrillas. When I asked my guide, Edgar, about the cuadrillas and the benefits they received, he shrugged and said they were “different.” At the plantation where he worked a contractor was paid to find people to work the harvest season and was paid for each person he or she recruited. Usually these workers came in groups from rural areas and labored for a month at a time. Importantly, as will become clear, the contractor managed the cuadrillas, not the plantation.