Fair Trade - Colombian Coffeepdf

Fair Trade ‐ Colombian Coffee Growers Case Study
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DOES FAIR TRADE HELP PRODUCERS FROM THE
DEVELOPING WORLD, WHO SELL THEIR PRODUCTS TO
THE DEVELOPED WORLD?
The case of Colombian Coffee producers.
Researcher: Juan Antonio Beltran Paez
2026PHTR0608
Supervisor: Dr. Bernadette Warner
London School of Commerce - University of Wales
28.05.2010
Words Count: 13.400
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AKNOWLEDGMENTS
A sincere gratitude is expressed to all the people who contributed to this study in the UK
and in Colombia. An enormous gratitude to the members of ASPROCAFE, Specialty
coffees association of GENOVA, APECAFE, Expocafe SA, FLO Colombia and all the
producers who kindly had invested their time collaborating in the research. My thanks
also go to my supervisor Dr. Bernadette Warner for her constant interest in the
research. Finally, wish to thank all the people who had expressed motivation when my
health was not the best, especially my family and friends.
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Table of Contents

AKNOWLEDGMENTS ..................................................................................................................................... 3
Abbreviations ................................................................................................................................................ 7
CHAPTER 1: INTRODUCTION ........................................................................................................................ 8
1.1. Back ground of the research ......................................................................................................... 8
1.2. Significance of the problem ........................................................................................................ 11
1.3. Statement of the purpose ........................................................................................................... 12
1.4. Aims and Objectives .................................................................................................................... 12
1.5. Research Questions: ................................................................................................................... 13
CHAPTER 2: LITERATURE REVIEW ............................................................................................................... 14
2.1. Trade in brief ............................................................................................................................... 14
2.2. The GATT and The WTO .............................................................................................................. 16
2.3. Globalization ............................................................................................................................... 22
2.4. An overview of some agricultural products and its trade........................................................... 26
2.5. Coffee trade ................................................................................................................................ 29
2.6. Fair trade ..................................................................................................................................... 33
2.7. Fairtrade and Coffee ................................................................................................................... 40
2.8. Colombian Coffee market ........................................................................................................... 41
CHAPTER 3: METHODOLOGY ...................................................................................................................... 43
3.1. Reliability and Validity, Research Design and Data Collection ..................................................... 43
3.2. LIMITATIONS ............................................................................................................................... 45
CHAPTER 4: DATA ANAYSIS AND FINDINGS ................................................................................................ 47
4,1, Overview ....................................................................................................................................... 47
4.2. The Developing countries producers’ awareness about the ....................................................... 50
Organizations which rule the trade globally. .......................................................................................... 50
4.3. Joining Fair Trade and the interest of producers in doing so. .................................................... 51
4.4. Developing countries producers’ benefits gained through fair trade. ........................................ 55
4.5. Colombian Fair trade coffee producers’ benefits ........................................................................ 58
4.6. The motivation of Colombian coffee producers to engage with fair trade. ................................ 63
4.7. The role of the Colombian government in monitoring the fair trade in ...................................... 67
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the coffee production. ............................................................................................................................ 67
CHAPTER 5: CONCLUSIONS ......................................................................................................................... 69
CHAPTER 6: RECOMENDATIONS ................................................................................................................. 71
REFERENCES ................................................................................................................................................ 72
BIBLIOGRAPHY ............................................................................................................................................ 77

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List of Tables and Graphs
Table Description
1 The most traded agricultural commodities

2 Coffee supply selected years
3 Coffee imports by main importing countries selected years
4 Fair trade Movement Generations
5 FT coffee volume sales per country 2007 and 2008
6 Countries which produce Fair Trade
7 Characteristics of the three study areas associations
8 FT certification process
9 FT premium received by producers globally 2007 – 2008
10 Different loans offered by INGRUMA
Graph Description
1 Indices of real prices of agricultural commodities 1980 – 2000

2 International coffee prices 1998 – 2001
3 International coffee prices 1980 – 2007
4 World supermarkets selling FT products 2007
5 World supermarkets selling FT products 2007
6 Producers awareness about the organizations which rule the trade globally
7 Percentage of awareness about organizations which rule the trade globally –
interviewees in three coffee associations
8 Producers awareness and interest about the FT system – Interviewees in
three coffee associations
9 Total percentage awareness and interest about the FT system
10 Percentage of FT benefits gained by producers in INGRUMA and APECAFE
samples
11 Total percentage producers by specialty among the sample
12 Percentage of coffee producers by specialty – Interviewees in three coffee
associations
13 Producers with coffee as first activity and producers that would like to change
activity – Interviewees in three coffee associations
14 Total percentage producers with coffee as first activity and producers that
would like to change activity
15 Benefits that have motivated producers to engage with FT
16 Producers thought about Government help
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Abbreviations
DAWS Dutch Association of World-shops
EFTA European Fair trade Association
EU European Union
FAO Food and Agriculture Organization
FDI Foreign Direct Investment
FLO Fair trade Labeling Organization
FLO-CERT Fair trade Labeling Organization Certifier
FT Fair Trade
GATT General Agreement on Tariffs and Trade
ICA International Coffee Agreement
IICA (Instituto Interamericano de cooperacion para la agricultura) Interamerican
Institute for the Agricultural Cooperation
IMF International Monetary Found
IT Information Technology
MNC Multinational Corporations
MT Metric Tons
NFCG National federation of Colombian Coffee Growers
PAA Protocol of provisional Application on the GATT
TNC Transnational Corporations
WCSDG World Commission on the Social Dimension of Globalization
WTO World Trade Organization
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CHAPTER 1: INTRODUCTION
1.1. Back ground of the research
“Trade justice is a truly meaningful way for developed countries to show commitment to bringing
about an end to poverty’… ‘Sometimes it falls on a generation to be great. You can be that
great generation. Let your generation blossom”
Nelson Mandela, Trafalgar Square London, February 2005
“Trade is the oldest form of exchange known to man. From ancient times it was the
most natural form of daily co-operation between peoples, whether it be in the smallest
village or the bustling market places of Athens, Babylon or Rome. The market place is
not the invention of some academic economist; it is the daily habit of the people.”
Margaret Thatcher, Mar 3Th 1994, London
Speech to the World Trade after GATT Conference
The importance of imports and exports of products in general and especially agricultural
products has increased considerably during the last 40 years (www.fao.org). After the
World War II, food was difficult to obtain, and people had to reduce its waste
considering that much food was imported. Governments were advertising “Food is a
weapon, Don’t waste it! Buy wisely, cook carefully, eat it all” (D. Somerville, 2008). On
the other hand, due to the fact of climate conditions and different agricultural products’
production exigencies, countries had started trading aiming to fill up the internal
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consumption of these agricultural products which were nearly impossible to produce
internally.
Moreover, the emergence of the global economy and the concept of ‘economic
globalisation’ made that trade became easier and essential. Countries and people could
be more integrated due to the considerably reduction in costs of transportation,
communication, and the breaking down of artificial barriers which has facilitated the flow
of goods, capital, knowledge and people across borders (P Van Den Bossche, 2005).
Some organisations had to be created to rule and measure the trade between countries,
especially when Southern countries (Developing countries) have claim that they were
not obtaining the same benefits of trade in comparison with the Northern countries
(Developed countries). Afterwards, during the 40’s until the present, some organisations
and institutions such as GATT, The international Monetary Fund (IMF), The World Bank
and subsequently the WTO, among others, have started to be the responsible in carry
on the matters of the world trade activity.
Then, people have started to talk about a fair trade, especially for these countries where
the people have less economic advantages and the poverty is evident. To avoid that
phrase “The poor stay poor, the rich get rich” (G Fridell, 2007) some people thoughts
were concerning about How to make the trade fair for this producers in the developing
countries. So, it has been created a frame about a just trade through the idea of The
Fair Trade. The concept of Fair trade exists since 40 years ago, but just during the late
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80’s it has started to get off the ground (Fair trade foundation, 2009). The main idea of
the fair trade was to make a better deal when the small-holders producers all around the
world trade their goods.
One case of trade of agricultural goods is the one of the Coffee. The coffee production
is a big market in the world. People consume coffee almost all around the planet. It is
produced just in some regions of the world due to the fact of the weather conditions and
its growth requirements. There is the coincidence that the most of the coffee which is
produced in the world is produced by developing countries, such as Brazil, Colombia,
Vietnam, Uganda and so on. To make it clear, the real figures are that two thirds of the
world’s coffee growers live in absolute poverty (M Lavtinoff & J. Madeley, 2007). That is
why the Fair Trade concept applies in the coffee market case. The coffee farmers in
these countries are not in the best economic conditions and they cannot have a decent
living standard, instead they constantly are in troubles owing to the fact that they get
into debts and what its worse is that the price of the coffee in the market is always
changing. So, the Fair trade in this case proposes a minimum price per kilo of coffee
which is not going to change if the market price changes. It gives more stability and
even more security to the coffee producers. Moreover, the Fair Trade offers a social
premium that is a certain amount of money which is going to be invested in the
community of these producers.
It is more or less what the Fair trade concept and movement is attempting to do, aiming
to give more benefits to those producers which are especially in the developing world.
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The world is changing every day, and we should change our way of look at it. It is easier
if we try to stay together and we consider that there are many billions of people in this
planet.
The main focus of this paper is to research about the facts of the Fair Trade and its real
effects on the small holder producers. The case study is based on Colombian coffee
producers and the researcher will look at the extent of the awareness of producers
about the existence and the role of the world trade institutions. Secondly, do research
into the requirements and how producers can join fair trade organizations, and how
interested do they are in doing so. Moreover, the research will focus also on the benefits
which fair trade bring to producers in the developing countries and to the Colombian
coffee producers; also research into the motivation of these coffee producers to engage
with the fair trade. Finally, an important aspect is to see if the Colombian government
has any role in monitoring the fair trade activities among producers.
1.2. Significance of the problem
Prices of agriculture products always fluctuate in the world market. This situation is a
disadvantage more for small producers than for Multinationals or big farmers. MNC and
big farmers have more power in the market so the ones getting into troubles are the
small-holders especially in the developing countries. When prices are downward small
producers can not cover the cost of their production. As a consequence, they go into
debt and they cannot improve their quality of life and their opportunities such as
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education or health. If small-holders in developing countries get better paid, they will
cover the cost of production, afterwards they won’t get into debt. As a result, producers
could improve their quality of life and opportunities conducing to a reduction of the
population of the world living in the poverty line. Thus, there could be more
development, equality and more justice.
1.3. Statement of the purpose
The main purpose of this research is to investigate the situation of the small-holder
agriculture producers in the developing countries and the possible advantages which
they could gain if there were a better trade. The research is a case study of three
Colombian coffee producers’ organizations.
1.4. Aims and Objectives
The main purpose of this study is to determine at what extent is the Fair trade helping
the agriculture producers from developing countries which sell their products in the
developed countries.
Objectives
- Determine if the small-holder farmers in the developing countries are aware
about the world trade institutions.
- Investigate how farmers from developing countries can join organizations such
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as Fair trade in order to gain benefits and more advantages from their activity of
production.
- Research about the existing knowledge and awareness of the existence of this
kind of organizations among the farmers from the developing countries.
- Determine if the FT system is a real advantage for small coffee producers in
Colombia.
1.5. Research Questions:

1. To what extent are producers in Developing countries aware of the role of the world
trade regulation institutions?
2. How producers can join organizations such as Fair Trade, aiming to gain benefits in
their activities of production and selling? And How interested do they are about it?
3. To what extent do producers in the Developing world benefit from Fair Trade?
4. To what extent do Colombian coffee producers benefit from “Fair Trade” with partners
in the Developed world?
5. What factors motivate Colombian coffee producers to engage with Fair Trade?
6. What is the role of the Colombian government in monitoring fair trade practices
among coffee producers?
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CHAPTER 2: LITERATURE REVIEW
2.1. Trade in brief
A definition of trade is “the activity of buying and selling, or exchanging, goods and/or
services between people or countries“.
“The country's trade in manufactured goods has expanded in the last ten years. Seventy
per cent of the country's trade is with Europe” (Cambridge online dictionary).
At the Beginning of the new century, the global trade in goods and services figures were
more than US$7 trillion. Also the flows of the global trade are dominated by the three
major and stronger regions of the global economy which is called “Triad”: Europe,
North America and East Asia. The rest of the world accounts just a small percentage of
the global trade reaching a 15% of its total (B. Hoekman and M. Kostecki, 2001). Only
the European Union (EU) and the North American trade accounts for the 52% of the
total world trade. A figure which can give us a better idea of what is happening on the
global trade is that all the 48 least-developed countries accounted for just 0.5 percent of
the global trade. Sub Asia and Sub-Saharan Africa each represent over one percent of
the global trade (B. Hoekman and M. Kostecki, 2001).
The World Bank world development indicators show that the 40% least developed
countries (which is home of 10% of the world’s Citizen) have seen their share of world
exports decline during the last twenty years. The USA and EU contain roughly the same
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number of population and account for nearly the 50% of world exports (C. Shiel & S.
Mann, 2007). The last figures are similar to the above mentioned figures. It ratifies that
the developed countries increase their economy year by year with an important
percentage more than the developing countries. In contrast, to have an idea, during the
last 20 years, African economies have been shrinking (at a rate of about 0.8% per year
Vs a 1.6% growth rate before), while Latin America has been basically stagnant
(growing at 0.3% Vs 2.8% before). Moreover, considering the income levels, 300 years
ago, there was just a small difference on it across countries. At the Beginning of the
twenty-first century the difference across countries was 100 to 1 (M Lavtinoff & J.
Madeley, 2007).
On the other hand, the global production networks have expanded rapidly, in part due to
the rapid growth in Foreign Direct Investments (FDI) flows. A 40 percent of the US$7
trillion trade in goods and services is intra-firm, involving exchanges between affiliated
firms (B. Hoekman and M. Kostecki, 2001). For some authors, international trade is
undemocratic, especially controlled by large corporations. Near two thirds of
international trade is between Transnational Corporations (TNC‘s). TNCs are not
subject to international regulation, which is an advantage in comparison with those who
trade independently. The United Nations tried for 17 years, from 1975, to draw up a
code of conduct for the TNCs. It had to abandon the attempt. The corporations were
powerful enough to stop it (M Lavtinoff & J. Madeley, 2007)
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Moreover, the focus of trade has changed significantly. A decade ago, the majority of
the developing country exports were mainly natural resources and unskilled labour
intensive. In contrast, nowadays, in East Asia and Latin America the importance of
technology and human capital inputs increased fast (B. Hoekman and M. Kostecki,
2001).
It is not a secret that trade has always played a main role in the development of the
economy. So it is clear that these countries that most trade are the most powerful
economies (B. Hoekman and M. Kostecki, 2001). It may be due to the reasons
mentioned above which beneficiated more the developed countries than others.
2.2. The GATT and The WTO
Considering all the negative aspects of trading for producers of goods and services,
exporters and importers, and the world population’ situation at that moment, in 1947, in
the wake of the Second World War, the General Agreement on tariffs and trade (GATT)
was created seeking to lower trade barriers, but it has been the major focal point doing
so specially for industrialized country governments (B. Hoekman and M. Kostecki,
2001).
In The Bretton Woods Conference in 1944 where the International monetary fund (IMF)
and the International Bank (The World Bank) were created, the issues and problems of
trade had not been included, but they accepted and recognized the need of an
international institution for trade, which could complement the IMF and the World Bank.
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Afterwards, the initiative has started in America in December 1945 when the
government came up with the proposal to its war-time allies that through negotiations
they could develop a multilateral agreement for the reduction of tariffs on trade in goods
(P Van Den Bossche, 2005). So, in February 1946 it was created a preparatory
committee which has met first time during October in the same year in London. The
main objective of this committee was to work on the charter of an international
organisation for trade. Then, they continued their work from April to November 1947 in
Geneva (P Van Den Bossche, 2005). Unfortunately, complications did not stop arising.
By October 1947, the negotiators had reached an agreement on the GATT, but for
some countries it was impossible to agree to some sections of the GATT. It has been
especially due to the fact that these countries’ constitutional law was different. So,
looking forward to resolve this situation, on October 1947, 8 of the 23 countries which
had negotiated the GATT signed up the ‘Protocol of provisional Application of the
General Agreement on Tariffs and Trade’ (PAA). The GATT has been applied through
the PAA from 1 January 1948. The rest of the countries which has negotiated since the
beginning, soon agreed to the provisional application of the General Agreement signing
up the PAA. In conclusion, the GATT itself was never adopted by the contracting
parties, and until 1995, the provisions of the GATT 1947 were applied through the PAA
of 30 October 1947 (P Van Den Bossche, 2005).
The GATT has reached its aims in reducing tariffs on trade in goods in a successful
manner, but it was especially on industrial goods from developed countries (P Van Den
Bossche, 2005). So that, developing countries were more or less excluded from getting
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the same benefits as the Northern countries.
The system was developed through a series of trade negotiations, or rounds, held under
GATT. The first rounds were mainly dealing with tariff reductions but later negotiations
included other areas such as anti-dumping and non-tariff measures. The rounds in
Geneva 1947, Annecy 1949, Torquay 1951, Geneva 1956 and Dillon 1960-1 focused on
the reductions on tariffs. The Kennedy Round 1964-7 focused on non-tariff barriers.
Subsequently, the Tokyo round 1973-9 which has showed a lack of real consensus
among the negotiators and proved to be difficult to implement (P Van Den Bossche,
2005). The last round – the 1986-94 Uruguay Round – led to the WTO’s creation which
was much stronger than the GATT (The WTO, 2008).
Moreover, there was not enough involvement of the Southern countries in this
agreement. During the last 10 years of GATT, developing countries have tried to be fully
involved in the negotiations. Southern countries claim for a better deal when trading
agricultural goods to the developed world. From 1948 until 1997, 76 free trade
agreements were created or modified, and more than half of these came into being after
1990. The GATT Uruguay round extended international trade rules into two new
sectors: textiles and agriculture (C. Thomas, 2000). At that point, agricultural producers
could tranquilly breath, but not for too long. When the GATT apparently has finished, all
the agreements which were created before were ratified and subsequently the WTO
was created (G. Fridell, 2007).
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The WTO was established and started to be operational on 1 January 1995. It is the
Youngest of all the major international intergovernmental organisations, especially those
which rule the trade (P Van Den Bossche, 2005). As it was mentioned above, it is the
successor of the General Agreement on tariffs and trade (GATT) established on the
Wake of the Second World War (WTO, 2008). It is the only international organization
dealing with the global rules of trade between nations. Its main function is to ensure that
trade flows as smoothly, predictably and freely as possible (WTO, 2008).
Among other WTO’s functions there are administering trade agreements, Acting as a
forum for trade negotiations, Settling trade disputes, Reviewing national trade policies,
Assisting developing countries in trade policy issues, through technical assistance and
training programs, and Cooperating with other international organizations and so on
(WTO, 2008).
The objectives of the WTO are set out in the Preamble to the WTO agreement.
According to this Preamble, the parties to the WTO agreement agreed to the terms of
this agreement and the establishment of the WTO (P Van Den Bossche, 2005):
“Recognizing that their relations in the field of trade and economic
endeavor should be conducted with a view to rising standards of living,
ensuring full employment and a large and steadily growing volume of real
income and effective demand, and expanding the production of and trade
in goods and services, while allowing for the optimal use of the world’s
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resources in accordance with the objective of sustainable development,
seeking both to protect and preserve the environment and to enhance the
means for doing so in a manner consistent with their respective needs and
concerns at different levels of economic development………
Recognizing further that there is need for positive efforts designed to
ensure that developing countries, and especially the least developed
among them, secure a share in the growth in international trade
commensurate with the needs of their economic development……..”
So the objectives of the WTO are thus, the increase of standard of living, the attainment
of full employment, the growth of real income and effective demand; and the expansion
of production of, and trade in, goods and services (P Van Den Bossche, 2005).
Furthermore, it is all focused also in the preservation of the environment and the needs
of the poorest countries (P Van Den Bossche, 2005).
The membership of the WTO is quasi-universal (P Van Den Bossche, 2005). It has 153
members, accounting for over 97% of world trade. Around 25 - 30 others are negotiating
membership (WTO, 2008). It includes all the major trading powers and most developing
countries. The members of the organization represent 92% of the total of the global
population (P Van Den Bossche, 2005).
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Over three-quarters of WTO members are developing or least developed countries
which have special provisions included in the WTO agreements. For example, special
measures to increase opportunities when trading, longer periods when implementing
agreements, support focus on help them build up the infrastructure for the WTO work,
handle disputes, among others (WTO, 2008)(P Van Den Bossche, 2005).
The WTO does not have a definition for “Developing country”. Instead, members
announce whether they are developed or developing countries (P Van Den Bossche,
2005). The importance of the developing countries’ role in the WTO has increased
during the last years. This is not only because their number of members but due to the
fact that they have increased their importance in the global economy (P Van Den
Bossche, 2005).
China, Brazil, India and South Africa are the most influential and “activist” members
among the developing country members (P Van Den Bossche, 2005).
After the 2001 Doha conference, tasks were set out concerning developing countries.
Some authors call the new negotiations the Doha Development Round (WTO, 2008).
The WTO usually takes decisions through consensus with some exceptions where a
vote is called. In this case, each WTO member has one vote including developing
country members. Nevertheless, some of the developing country members feel
marginalised within the WTO decision-making process (P Van Den Bossche, 2005).
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Until today, developing countries still unhappy with the WTO taking-decision process
and still claim that the most beneficiated with the decisions is the developed world.
On the other hand, developed countries say that they are doing the best to help
developing countries in trading, taking decisions which give equal benefits for all the
WTO members. The true is that they have a long way to work hardly in make all the
global trade issues fair for every country all around the world, no matter if it is developed
or developing country. They have to remember that if we want to subsist in this world
situation, we have to work together.
2.3. Globalization
The term "globalization" began to be used more commonly in the 1980s, and it refers to
the increasing integration of economies around the world, particularly through the
movement of goods, services, and capital across borders. The term also refers to the
movement of people (labour) and knowledge (technology) across international borders.
There are also broader cultural, political, and environmental dimensions of globalization
(www.imf.org). Globalization is bringing societies that were previously economically,
politically and culturally diverse into convergence (C. Fisher & A. Lovell, 2009).
There is no doubt, that globalization has been supported and criticized and there is a
growing concern about whether globalization is a fact at all. At the same time business
leaders have also started to recognize the increased risks that globalization can bring to
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their operations. Moreover, successive battles over fair trade and poverty have kept the
ethical spotlight on the process of globalization (A. Crane & D. Matten, 2007).
The World Commission on the Social Dimension of Globalization (WCSDG) identified
the following characteristics of globalization:
- Liberalization of international trade.
- Growth of foreign direct investment (FDI) and massive cross-borders financial
flows.
- Growth of the new technology of IT and communications that makes
communication between countries easier.
- The greater ease of transporting goods and people around the world that now
makes it possible for markets to be global in scope (C. Fisher & A. Lovell, 2009).
Some authors do not agree with the liberalization of international trade. They claim that
it will beneficiate just some countries, perhaps the most strong countries. Moreover,
they recognize the disadvantages which are generated by the FDI. Most of the
developing countries attract FDI from the developed countries (The Economist, 2005).
The FDI is usually invested in developing countries by Multinational Corporations
(MNC´s). This MNC´s pitch developing countries against each other by allocating FDI to
those countries that can offer them the most favourable conditions in terms of low tax
rates, low levels of environmental regulation and restricted workers´ rights. Thus,
MNC´s are at the centre of publics´ criticism on globalization. They are accused of
exploiting workers in developing countries, destroying the environment and by abusing
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their economic power, engaging developing countries in a so-called ´race to the bottom´
(C. Fisher & A. Lovell, 2009). The size, power, and political influences of MNC´s often
means that they enjoy considerable cost and other advantages compared to local
competitors. This can mean that the exposure to the competition of a major
multinational such as IKEA, Microsoft, or Monsanto can severely threaten the business
of indigenous, peasants or other local competitors (A. Crane & D. Matten, 2007).
Conversely, instead of beneficiate all the developing countries, FDI is highly
concentrated in a few countries bringing advantages just for them. For example, China,
Mexico and Brazil alone account for the 50% of FDI in the last years. In 1999, of the
total FDI that went to developing countries, less than 1% went to the 48 least developed
countries (M. Khor, 1999).
Furthermore, the WCSDG has recognized a number of deficiencies in the system of
global governance which is dictated by the institutions of global governance, such as
United Nations, the World Bank, The International monetary fund and the World Trade
Organization. The western industrialised companies have an excessive influence in the
formal bodies of the global governance through private lobbying and public relations
activities. This is so even in organizations like the WTO where the developing countries
have a “formal equality” with the industrialised ones (C. Fisher & A. Lovell, 2009).
Leaders of many developing countries voiced their disillusionment with globalisation and
questioned the benefits or wisdom of their countries' rapid integration in the world
economy. Some questioned the IMF-World Bank policies whilst others hit out at the
WTO trade system for not benefiting the developing countries. International trading
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system is central to globalisation. The functioning of the WTO must thus be responsive
and sensitive to the development needs of all its developing members. Under
globalisation, key decision-makers are concentrated in a few major industrial countries,
often in the hands of a few major corporations and individuals. Moreover, developing
countries are ever more vulnerable to pressures from the most powerful players in the
international order, and have problems dealing with the existing agreements and would
be threaten if they have to negotiate with the new agreements proposed mainly by the
north (M. Khor, 1999).
There is no doubt that Developing countries need a fairer multilateral trading system
that ensures a more equal sharing of benefits. The fair trade could be described as a
form of “ethical globalization” (T. Witkowsky, 2005), which could fulfil the
characteristics of a fairer multilateral trading system. Moreover, it could be catalogued
as a system for globalization and development. Conversely, the fair trade has many
similarities with anti-globalization. On the other hand, in the words of Nicholls and Opal,
fair trade is a “benign manifestation of globalization”. Considering that, like other
manifestation of globalization, fair trade has grown rapidly in the recent years
introducing roots in many developing countries (T. Witkowsky, 2005). The only hope for
producers in the developing countries is a system that provides them with better
possibilities to subsist the day by day; and if the fair trade system can provides them
with that kind of benefits, it would be the proper to use by now.
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2.4. An overview of some agricultural products and its trade
The majority of these goods are produced in developing countries. It could be due to
lower cost of its production there, and the climate advantages which some of these
countries have. Almost all of the ten most traded agricultural products are essentially
produced by developing countries and represent for many of these countries the main
source of foreign exchange (www.fao.org). See TABLE 1
Table 1: The most traded agricultural commodities. Percentage of trade to

total production
Products 1961 1970 1980 1990 1996
Cocoa * 108 104 113 128 148
Coffee 60 89 85 91 94
Rubber 107 95 88 81 77
Tobacco 27 26 33 32 57
Veneer Sheets 28 27 32 41 45
Sugar (Raw Equivalent) 58 48 50 40 43
Vegetable Oils 17 21 31 37 40
Tea 52 51 46 42 38
Fish, Seafood 29 34 29 33 36
Cotton Lint 40 33 35 28 30
Soybeans 16 29 33 24 27
Peas 4 5 7 16 25
Bananas 18 18 19 20 25
Wheat 21 19 23 19 20
Milk, Skimmed 4 11 15 9 15
Bovine Meat 6 8 10 11 12
Poultry Meat 3 3 6 6 12
Cassava 3 6 15 20 10
Pigmeat 4 4 5 6 8
Rice (Milled Equivalent) 4 3 5 4 5
Potatoes 1 1 3 4 5
Eggs 4 2 3. 3 2
Plantains 0.21 0.36 0.31 0.59 0.46
Yams 0.00 0.04 0.12 0.12 0.08
Sugar Cane 0.02 0.01 0.01 0.01 0.01
* The case of cocoa illustrates the importance of re-exports of certain commodities. In
this case an important share of trade is re-exports of cocoa paste and powder by the
Netherlands.
Source: FAOSTAT.Source: http://www.fao.org/docrep/003/x7352e/X7352E01.htm .
Trends in World and Agricultural Trade Yon Fernández de Larrinoa Arcal and Materne Maetz
Policy Assistance Division
26

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But there is a sad face of the whole history. Farmers in developing countries are
constantly in difficulties due to the fact that the price they are pay for its products often
is not enough to cover all their living expenses. As an example, there is the case of a
coffee producer (Lawrence Seguya) in Uganda. He says “I’d like to tell people in your
place that the drink they are now drinking is the cause of all our problems” (R. Patel,
2007. pp8). He claims that it is the only reason why they are broke, they cannot buy
essentials, and they cannot have some food such as meat, fish or rice. Moreover, their
children cannot go to the school.
Other coffee growers in his same situation say that this problem is cause due to the
price of the coffee. The coffee was paid at 69 cents/kilo, so they could support their
family and agricultural activities. Then, the price has decrease to 29 cents/kilo which is
not enough even to look after the land. Unfortunately for these coffee producers the
price is now around 14 cents/kilo (R. Patel, 2007. pp9). This is just one of the hundreds
of thousands examples that daily become a storm for small-producers.
It is difficult to imagine how these farmers can live without any worries. Moreover, this
situation forced them to obtain loans which are going to be impossible to pay for.
Contrarily, at Nestle gates factory the cost per bag of coffee is well over ten times what
the producers in Uganda receive for it. Furthermore, its price could reach 200 times the
cost of a kilo in Uganda (R. Patel, 2007. pp10).
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This case illustrates the reality of the farmers, not just in Uganda or Africa, it is all
around the world and it does not happen just with coffee, it happens with the majority of
agricultural commodities produced in the developing countries. Moreover, the prices of
these agricultural goods are constantly decreasing.
Graph 1: Indices of real prices of agricultural commodities (1980 – 2000)
Source: http://www.fao.org/docrep/003/x7352e/X7352E01.htm .
Trends in World and Agricultural Trade
Yon Fernández de Larrinoa Arcal and Materne Maetz
Policy Assistance Division
As can be seen in the above graph, agricultural products’ prices have been decreasing
during the last 20 years. On the other hand, is a fact that costs of production of any
good for these farmers are contrarily increasing. It is making worst the situation for
these people in the developing countries.
28

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2.5. Coffee trade
Coffee and oil are the commercial goods which are more traded and also which move
more money all around the world. It is calculated that more than 100 million people
depend on the coffee growth activity (Setem, 1997). Moreover, on it depend many
countries and over half of the world’s coffee is produced by small family farmers
(Foundation Chicago materials and publications, 2007) and over 50 developing
countries produce it to then, export it to the developed countries where value is added
by Multinationals through its process in order to sell it for its consumption (E. Tuvhag,
2007). For example, the region of the big lakes in Africa, including Burundi, Rwanda and
Uganda, which unfortunately are not significant world coffee exporters considering the
volume they ship, its economy is based almost 80% on coffee production and
exportation. Furthermore, taking into account that coffee price stability fluctuates
constantly and that these countries depend on that, it will be a threat for their economies
(Setem, 1997).
Coffee has been a focus of international commerce since Arab merchants brought it out
from Ethiopia and started to trade it 1.000 years ago (E. Tuvhag, 2008). Thus, Ethiopia
could be considered the “Birth of Coffee” (Black Gold, 2006). Today, the global coffee
market is worth more than $80 billion annually (Foundation Chicago materials and
publications, 2007). However, while retail prices follow an up-going trend, green coffee
prices on the international market decrease (E. Tuvhag, 2008).
29

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The production of Fair trade coffee and other special coffees has increased during the
last years. Despite that, almost 90% of the coffee that is traded is conventional coffee
(E. Tuvhag, 2007). There are in the market two different types of coffee which are
Arabica and Robusta. The first one is characterized by its high quality and it is collected
manually. The second is a coffee of lower quality but it has resistance to bad weather,
can be collected mechanically and its price is less in comparison with Arabica (E.
Tuvhag, 2007-8).
The Arabica is mainly produced by Brazil and Colombia and the Robusta by Brazil and
Vietnam. The coffee exports of these three countries accounts for more than half of the
world’s total exports (E. Tuvhag, 2007). There are many other countries that produce
coffee but, it is at lower scale. However, it is important for their economy and it also
represents an important share of their exports (E. Tuvhag, 2007).
Regarding coffee demand America and the European Union account for almost 90% of
the world’s coffee imports.
30

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Table 2: Coffee supply selected years (Thousands of 60Kg bags)
COUNTRY 1980 1990 2000 2005 2009

Brazil 17307 27321 34100 32944 30309
Colombia 13069 14231 10532 11550 9277
Vietnam 73 1390 14930 11000 17090
Indonesia 5044 7441 6978 6750 6519
India 1962 2829 4516 4630 3108
Ethiopia 3304 2909 2768 4500 1851
Mexico 3871 4674 4815 4200 2838
Guatemala 2770 3271 4940 3675 3507
Honduras 1301 1568 2667 2990 3084
Costa Rica 2157 2562 2253 2157 1237
Others 29851 23646 26383 22094 20861
Total 80709 91842 114882 106490 99681
Table 3: Coffee imports by main importing countries selected years (Thousands
of 60Kg bags)
COUNTRY 1980 1990 2000 2005

France 5825 6301 6643 6013
Germany 8959 13671 14382 17013
Italy 3725 5242 6344 7308
Spain 1595 3053 3820 4433
UK 2195 2898 3096 3340
America 19787 21007 23822 23191
Japan 3234 5330 6908 7507
Total 45320 57502 65015 68805
Source: Table 2 and 3 from E. Tuvhag, 2007
There are many Multinationals that dominate the world coffee market. Among them
there are four which clearly stand out: Kraft, Nestle, Proctor and Gamble, and Sara Lee
(Black Gold, 2006).
31

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The price of coffee in the world market is unstable and there is a decline in world coffee
prices for producers. The price fluctuations could be caused for different reasons.
Firstly, the abolition of the International Coffee Agreement (ICA) – Use to Work on
International supply control mechanisms - , secondly, the increased production in Brazil
and Vietnam, bad harvests, frost or drought, development of new regions with fast
growing producers or the time that takes for supply to respond to changes in demand
(E. Tuvhag, 2007). The prices are set based on what occur in the London and New York
stock market, on the large Multinationals’ purchases and the WTO policies also have a
significant impact on the prices (Black Gold, 2006).
Graph 2: International Coffee prices
Source: Oxfam International www.oxfam.org
32

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Graph 3: International Coffee prices
Source: E. Tuvhag, 2007
There can be seen that coffee prices follow a down-ward trend since years ago with
some fluctuations. The actual coffee price is US 63 cents/lb approximately.
2.6. Fair trade
The term Fair Trade brings us to think about the existence of an unfair trade. Some
authors and some people’s perspective about the normal global trade is that it is unfair.
They claim that it is due to the advantages to rich countries considering that those have
designed and created the policies and rules for the global trade in comparison with the
poor countries which do not have much vote and voice in influencing these rules (C.
Shiel & S. Mann, 2007).
33

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The Fair trade is a global movement which try to ensure a better deal for producers in
disadvantages all around the world especially when they are not in a positive economic
position. It is a strategy for poverty alleviation and sustainable development
(www.fairtrade.org.uk). Nicolls and Opal 2005, clearly define Fair trade as: “To offer the
most disadvantaged producers in developing countries the opportunity to move out of
extreme poverty through creating market access under beneficial, rather than
exploitative trading terms” (A. Crane & D. Matten, 2007). Or as it is described by Oxfam:
“A growing International movement which ensures that producers in poor countries get
a fair deal, it aims to build dignified relationships between consumers in the North and
producers from developing countries” (C. Shiel & S. Mann, 2007). Nevertheless, it is
clear that the fair trade attempts to equilibrate the unequal position when North and
South countries trade, focusing specially in the poor producers all around the world. The
purpose is to encourage and empower producers to develop their own business and
wider communities through international trade (A. Crane & D. Matten, 2007).
The Fair trade origins are not totally clear but, it is known that it has begun to be heard
more than half century ago. Some believe that first it was in America who began buying
needlework from Puerto Rico around 1946, and SERRV (An Alternative Trade
Organization – ATO: “Those were established in America in the 40’s (IICA, 2008)”)
through the trade with southern poor communities. Afterwards, the first shop which
started to sell these products was opened in 1958 in America (EFTA, 2006).
Others believe that first it was in Central Europe especially in high development
34

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countries where Fair trade has begun. However, others affirm that the concept arrived
to Europe around the 50’s with the Oxfam shops in the UK selling crafts from the
Chinese refugees (IICA, 2008). However, different countries such as America, the UK,
Germany, Netherlands, France, and so on started to create organizations with the Fair
trade concept around similar periods.
For an overview, it is possible to recognize at least three generations of the Fair trade
movement:
Table 4: Fair trade movement Generations
First Generation First Fair trade importer (Fair Trade Organization) was
created by Oxfam in 1968 in Netherlands. Trade of crafts
in Churches, Markets, fete. S.O.S Werelhandel, The
Alternative trade Organisatie, Stichting Ideele among
others organizations.
Second Generation Label and brands creation. 1988 – Transfair, Fair trade
market, Max Havelaar, among others. 1989 –
International Federation of alternative Trade. 1990 –
EFTA which get together 12 importers for Fair trade.
1997 – FLO International Fair trade labelling.
Third Generation Lead producers to the control of its products’ trade
together with FT organizations aiming to exclude
profitable companies and make sure that the premium
and the over price gets to the right hands.
Source: Compiled from IICA, 2008
Some of the objectives of fair trade are as it was mentioned, to beneficiate poor and
small holder producers. Some of the mechanisms which FT uses to reach that objective
35

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are the Fair trade minimum price and the Fair trade premium.
The FT minimum price is a guarantee for the producers. It is the lowest possible price
that FT traders and buyers must pay to FT producers. It is agreed between both parts
and ensures that the producers get paid an amount which covers the cost of sustainable
production. The prices in market vary constantly and in some cases are lower than the
costs of production leaving small producers in troubles. So, fair trade minimum price in
those cases is an enormous advantage for these producers. Moreover, when the prices
in the market are higher than the minimum price, the higher price is payable
(www.fairtrade.org.uk).
On the other hand, there is the premium which is an extra money paid besides the
minimum price and it is going to be invested in the local community in social,
environmental, and economic development projects (www.fairtrade.org.uk). For
example, it is invested in scholar ships, schools, roads, hospitals and so on.
Furthermore, another tool is to reduce the trade chain of the FT products. For example,
the coffee chain is highly complex; with a coffee bean changing hands up to an
estimated of 150 times since it is produced and it is consumed (Black gold, 2006).
Reducing it, more profit is reachable for the producers.
Some of the FT products which actually could be bought in the market are for example,
coffee, tea, bananas, cocoa, chocolate, honey, flowers, gold, mangoes, tomatoes, rice,
36

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clothes, juices, toys, crafts, footballs, cotton, sugar, wine, spices and herbs, and a sort
of products.
The statistics of Fair trade during the last half decade have showed an average growth
of almost 40% for each year. Statistically, it is a growth of 22% average in sales per
year. Fair trade sales in 2008 went up to almost €3 billion all around the world
(www.fairtrade.net). Furthermore, only in 2007 FT sales has increased 47% by
comparison with the year before (www.fairtrade.org.uk).
The number of certified producer organizations is also moving up-ward reaching over
800 organizations in 2008. This is more than 1 million farmers and workers, that with
their dependents represents about 5 – 7 million people beneficiating in over 58
countries (see table 6) (www.fairtrade.net).
The United States and The United Kingdom accounts for 31% and 30% of the global FT
sales respectively, becoming the most important national markets. On the other hand,
Switzerland is the country where the expenditure per capita in FT products is higher
with €21 annually (DAWS, August 2008).
37

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Table 5: FT coffee volume sales per country 2007 and 2008
COUNTRY UNIT 2007 2008 GROWTH RATE

AUS/NZ EUR 10,800,000 18,567,280 72%*
AUSTRIA EUR 52,794,306 65,200,000 23%
BELGIUM EUR 35,000,000 45,780,141 31%
CANADA EUR 79,628,241 128,545,666 67%*
DENMARK EUR 39,559,534 51,220,106 40%*
FINLAND EUR 34,643,000 54,445,645 57%
FLO EV EUR 127,297 127,297**
FRANCE EUR 210,000,000 255,570,000 22%
GERMANY EUR 141,686,350 212,798,451 50%
IRELAND EUR 23,335,678 30,131,421 29%
ITALY EUR 39,000,000 41,180,027 6%
JAPAN EUR 6,200,000 9,567,132 44%*
LUXEMBURG EUR 3,200,000 4,249,301 33%
NETHERLANDS EUR 47,500,000 60,913,968 28%
NORWAY EUR 18,069,198 30,961,160 73%*
SPAIN EUR 3,928,213 5,483,106 40%
SWEDEN EUR 42,546,039 72,830,302 75%*
SWITZERLAND EUR 158,101,911 168,766,526 7%
UK EUR 704,314,576 880,620,304 43%*
USA EUR 730,820,000 757,753,382 10%*
GLOBAL TOTAL EUR 2,381,127,046 2,894,711,217 22%
Source: FLO 2009: Fairtrade Leading the way: Annual report 2008-09
The FT products can be bought in Supermarkets such as ASDA, Somerfield, Tesco or
Waitrose among others; in Shops such as Oxfam, Woolworths or Stokes; in coffee
shops such as Costa coffee, Starbucks or Pret A Manger and so on.
38

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Graph 4 and 5: World supermarkets Selling FT products 2007
Source: Graph 4 and 5 (DAWS, August 2008).
In the above graph, there can be seen the number of supermarkets selling FT products
in Europe, North America, the UK, Japan, Australia and New Zealand in 2007. United
States and Germany lead that number with 40.000 and 30.000 of establishments
respectively. Those numbers show the interest of the traders in selling FT products.
39

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Table 6: Countries which produce FT
Latin America Africa Asia

Argentina Haiti Benin Morocco China Vietnam
Belize Honduras Burkina Faso Mozambique East Timor
Bolivia Jamaica Cameroon Rwanda India
Brazil Mexico Comoros Islands Senegal Indonesia
Chile Nicaragua Congo Dem. Rep. Sierra Leone Kyrgyzstan
Colombia Panama Egypt South Africa Laos
Costa Rica Paraguay Ethiopia Tanzania Pakistan
Cuba Peru Ghana Togo Palestine
Dominican The Windward Ivory Coast Tunisia Papua New
Republic Islands Kenya Uganda Guinea
Ecuador Madagascar Zambia Philippines
El Salvador Malawi Zimbabwe Sri Lanka
Guatemala Mali Thailand
Source: Table 6: FLO 2009: Fairtrade Leading the way: Annual report 2008-09
2.7. Fairtrade and Coffee
The first product being certified as a FT was the coffee and it seems to be the more
valuable FT product until now. It is the speciality coffee industry product with the fastest
growth in America and the UK (E. Tuvhag, 2007).
Just in the UK, FT coffee sales have reached £137.3 millions becoming the second
most sold FT product in the United Kingdom after the bananas which has reached
£184.6 million (www.fairtrade.org.uk).
Sales volume worldwide of FT coffee in 2008 was estimated by 65.808 MT (Metric
Tons: 1MT = 16.7bags: 1Bag = 60Kg) with a growth rate of 14% for the year (FLO,
2009).
40

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The countries which more export FT coffee are Mexico, Guatemala, Nicaragua, Peru,
Colombia, Indonesia and Ethiopia. There are more or less 30 countries producing and
exporting it and those accounted all together for 20.654 MT exported in 2002 to all the
buyers worldwide and from this total 4.864 MT were to the USA. Comparing the 16.400
MT exported in 2005 just to the USA (Trans Fair USA, 2006 - FLO, 2009 and E.
Tuvhag, 2007), it is clear to recognize the fast growing of the FT coffee market.
On the other hand, the main importers of FT coffee are USA, France, the UK, Germany,
Netherlands and Switzerland. The total FT coffee sold to consumers in 2005 was
estimated in 33.991 MT. Just USA has sold 11.240 MT (E. Tuvhag, 2007 and Trans Fair
USA, 2006).
Unfortunately, the production of coffee is predicted to decrease in 2010 due to the fact
of the weather conditions with the global warming. It could be disadvantageous
especially for the producers.
2.8. Colombian Coffee market
The Colombian coffee is recognized as a coffee of high quality all around the world. It is
among the fifth-largest coffee producers and the largest in production of washed
Arabica coffee. Colombia has began a serious commercial production of coffee in the
1870s and at one point it has reached an 80% of the total value of the country exports
(D. Giovannucci et all, 2002).
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Unfortunately, during the last years, Colombia’s participation in the coffee world market
has decreased showing negative figures. So that, other countries such as Vietnam have
taken advantage in the market. On the other hand, the exports of processed coffee
have increased in the last decade. Taking into account that Colombia’s speciality is
green coffee, it is disadvantageous. The country export of processed coffee in 2005
accounted for 1% of the total volume of it in the global market (C. Espinal et all, 2005).
Colombian coffee production in 2008 has reached 11.5 million of 60Kg bags
(756.000MT). In comparison with the year before it has decreased by 9%. In contrast,
exports have decreased by only 2% thanks to the accumulated stock from 2007 (NFCG,
2009).
The internal consumption of coffee accounts for about 2 million of 60Kg bags. The
coffee consumption per capita in the country is just 2Kg per inhabitant (C. Espinal et all,
2005).
The coffee crops represent 20% of the total harvested area in Colombia. Moreover, it
was the agricultural product with more harvested extension with 775.000 hectares. The
coffee production accounts for 500.000 direct employments (C. Espinal et all, 2005).
The income of the 18% of the total Colombia’s rural households depends on coffee
(D. Giovannucci et all, 2002).
42

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CHAPTER 3: METHODOLOGY

3.1. Reliability and Validity, Research Design and Data Collection
With the purpose to achieve the main objective of the dissertation it is important to
design and choose proper methodologies to ensure the validity, accuracy and reliability
of the results. For the credibility it is important for the researcher to attempt to reduce
the possibility of getting the wrong answer during the relevant research (M. Saunders et
all. 2000). Having mentioned the above, the researcher has to paid attention to two
main aspects of the research design: Reliability and Validity (M. Saunders et all. 2000).
According to Easterby-Smith (1991), reliability can be assessed setting up two
questions:
1. Will the measure yield the same results on different occasions? (Deductive
approach).
2. Will similar observations be made by different researchers on different occasions?
(inductive approach) (M. Saunders et all. 2000).
The research will be focused in a case study of the Colombian coffee producers
especially the small-holders. The internal research will be developed basically based on
interviews and questionnaires. There will be interviews and questionnaires to members
of FT coffee associations in Colombia named INGRUMA and APECAFE, and to
producers of conventional coffee (GENOVA) with the aim of compare the possible
differences between them. Moreover, the researcher looks forward to establish
43

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conversation with agriculture producers in a developing country
(campesinos/intermediaries) especially to Colombian coffee growers, with some
members of exporting organisations in Colombia such as Expocafe S.A. and the
Colombian National Federation Coffee Growers, with members of FLO in Colombia, and
with consumers in the UK. It is important to consider that the coffee production involves
producers with different economic levels. So, the researcher will take into account the
possible differences among the coffee growers based on the fact that the benefits and
economic gains that each of these producers obtain are not the same in any case.
The principal objective with those interviews and questionnaires is to identify and
understand all the process in which the production, intermediation, exporting/importing
and consumption market of Fair trade products from the developing world is carried out.
During the interviews, questions that permit identify different alternatives, points of view,
and experiences giving qualitative data as a result will be asked.
On the other hand, the researcher will analyse information (statistics and articles) from
the world’s trade situation and from global trade associations such as Fair trade.
Analysing this kind of data, it would be possible to compare it and determine a frame of
the developing world farmers’ situation to then analyse the possibilities which these
farmers have to be beneficiated.
It is important to obtain the points of view of all the possible people implicated in the
agricultural exporting/importing process from developing countries. In that way, it would
44

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be easier to analyse who in the chain has a lack or a deficit of information about the real
situation of this field. On the other hand, the validity and reliability of the research will be
higher.
3.2. LIMITATIONS
There are some limitations which are important to mention for this research. Firstly,
considering that the number of members of the main producers sample organization
(INGRUMA) its considerable, it was impossible for the researcher to interview an
important quantity of them. Mostly of producers live in their farms which are far from
town. Furthermore, the producers have some especial days and especial times to come
over the town. So, the researcher could find just a small number of them to be
interviewed.
Secondly, considering that the researcher has arranged a visit just to one organization
but, having the opportunity to visit other two by chance; the data collected from the last
two was not enough against INGRUMA. Nevertheless, it is considerable to carry out a
comparison among the three organizations which gives a clearer frame of the situation
of the member producers.
Moreover, the access to some information from GENOVA and APECAFE was not
possible to the researcher. It is due to the absence of the main directors of these
associations during the respective visits considering those were by chance. The contact
45

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within them was with the secretaries, instructors and with few producers. Having said
that, the only members enable to give this sort of information (statistics, financial) were
impossible to be contacted by the researcher.
Lastly, a non common and curious limitation was the health of the researcher which has
some problems that have forced him to leave aside the process of research for a certain
period of time whilst he got recovered. It is important for a researcher to have a
continuous process with the research; otherwise there could be some bad patch when
taking up the research again.
46

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CHAPTER 4: DATA ANAYSIS AND FINDINGS
4,1, Overview

This chapter describes the real situation and the facts of the developing countries small
holder producers. The research is taking as an example the case of coffee producers in
three different coffee organizations in Colombia. Firstly, ASPROCAFE INGRUMA which
is the main researched association in this papers. Secondly, The Specialty Coffees
Association of Genova and last but not least APECAFE association.
Asprocafe INGRUMA (Ingruma: Hard stone in Embera Katio indigenous language) is an
Association of small coffee producers which is joined mainly by Indigenous, peasants
and people of mixed race which are called “colonos”. It is located in Riosucio which is a
57.220 inhabitant’s town in the department of Caldas in the centre east region of
Colombia. It has started to produce FT coffee in 1991 with a Max Havelaar proposal.
The association has started to encourage organic production in 1997 after a delegation
visit in 1996. Afterwards, the first organic certification for some producers of the
association was achieved in 2000. From then on, the association has been doing an
amazing job integrating all the community exporting their coffee, working hard with
organizations such as Equal exchange, FLO, EXPOCAFE among others.
The other two Associations were visited by coincidence due to the opportunity to be
located close to the same region and for some contacts and the help of the INGRUMA
Human Resources. It is important to highlight that for the last two associations there
47

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were not any arrangements, nevertheless some members and some figures could be
gathered from them giving the researcher the advantage of having more data which
enable the research to hold more credibility, validity and reliability.
The first one is The Specialty Coffees Association of Genova (which is mentioned from
now on as Genova). The researcher has gathered not too much information about this
association, but the enough to be a good point of comparison with the main researched
association. Genova is an 11.000 inhabitants’ town in the department of Quindio in the
same east centre region of Colombia. The Genova Association does not produce Fair
trade coffee label. Instead its members are focused on the forest protection working
hardly with Rain forest alliance. It is other kind of fair trade system or a just trade form.
The last association is APECAFE (Quinchia small coffee producers association) which
is located just 30Km far from INGRUMA. They also work hard with the FLO system
since 1.999. APECAFE have already its own FT coffee branch named Sainsbury’s
Colombian Fair Trade ground coffee UK. In this case, as Genova case, the data
gathered is a good point of comparison to have a better idea with the INGRUMA
producer’s situation.
Furthermore, taking into account the importance that Fair Trade has been achieving all
around the world, the main idea is to research about FT producers especially focusing
in the FT coffee producers in Colombia and the advantages and/or disadvantages that it
bring to those producers.
48

