This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Fair-Trade Coffee Wins Over Starbucks, Keurig, but Fails Coffee Producers

NEW YORK (TheStreet) -- Back in the 1960s, the concept of fair-trade coffee was confined to do-gooder churches and charity shops, which believed that the poor would benefit from it. Today, fair trade wears the garb of an opportunistic culture that several corporate bellwethers, including Starbucks (SBUX - Get Report), Whole Foods Market (WFM - Get Report) and Keurig Green Mountain(GMCR) are embracing.

The strategic positioning of fair-trade-certified products has catalyzed a wave of stupendous marketing success that has big-league retailers jostling one another to get a piece of the pie. There's only one problem. The fair-trade program, originally designed to help 1.24 million farmers around the world, now fails to provide them any deliverance from the shackles of poverty.

For every dollar spent by an American consumer to purchase a fair-trade product, only 3 cents is transferred to the producer in the country it came from. That is the calculation of Senegalese development economist and former Fair Trade International employee Ndongo Samba Sylla, in his book Fair Trade Scandal: Marketing Poverty to Benefit the Rich. The remaining 97 cents either flows into the pockets of the big-brand retailers or ends up in the hands of the wrong country.

Apple Will Murder Microsoft and Bury It With BlackBerry's Corpse

We Could Be Minutes, Hours, Days, Weeks Away From a Huge Pandora Announcement

40% Would Quit Their Jobs for Better Health Care

10 Best Cars for the Great American Road Trip

While fair-trade practices in the U.S. have expanded to accommodate a suite of products, including chocolate, tea, sugar, flowers, spices, mangoes and wine, coffee currently accounts for 80% of all fair-trade premiums, with a sales volume of $30.8 million. These premiums are supposed to be transferred directly to farmers. But that clearly isn't happening.

A groundbreaking body of research evidence from a U.K. government-sponsored study conducted by SOAS, University of London, (formerly known as the School of Oriental and African Studies) found that coffee growers in Ethiopia and Uganda, which are among the world's leading coffee export markets, continued to earn meager wages in spite of fair-trade certified exports. The research also found that these agricultural workers were more impoverished than producers who worked in sites that were not fair-trade certified.

Producers in countries like Mexico are getting record lows of 56 cents for every pound of coffee they export. Jeremy Simer of Fair Trade USA says that these farmers in some cases receive a scanty 20 to 30 cents per pound of coffee.

Given the increased efforts at marketing fair-trade coffee, revenue has escalated significantly in recent years. Sales of products carrying fair-trade labels in key markets across the U.K. and Western Europe rose from $1.1 billion to $6.6 billion.

In the U.S., products that won Fair Trade USA's seal of approval for meeting requisite ethical, environmental and sustainability standards, saw a sales jump of 75% last year over the first quarter of 2011, according to a report by SPINS, a retail research firm based in Illinois. TheStreet's Gregg Greenberg speaks with the CEO of Jammin Java:

WATCH: More feature videos on TheStreet TV

Mary Jo Cook, a chief impact officer at Fair Trade USA, emphasizes that the entry of big brands into the fair-trade market has been attributable to increased consumer interest and the ensuing sales jump.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SBUX $95.07 0.00%
WFM $51.93 0.00%
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs