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justcoffee.orgWe are not affiliated with the coffee grower cooperative Just Coffee based in Salvador Urbina, Chiapas Mexico--though we share many values and goals. TopicsPlacesEn líneaEn este momento hay 0 usuarios y %count invitados en línea.
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Our Supply Chain BreakdownPosted by admin at about 1pm on Martes Diciembre 4, 2007This was a little ditty that addressed our supply chain and how we get coffee from farmers to you. Then some clown decided to hack our site and put up weird links that i hope were not offensive. We'll het the original back, but most importantly check out the discussion below and check out the "our supply chain" tab above. Thanks and a big old razberry to whoever messed up our site. |
Here is where your money goes when you buy a bag of Just Coffee. Please note that the breakdown is by the pound. Some of you buy our coffee in 12oz. bags. To do that math, remember every factor is at .75 of the pound totals.
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Interactive Supply Chain Map
very cool!
Very cool map, but...
I don't know how many other partners you missed, but I did notice right away that Yahara River Grocery Co-op in Stoughton isn't on the store map. Have you updated the maps since December? I'm sure we're not the only ones who've opened since then!
issues of showing your transparency
Two questions about this.
First, how does Just Coffee justify that they have $3.80 of overhead and wages while the farmers make 50 cents a pound? I mean it seems pretty easy to increase the farmers' take by cutting those two numbers?
Second, it would be helpful if the wages associated with your coffee rosting and management were made transparent.
transparency
Hey There:
Thanks for your comments, they are really important towards making this thing more transparent.
I will work with our webmaster to break overhead down into smaller categories. We will also put our end of the year P&L online which will help. When I was a grad student studying the coffee industry, in particular looking at cafes, it always amazed me that "overhead" could be so high. Now, on the other side of it (at least in terms of roasting), it makes more sense. JC pays for everything from the dock in-country to putting the beans on the shelf. That is where the $3.00 plus comes from.
So yes "it seems pretty easy" to cut overhead, but in fact it is hard. I feel like JC has been pretty successful doing it and that is evidenced by what we pay for coffee, which is much higher than any conventional roaster and many FT roasters. No one here is making even the median income for our community-- we are not doing this because we are making a bunch of money. The price we pay to the farmer cooperatives is between 25% and 35% of our final wholesale price. That beats the crap out of the conventional chain.
Looking at what individual farmers make, we can only control what we pay to their cooperatives, which in 2008 will be between $1.61 and $2.85 per pound for organic and $1.35 to $1.61 for conventional coffee-- higher to much higher than the FT minimum prices. How much gets into the hands of the farmer is up to their democratic organization that they have ownership of. $.50 is actually on the low end, I would put the average at around .80 per pound, sometimes higher. When producers feel too much is staying in the hands of their co-op (for administration, processing, transportation to port, community projects, micro-lending funds, etc), they address that internally. In short, we have little to do with that portion.
Finally, we actually do not separate our pay by "management" and "worker". We have two tiers of pay. Worker-Owner and Worker. We have stratified our roles somewhat over the years, but everyone still roasts or bags coffee when needed. However, some "workers" spend most of the time in the office while some W/Os spend all of their time in production.
Worker-Owners have invested a combination of time, cash, or equipment at a minimum of $6000.00 into the cooperative. They co-sign any and all loans and are financially liable if "the ship goes down". They serve on the BOD and make larger financial decisions that they would be liable for. W/Os make between $18.25 and $20.00 an hour depending on how long they have been in the cooperative and how much they have invested.
Workers make $13.75 an hour with full benefits for anyone working 20 hours or more a week. These folks are first in line in the case of taking on new W/Os. So, they make less cash, but they have not had to invest gobs of money and are not liable for the company.
Thanks again for your comments. I will work with Heavy Kev to make some of this clearer.
-Matt
More Ideas
So here are few ideas about transparency.How much do the farmers make on an hourly rate? Do they enough to sustain a cost of living in their community. Also when the season is really busy a lot of farmers hire out pickers. Do you know how much they are paying their migrant labors (most of the time it is migrant). If there is no transparency on these issues then how do i know that the coffee is truly fair trade. Isn't the model of fair trade based off this idea that the direct relationship between grower and roasters allows the consumer to know that the product is indeed Fair.
More Answers
Hey There:
All of the answers to these questions differ from co-op to co-op and even farmer to farmer. Some farmers use collective labor where they trade off helping in each other's fields in exchange for that labor in their own. Others hire laborers at the height of the harvest. Some farmers are making much more cash than they were making prior to being in "fair markets" and are doing comparatively well. Others have seen the costs of production and the certification that "fair markets" sometimes demand almost cancel out most of their gains. We have seen major success stories and what can probably be seen as disappointing results. One thing I have never seen is a farmer "lifted out of poverty" by fair trade as some of the certification folks would tell you.
To be honest, it is difficult to get some of this info in any systematic way. It is a potential weak spot in assuring "fairness" all the way down the chain. In tis same vein, what are the conditions of the folks that make our bags? What about the truckers that bring us our green beans? Or the workers in the warehouse in NJ where the beans are kept? Or the workers in the processing plant in the producing country? The skeptic in me says that it would be nearly impossible to get a handle on much of this. Or if we could we would find that someone is getting exploited on the periphery of our commodity chain.
However, we can do better and your questions are a good impetus to find out more. At Co-op Coffees we have started a roaster/producer communication group that will allow us to get better info on some of the details of their lives and businesses that we might not see on a 7 day visit. I have sent down an inquiry to try to get a better idea of what individual farmers are getting paid from their co-ops with our contracts this year. That is a start.
Thanks and please keep the questions and comments coming.
-Matt
why call it fair then?
This comment is from someone different. Promise. Okay, first thing here is that it would be good to know the effect of fair trade pricing schemes on your farmers. You send down a number of delegations each year. This information seems available, is it not? I think the supply chain would be much more complete if there was a cost of living detail along with effect of the fair trade pricing structure on farmers themselves. Since it does change from farmer to farmer, me as the consumer wants to see how that effects on each bag of coffee that i purchase. I want to be purchasing the fairest possible coffee.
Mo' Better Answers
Okay College Boy (just kiddin' Jonny!)
It sounds like you have a really good handle on potential weak spots in a "fair" model. The word fair is most likely a stretch, as you are pointing out. "Better trade" or "solidarity purchasing" or something like this would probably be better.
But looking at your questions, you need to understand that not only does all of the info you request differ from co-op to co-op and farmer to farmer, it also differs from buyer to buyer (their income is a combo of the coffee we buy from them at a higher price and coffee they sell to others at a lower price) and year to year. For example, the cost of production tends to rise yearly. Some farmers in one co-op who live on one side of a hill may have to irrigate or deal with another micro-effect that farmers on the other side do not have to deal with. Getting this info in a truthful way would take a small army of researchers to be on site in each co-op all of the time. Sounds like you might be a good candidate for this
Here is what I can tell you about our model:
1) We stand by the co-ops we work with. Beyond paying a higher price we help with pre-financing, have farmers to Madison, send Madisonians to their communities, do "special projects" in their communities, and help out in emergencies, all in an attempt to create genuine relationships between fellow humans with all that entails in common.
2) This model is much better or "fairer" than the conventional coffee model.
3) We will always answer questions like yours honestly and not with inflated figures and general statements that we cannot back up.
4) We will continue to make this model better, more democratic, and more cooperative.
5) We will attempt to use it to make the blatantly unfair conventional model disappear.
Beyond that, if you want to be assured the coffee you are drinking is truly "fair" in the purest sense of the word (whatever that means), you might consider switching to tea.
-Matt
speedy
You're quicker on the draw than i am, Matteo Conejo.
-heavy kev
Fairness?
Why obsess about purchasing the "fairest possible" bag of coffee? It reminds me of the utopian, puritan, and dare i say narcissistic quest for the "perfect meal" by Michael Pollan at the end of The Omnivore's Dilemna, which comes close to ruining an otherwise great book.
I think it's important to ask what exactly the "fairest possible" might mean. Some socialists would argue that all labour in the coffee commodity chain should be renumerated equally. In this vision, either the farmers would get a huge raise (from, say, $1,000 per year to $30,000 per year), or those who work for the importer, the roaster, or in coffee retail would start making about $0.20-0.50 per hour. The former (let's call it "rising tide lifts all boats") approach would probably boost coffee prices 100% to 500%, making it only affordable to the super-rich (and therefore jeopardizing its "fairness"). The latter (let's call it "lowest common denominator") approach would fall apart as quickly as a bunch of workers at Coop Coffees (the importer) Just Coffee, or the Willy St Coop can say "I quit".
Another interpretation of fair might be the Michael Pollan approach, which would mean flying to the jungle where wild coffee grows, harvesting it and processing it yourself, and then writing about how noble you are.
The point is, “fairness” is not achievable in an extremely skewed global economy. It is especially unattainable if we continue to focus on the products themselves, rather than the institutional arrangements through which our commodities flow. The goal, then, should not be to find some kind of perfect product, nor should it be what you say above to "allow the consumer to know that the product is indeed Fair" (because it won’t be). The goal i think is to engage in transnational solidarity despite all its messy contradictions, using a consumer product as a vehicle for change.
Ya, maybe you’re right, fair is probably the wrong word.
-kev
Food First
I want to come back to a point about overhead and the farmers food security. In Dan Jaffee's seminal book "Brewing Justice", he breaks down the effects of fair trade coffee in Mechiza, a community in Oaxaca, Mexico. In this book he shows that the average family in the community who sells fair trade coffee and does not receive financial support from relatives in other countries is about 2000 dollars short of being food secure. Now lets take a look at the numbers to see if Just Coffee could help more families achieve food security by cutting overhead and sending more money back to the farmers. First if one employee (lets call him Bob) at just coffee took a 25 cent pay cut per hour for an entire year he would save the company around 460 dollars a year, i'm guessing that the money would be missed but Bob is probably not going to be food insecure next year with that cut. Okay to break it down even further we can estimate that the collective as a whole took a cut of 25 cents it would bring the the total savings in at about 4500 maybe slightly less. Which if you paid an average farmer in Michiza an extra .20 a pound, that would bring close to 2.25 families out of food insecurity each year. Now lets say the collective takes a dollar down, we get closer to 9 families who are more food secure. I think you see where i'm going. i'm not saying that this is the only way to create a just system, in the end cutting your labor cost can only go so far. It is obvious that we need to start paying a greater amount for our coffee.
Interesting numbers, thanks
Interesting numbers, thanks for posting them!
A common critique of fair trade is that it confuses charity with justice. (Consumers, if they feel so inclined, can spend an extra buck or two to feel good about helping to equalize trade relations.)
What you're proposing is another nice charity measure that would help a few farmers. But JC sources from hundreds of farmers. If we assume that the average Central American farmer grows 500 pounds per year, then we can say that there are the equivalent of about 500 such farmers working full-time to grow the 250,000 pounds of coffee that JC purchases each year. If each of those farmers' households were to receive the extra $2000/year from JC, then--oops--there goes not only JC's ENTIRE labor budget, but almost all of its gross revenue.
One quarter here and another quarter there can make a huge impact on a few families, but can't help to create long-term justice in the coffee supply chain (or for that matter, the global economy). Especially when it comes from "cutting labor costs"--not something i usually associate with justice. We have along way to go, but i don't think that measures that are charity- (or martyrdom-?) based, will help us get very far.
Labor Costs
Thanks Kev and Anon:
A couple of quick points...
1) JC already pays above the FT minimum to the producers we buy from. You might want to speak to some of the "low-baller" roasters out there about this as well. There is definitely a lot of fat to cut in the industry in general, however at JC we operate on a pretty lean budget. I mean just look at our abs.
2)We have not given ourselves raises in 2007. This at a time when we, especially those who have families to support, are not making enough to function on single incomes in Madison. We are already working jobs that would pay us much more elsewhere, but we are committed to a more equitable model.
The point is that I realize that we are not "solving" the problem of poverty in grower communities here, but we are trying to build a better model of trade that addresses the inequalities that you outline. The balance of what we pay for coffee and what we pay our co-op workers is a tight one. On one hand we want to make sure we pay growers as much as we possibly can. On the other, we need to attempt to give our people a decent living. At this point we are virtually deferring taking more cash home so that we can raise what we pay to growers. And we do raise that price every year.
If we fall into paying sub-standard wages and benefits here in Madison, we are not truly doing fair trade.
-Matt
great exploration
I am definitely impressed with your patience and articulation in the responses to the above questions made by anon. It definitely shows that you are much more than knowledgeable about the Fair Trade model, but equally passionate, not necessarily about its employment, but the outcome. Although the questions made by anon. have indeed sparked a deeper investigation into the dogma of fair trade, of which I definitely have learned more about -- and without doubt there would be no innovation. I feel that those comments are made trying to find a problem rather than a solution within the system Just Coffee follows (your own individual commodity chain that identifies with Fair Trade principles but doesn't necessarily subscribe to the dogma). Furthermore, the approach this investigation is taking follows an economic basis (income income income), one which although is necessary for transparency and subsistence aspects, does not entirely implicate or dictate the standards of living of the cooperative community they enjoy(or of you). The original emphasis of the Fair Trade network isn't designed as an escape route from poverty, but as an opportunity to create social development not only through capital, but through the relationship of the consumer/intermediary. In focusing on the financial component of this trade, aren't we ignoring the benefits that are external to income -- benefits resulting from the established relationship and delegations between communities. Still, its true that without the price premiums offered by Fair Trade networks, the social projects could not be realized, however, as was pointed out earlier, just by increasing that premium doesn't necessarily result in a more just and efficient network.
Lastly, Fair Trade is an agro-export market, and without the necessary connection and involvement of social responsibility, it is subject to the same market fluctuations and crises that have plagued the neo-liberal development strategies of export diversification. This is potentially where Fair Trade is headed with an increasingly larger group of suppliers attracted to its capital benefits and the standardization of certification procedures opening up the 'fair' to the 'free'. As such, focus should be centred on the creation of partnership identification and social trust and the creation of alternatives to this fickle export model. The key ingredient to truly 'fair' trade may not be price premiums and where they end up, but that supplier information still reaches consumers beyond the simple shelf explanation solely telling you that your coffee is Fairtrade organic Guatemalan and distributed by (any name here).
micah
Transfair/FLO the real problem
First, I want to say that I have come to have the utmost respect for Just Coffee through this discussion. It is obvious that they embrace the contradictions of fair trade, yet strive for a system that betters the lives of the farmers. I feel that the conversation above has led us to ask the question. Where do we go from here? It is obvious that the word "Fair" is failing the movement. When we have figures like Paul Rice spearheading the Fair Trade movement in a way that pushes the label in a manner in which it ignores the farmers it supposedly supports. How can Just Coffee change the system? Or is "Fair Trade" a lost cause and we should move onto a different model?
The next question that I have has to do with farmer pricing. Why is it that an international organization sets the price for the fair trade model. A farmer in Mexico has a very different set of needs then one in Kenya. How do we participate in a system where the farmers are dictating the price per pound they need in order to make a living wage? Can we expect a consumer to negotiate the fact that pricing is not set on quality alone? To make this problem even worse, doesn't it seem a little silly that minimum price is set in accordance to the dollar? It must be really hurting the bottom line of farmers where the price per pound is going down because the USD is not worth what it once was. Is there any system where a partnership between farmer and roaster can exist that the success of both is not a contradiction?
thanks, i have enjoyed this conversation quite a bit.
J-ROD
RE: Transfair/FLO the real problem
Any commodity exchange involving a wide range of actors needs some sort of stability. The point behind third-party certifications and monitoring/determining of price is that these organizations should have no interest in the success of one actor over another, therefore diluting power hegemonies that could dominate a market. Furthermore, for any commodity (even if its a 'fair' food) price variability and fluctuations could drive actors from the market due to uncertainty behind price determination: consumers like stable prices and other actors find it more efficient. And you must remember, the actual quality of the coffee is what commands a significant price, the premiums offered are supposed to socially benefit the farmer and are offered (at the supplying firm's discretion) to further build the value of the coffee to the consumer.
This is the integral component, the social valuation. Some firms (like Just Coffee) vary their premium offered to the farmer to meet the farmer's needs, but they do not change the final price of the commodity and decide that they can internalize the costs. This is one approach and by far one of the most responsive to a farmer's values. However, most firms don't have this relationship with their supplier and so the premiums offered should be set by a floor/minimum price if the firms want to be considered part of this specialty market. Fairtrade stresses social involvement and inclusion in the pricing of a commodity. The fact that firms vary their approach to how they consider social-justice is not a fault of the system.
It is true the minimum 'fair' price isn't meeting farmers needs and is a factor that needs to be addressed. Saying that it is a contradiction within the current fairtrade system or that fairtrade is a lost cause is untrue. The model hasn't changed, its employment has due to its attractiveness in the global market. Like anything in this world, fairtrade is evolving from numerous influences. What needs to be ensured is that through these transformations the principles behind fairtrade are not lost. Individual firms like Just Coffee address these issues from a 'fair' standpoint: equality throughout the system. And, as such, are changing the system and assuring the success of both the farmer and the roaster. In fairtrade, this is accomplished by emphasizing connections as relationships: it isn't that these connections are made, but how and why they are made. As an explanation, consider a chain involving a transnational corporation. That corporation will buy from a certified fairtrade supplier such as a NGO that actually focuses on working with and in the farmers' community. The corporation will then sell their coffee to the consumer. The connections are made and an 'equitable' chain is preserved, however, beyond purchasing the corporation has no interaction with the growers. They are like a benevolent uncle, simply providing the capital and a market to the network, avoiding the actual social responsibility which falls to the NGO. This connection lacks the 'how' and the 'why'.
For the idealized fairtrade network, it is critical that the product reaches the consumer embedded with information and relationships, as such, the "example" product and chain explored above does not meet this expectation. Hope this helps and answers some questions.
- micah
The Problems of FLO/Transfair
I want to come back to the problem of third party certification, because i think more then anything it is what this conversation has been about. FLO has failed its directive as an NGO, by not raising the Fair Trade pricing from its 1989 levels. It makes sense that this would happen as the stakeholders in FLO are northern coffee importers who have a financial stake in keeping their own margins as high as possible. This problem is expounded by larger transnationals coming into the fair trade market, and purchasing large quantities of fair trade coffee. If FLO is to have merit in its existence then they need to have a fair representation from the producers. Second, Transfair USA takes the poor job that FLO has done and bastardized the system to an even greater extent. They have no transparency, they play cover for companies like Coke and Starbucks that have horrible labor relations. Yet Paul Rice is quoted as saying that companies like Starbucks are much more important to the movement then movement based companies like Just Coffee. For Transfair it is all about expanding the label. It envelopes the worst of market based movement, in allowing the consumer to clear his conscience while the companies make a larger profit. What can we do to change Fair Trade? What is being done to make these third party certifiers more accountable?
J-Rod (ripping off Dan Jaffee)
Outsourcing is the best option
Matt-
Toll roasters charge between $0.50 and $1.00 to roast and package coffee. You should outsource this job, close your facility, and return the difference to the farmers.
If you claim to be in business to get more money back to the producer, then how do you possibly justify your inefficient small-scale operation?
Outsourcing is not a dirty word. Consider it.
- Your Amigo
I just came across this
I just came across this image of Community Agroecology Netowrk's "fair trade direct" supply chain, which keeps the profitable roasting stage of the supply chain in the coffee-producing country.
Click on the image for more info.
-kev
Lordy, y'all are good
I cannot keep up with you all!
J-rod, as you know we have had many frustrations with FLO and TFUSA. As Micah points out, third party certification plays its most important role when that 3rd party has no bias in the commodity chain. There is a very good argument, as you spell out, that the FLO system does have a bias now. However, I still believe that everyone there is trying to do right by the farmers, I just think the vision has morphed over the years and that it is, in many ways, no longer what we are doing over here at JC. I do think big businesses have too much power in the system now. D. Jaffee, Food First, and many others have outlined this thoroughly.
Our approach until recently was sort of like a "cage match" mentality in trying to claim or reclaim what fair trade should be. Now we are trying to simply forge ahead with a "mission-based" approach that only resembles the "market-based" approach in very general ways-- we want to help create the system that we think should be in place. The real divide between us and FLO is that we seek to create a new system where FLO/TFUSA, IMHO, is seeking to reform a piece of the old one-- the same one that we all saw as the problem to begin with. As much as I don't agree with the "volume as its own end" approach, I recognize that volume is a key to success. However, I think it can only be a means and that the end has to be a new and better way of trade. And even though we are focusing on our own vision as opposed to spending a lot of our time fighting to change that of another, I still think these debates have to happen within our movement. It is healthy even if sometimes uncomfortable.
