A makeshift tent in a roadside camp of jobless coffee workers near Matagalpa, northern Nicaragua. Two children had recently died here. "We have been coffee workers all our lives, and have reached a great crisis now. We are ashamed to be in this situation," said Bertha Salinas, deputy president of the camp. In mid-2001, the lack of work on coffee plantations forced thousands to form similar camps. Many have lost their homes as well as their jobs, with some migrating to urban areas in a desperate attempt to find food, work and shelter.

What's causing the coffee crisis?

Put simply, there's too much coffee in the world. That's partly because for a few years now, the coffee crop of the world's biggest producer, Brazil, has been spared from frost. The other main reason is that countries in the South, such as Vietnam, have tried to boost their earnings by growing more crops for export. They've been encouraged to do this by international financial institutions, such as the International Monetary Fund and the World Bank.

But demand for coffee has not increased at the same rate as supply - causing its price on the world market to plummet to all-time lows in real terms. Ten years ago, the world coffee economy was worth $30 billion, of which producers received $12 billion. In 2001, it's estimated to be worth $55 billion, with producers receiving only $7 billion.

"Fair trade is not just a chance to get higher incomes, but also to have contact with consumers... We can change the relationship between consumers and producers, and the relationship between prices, so that it is a relation that allows us to live." Porfirio Zepeda, Agricultural Co-operative Union Miraflor, Estelí

A fair price

One solution for this crisis is to change the rules governing trade to give producers a fairer deal. As individual consumers, we may not have the power to transform the international trading system overnight. But we can choose to buy the fair trade products that are on sale in our shops and supermarkets.

When producers sell their coffee to a fair trade buyer, they are guaranteed a minimum payment - no matter how far the price falls on the world market. And that gives them some financial stability, helping them to sustain their families and plan for the future.

A fair deal for Nicaraguan producers

Coffee

In Nicaragua, more and more producers are opting to sell their coffee through fair trade schemes. The amount of Nicaraguan coffee imported into Europe under these schemes has grown steadily, rising from 707 tons in 1996 to 1,120 tons in 2000. Most of this coffee is exported through Nicaraguan marketing co-operatives, which operate as a vital link between producers and consumers.

These co-ops have expanded as fair trade sales have risen. There are now four main organisations, including Matagalpa-based Cecocafen. Up until 1999, Cecocafen was owned by just four people, but it now belongs to 1,200 farmers organised into 14 unions of co-operatives (UCA).

One of these unions is UCA Miraflor, which occupies 206 km2 of protected land near Esteli. It has been exporting organic fair trade coffee to the US since 1999 and to the UK since May 2001. Manager Porfirio Zepeda explains why fair trade matters: "Selling our coffee through fair trade has given the farmers of Miraflor a way of escaping poverty. The income guarantee which fair trade offers has enabled us to avoid the constant threat of low prices. Fair trade is allowing us to plan ahead and to substantially improve the conditions of production."

Protecting the environment

Among Miraflor's 13 co-ops, production is shifting rapidly towards organic methods and diversification. Crops include vegetables, cereals and coffee, with coffee grown under the forest canopy. Farmers are eager to earn extra income by selling their coffee to fair trade buyers - the best organic coffee fetches $140 per 100lbs compared with just $40 for non-organic, non fair-trade coffee. Of the 300 farms growing coffee, 80 are already organic, and more are planning to change over.

According to farmers from one Miraflor co-operative, which earns 80 percent of its income from coffee, the opportunity to participate in fair trade and organic production is encouraging young people to stay and work on the land rather than going abroad to look for a job. "It gives the youngsters a chance to make a bit of cash and an incentive to stay," said one.

For more details about Miraflor go to www.miraflor-uca.com >>

Why fair trade coffee costs more

The fair trade price for coffee includes what is called a social premium - usually five US cents per pound. With certified organic coffee, there is an additional premium of 15 cents per pound. Producers use the premium to improve their living and working conditions. In Nicaragua, that premium is usually paid to the co-operatives rather than directly to the producers. This is how the extra money has been invested:

UCPCO: This union of organic coffee producers has spent $11,000 on a truck and $50,000 on a dry processing plant, since coffee that has reached a later stage in the production process sells for more. The co-op plans to invest more in the plant, as well as to set up an office and establish health and educational programmes.

PRODECOOP: Members of this marketing organisation, which is owned by 45 co-ops, also decided to invest part of their premium in equipment for drying coffee. Other initiatives include increasing organic production and improving overall quality. As Elisa Huete said: "The end result we're looking for is to increase the standard of living of the producers."