I agree with Micah in that we should not throw out the baby with the bathwater because there are problems in FT. We have struggled with all of this, our own shortcomings as well as those we see in the FLO system, and we continue to identify with fair trade. I honestly have seen FLO taking steps to include growers more in the mix of their decision-making, although I think they have a long way to go. I will put up stories tomorrow about something cool FLO has done recently (another small price raise for coffee farmers) as well as a problematic development just sent our way by producers in Peru.
Heavy Kev, the CAN model looks cool. I am skeptical that coffee can be roasted in producing countries and make it into the cups of US coffee drinkers without sacrificing much quality. Quality, as you all know, has been the point of attack that conventional roasters and importers have taken against FT in the past and all of us have spent a lot of time debunking it and perfecting our coffees. I would be interested to hear how CAN deals with this because ideally producers should keep as much value-added in their communities as possible. Of course then we'd need to find other jobs, but we'll deal with that when it happens!
A new company called Pachamama Coffee is doing something similar to the CAN model. It is a producer-owned co-op coffee company. However, the co-op pays a US roaster to roast the beans instead of doing the roasting in the grower community. This is a hell of an innovation and I am bummed that we did not somehow think of it first! We know many of the co-ops involved, so I am anxious to hear how it is working on the ground.
Keep the comments flying...
-Matt
-Matt
A lot of Talk about Problems
But i think the real question i have from reading this whole process is where does Just Coffee go from here? How can we create meaningful relationships between producer and roaster. What is being done to hold Transfair USA accountable.
thanks,
Jonny
CAN
CAN looks like an interesting model and brings up the question of who gets to do the value added. Recently a bunch of folks on a PBS show were discussing whether "globalization" was working for their country. (They were students at some econ school and their professors were watching!) The most compelling moment was when they were asked what they would change and the guy from Africa quickly said that he wanted to be able to add value to their ag products before they left the country.
This is an age-old problem. I recall that many developing nations were pretty much told to stick with raw goods, and that they could not even get World Bank or other development loans if they were for value-added projects such as coffee roasters.
It's interesting that pro-family-farm advocates in Wisconsin are teaching farmers how to do value-added on premises (through commercial kitchens and selling jam, etc, at farm markets or direct to consumer).
So I think the idea of coffee farmers roasting is an interesting one. Assuming that quality control is the same as a US roaster, the impediment then is freshness, and in the CAN model apparently they mail direct from El Salvador or wherever.
Besides the fact that it probably sucks in terms of carbon footprint, FedEx's world-wide penetration really means that I can buy roasted coffee from the coffee farmer via mail. An intriguing idea, though not probably financially viable now. But it sure does put the consumer in charge and have fewer degrees of separation.
How can coffee farmers benefit more from taking in more of the value addition? Having their own sorters? Their own trucks? What else?
I see CAN is a non-profit. I'd like to see their price/commodity chain breakdown as well... if they get grants and other support from the university, then they can't be compared apples to apples with JC who pays their employees 100% out of sales revenue.
Thanks for the link to this. I hope to pull material from here and from CAN's handbook as I work on the next Orientation Manual for the Fair Trade University! http://justcoffee.coop/ftu
-Carol
Fair trade is crap
What baffles me is this, when it comes to BMW selling its cars, we do not use word fair trade. So, why should the issue of fair trade arise when it comes to third world products? In my view, the whole issue of fair trade is nothing but institutionalised beggary. Why should a farmer beg for a fair price when BMW does not? Thats the issue.
Step away from the Zima
Hey There:
BMWs? Beggary?
Well, there are some pretty good arguments out there to support "fair trade as crap" assertions. The certification is suspect at some levels, the minimum prices are too low, the model is being influenced by Wal-Mart and Coca-Cola, and there has been a systematic lack of farmer participation in creating standards. We could go on and on.
Your comments, however, are non-sensical, half-formed, and quite frankly bizarre. My advice to you would be to sleep off your wine coolers, do some reading so that you know what you are talking about, and then write back at a time (probably not 2:00 am) when you can make a rational point.
Until then, thanks for sharing...
-Matt