A British volunteer helps local farmers plant organic coffee, UCA Miraflor. Photo: Hannah durrant NSC study tour member Peter Harrison clears the furrows with sesame farmer Isidro Lopez Calderon and his son henry in El Porvenir, Achuapa. Photo: Michael Trevallion

Sesame oil

Since the mid-1990s, the Juan Francisco Paz Silva Co-operative in Achuapa has been selling sesame oil to the Body Shop for use in its products. The Body Shop operates a community trade programme in accordance with fair trade principles, and the price Achuapa farmers receive for their oil is negotiated on the basis of their production costs. Since 1993, orders have leapt from around two tons a year to 72 tons a year, indicating the success of the project for both sides.

Londoner Anna Herrmann spent a fortnight living and working in El Porvenir, Achuapa, with sesame farmers Marcelo and Marie Elsa Lopez and their family as a participant on a fair trade study tour run by the Nicaragua Solidarity Campaign (NSC). Here she describes how selling to the Body Shop has brought benefits to the community.

"Life for a sesame farmer in El Porvenir is hard. In July and August, the working day starts at around 5am, and consists of relentless hours under the baking hot sun, ploughing the hilly land with oxen and sowing seeds. And this is for the lucky ones, like the Lopez family, who iare members of the Juan Francisco Paz Silva Co-operative. They have their own land and oxen, enabling them to support and feed their family. Others without can only rely on community support and seasonal employment. The poverty in El Porvenir takes some adjusting to. Not that the farmers complain -- though life may be hard now, it is still much better than it was before.

As the meeting of farmers and NSC study tour members gets underway in the early afternoon heat, stories emerge of greedy middlemen back in the early 1990s. Stories of low market prices and scams by commercial credit organisations charging high interest. Stories of drought and of having to pay taxes to travel to Granada to sell sesame there. Stories about times when the farmers were forced to trade sacks of sesame seeds for sacks of corn at a loss, just so their families could eat. Stories of a continual cycle of debt and survival. And then comes the story of change - change that began with the setting up of a community co-operative shop in Achuapa, offering credit and basic grains at low prices. Ten years later, it has grown into a co-operative of 132 members who produce high-quality sesame oil for export to the Body Shop at fair trade prices.

A Christian Aid-funded mechanical press is enabling much higher levels of production, and the fair trade prices offered by the Body Shop have transformed the lives of farmers in the co-op. Not only can they get credit to invest in essential farming equipment, but the co-op also provides training, a shop, a natural health clinic for homeopathic treatment and a model farm that employs local people and experiments with organic farming and diversification.

So now the Lopez family welcome us to share their home, their hard work and their lives. They have a sense of pride in what they have achieved. Yet they are also indebted to the Body Shop, because there is no doubt that, without them, the Achuapa farmers would be practically giving away their sesame. But this vision isn’t just for themselves but for all members of their community and other farmers throughout the country. It's not a vision of vast wealth and material goods, but of running water, tiled floors, oxen, crop diversity and education for their children. Supporting fair trade is clearly one way in which we can help farmers in the South realise that vision."

Making fair trade work for all

Coffee is only one commodity that has been affected by global free trade, and the volatility of international financial markets. Southern-based producers of cocoa, bananas, tea and sugar, for example, are also suffering the negative effects of globalisation. And as with coffee, fair trade offers an alternative.

Sales figures show that more and more British consumers are keen to support producers by buying fair trade products:

In 1994, when the Fairtrade Foundation launched its Fairtrade mark, the value of fair trade sales was £2.75 million; now, it's approaching £33 million - meaning that £1 is spend on fair trade products each second.

While sales of fair trade products have shown impressive growth, the news isn’t all good. Sales tend to rise sharply in the first few years after a product first appears. But as the market matures, sales flatten out. And this is what has happened with fair trade coffee. In practice, it means that not all producers who want to sell their coffee under the fair trade system can do so. The solution lies in increasing the market share of fair trade products by encouraging more consumers to buy them: a major goal for Europe’s fair trade organisations.

The Fairtrade Foundation

Set up in 1994, the Fairtrade Foundation has awarded its consumer label, the Fairtrade Mark, to more than 90 products that meet internationally recognised standards of fair trade. The Foundation also runs campaigns to raise consumer awareness about fair trade, including the annual Fairtrade Fortnight. The theme for 2002 (March 4-17) is linking consumers and producers.

Further information: Tel: 020 7405 5942
mail@fairtrade.org.uk
www.fairtrade.org.uk

Fairtrade Labelling Organisations International (FLO)

The FLO was set up in April 1997 in Germany to co-ordinate the work of national labelling initiatives, such as the Fairtrade Foundation, and to improve the efficiency of monitoring programmes. It is planning to introduce a single international Fairtrade label in 2002. Other projects include increasing producer participation in the development of certification and marketing policies.

Further information: Tel: +49 228 949 230
Website: www.fairtrade.net

This briefing was published in 2002 by Nicaragua Solidarity Campaign.