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The following table (number 7), illustrates some of the characteristics of each of the
three associations and also introduces us to know the condition of the producers which
are part of them.
Table 7: Characteristics of the three study areas associations
INGRUMA GENOVA APECAFE

MEMBERS 1500 130 510

SPECIALTY
Conventional 0 130 0
FT 1050 0 471
Conv/organic 0 0 0
FT/organic 450 0 39

AVERAGE LAND
< 1Ha 19% 0% 37.50%
1‐5Ha 71.50% 16.70% 50%
>5Ha 4.70% 83.30% 0%
Does not know 4.80% 0% 12.50%

AVERAGE PRODUCTION ANNUALLY
<1000kG 47.60% 0% 25%
1000 ‐ 5000kG 33.30% 33.30% 62.50%
>5000kG 4.80% 66.70% 12.50%
Does not know 14.30% 0% 0%

AVERAGE PEOPLE DEPENDENT
1 ‐ 3 people 33.30% 16.70% 12.50%
4 ‐ 6 people 52.40% 33.30% 87.50%
> 6 people 14.30% 50% 0%

AVERAGE PRODUCERS WITH LOANS
66.70% 83.40% 87.50%

SECONDARY ACTIVITIES
Plantain crops 36.10% 62.50% 45.50%
Corn crops 5.50% 12.50% 9%
Pork’s small scale 2.70% 12.50% 0%
Beans crops 8.40% 12.50% 9%
Sugar cane crops 33.40% 0% 27.30%
Cows small scale 11.10% 0% 0%
Not secondary activity 2.80% 0% 9%

The quantities are measured expressing the % of producers of each association. For the secondary activities is measured in % of activity among all the
producers by association. The percentages are quantities calculated from the samples.
49

Fair Trrade ‐ Colom
mbian Coffeee Growers Case Studyy
____________________________________________________________________________ __________ _
4.2. The Deve
eloping co
ountries p
producers’ awaren
ness abou
ut the
Organiza
ations whiich rule th
he trade g
globally.
The ru
ules of the global tra
ade are se
et mainly b
by the WT
TO. Other organizations which
h
have to
o do with itt are the IM
MF and the
e World Ba
ank. It is im
mportant fo
or produce
ers to know
w
about the
t existen
nce and the
e role of these organizations.
esearch has
The re h aled that the awarreness of small prroducers about the
revea e
organizzation which rule the global trade

t in th
he three sttudy areass is virtually nil. Forr
INGRU
UMA and APECAFE
E study areas
a the knowledg
ge about tthese insttitutions iss
ow with 4.76% and 12.5% of the samp

extraorrdinarily lo ple respecctively. On the otherr
hand, despite
d the
e high perc
centage off awarenesss showed
d by GENO
OVA assocciation with
h
83.3%,, there wass confusion

n among th
he sample..
Graaph 6: PRODU
UCERS AWARENESS ABOUTT Graph 77: TOTAL % OF AWAARENESS
ABOUTT ORGANIZATIONS WHICH
ORGANIIZATIONS WHHICH RULE THE TRADE GLOBALLY RULEE THE TRADE GLOBAALLY ‐
INTERVVIEWEES IN THREE COFFEE
95,24% ASSOCIATIONS
83,33% 87,50%
%
1
100,00%
Yes No
50,00%
16,67% 12,50% 20%
4,76%
0,00%
Yes No Y
Yes No Yes No 8
80%
Produccers of GE
ENOVA asssociation are confu
used with what are the institu
utions thatt
regulatte the global trade. Their

T answe
er was possitive, desp
pite this; th
hey assure that some
e
50

______________________________________________________________________________
of those institutions were for example Rain forest alliance and the Colombian National
coffee growers Federation. Nevertheless, it is important to highlight that these two
organizations support them in the production of the coffee which is exported from their
cooperatives. In conclusion, the confusion could be result of this situation.
The research clearly shows that 80% of the producers sample does not know about the
existence and about the names of the global trade regulation institutions.
4.3. Joining Fair Trade and the interest of producers in doing so.
Small holder producers in developing countries are always straggling trying to get a
better life. The prices in market and the costs of production usually are not favorable to
them and due to the size of its activity (small scale) they are not in an advantageous
position in the market. The FT enables these producers to have a better deal in a
market which normally were impossible for them to reach such as the international
market. In a normal market with normal conditions these producers will trade their
products locally getting good prices if they are lucky; otherwise they will get prices which
put them in disadvantage again.
Since FT exists many of these producers have realized thanks to FT organizations
members that they could enter into a better market with their products just working
focusing in some aspects. Some others did not believe it was possible and the rest just
do not have any idea about this possibility.
51

______________________________________________________________________________
When producers are interested to become FT producers there are some requirements
which they have to fulfill. Firstly, producers must belong to a producers’ organization in
a legal way following the rules set in the country. For example, coffee producers in Rio
Sucio are members of INGRUMA association which is created legally. Secondly, the
association or cooperative must get certified by FLO-cert which is an independent
company owned by FLO. When the companies or the producers’ organizations make
contact first time with FLO-cert an inspection on-site will be arranged. An audit of the
producer organization and random checks of producers will be carried out and it could
last between 4 days and 7 weeks considering the size of the cooperative
(www.fairtrade.net). Once the certification is gained there will be inspections on-site
annually. This certification have a cost which depends on the days which the process
last. See table 8 for more detailed information about the process of certification.
On the other hand, producers which are interested in become members of the
cooperatives have to fulfil some requirements as well. For example, the minimum
requirements which are set by INGRUMA, are that the producer has to hand them the
property deed and to have the willingness in engage with the new tasks which are going
to be improved by INGRUMA which at the same time is following the FLO-cert rules.
52

______________________________________________________________________________
Table 8: FT CERTIFICATION PROCESS
APPLICATION Application form and evaluation. Then, see if
applicant falls with the scope of the certification
process. Give information about it, inform rules and
certification policies
AUDIT
Preparation Agenda of the visit, structure of the visit,
List of interviews, documents for inspection

Opening meeting Representatives of the cooperative.
Explanation how the audit will happen and
about minimum price and premium

Document review E.g.: Financial and accounting documents,
Policies of occupational health and safety

Interviews To any person linked to the organization
E.g.: Members of the committee, workers

Site visit E.g.: To the office of the cooperative, farms

Closing meeting Highlight strengths and weaknesses of the
Cooperative

EVALUATION Suggestion of measures to correct non conformities
and make sure relevant requirements are correct

CERTIFICATION Once conformities are fixed a qualified certifier who
was not involved in any step before checks and issue
a certificate if compliance criteria is confirmed

1 year long with a renewal inspection before it
CERTIFICATION CYCLE ended
to evaluate the compliance with FT standards

Source: Compiled from http://www.flo-cert.net
Producers in developing countries some times are isolated or do not have any medium
through which realize about the existence for example of movements such as FT. It is
important that governments, associations or cooperatives inform them about these
53

____________________________________________________________________________ __________ _
possibiilities which could be
e adopted by
b them.
Day by
y day millio
ons of producers are
e grumbling concerning their economic
e situation.
s Iff
they ge
et informed
d about th
hese new opportuniti
o es they will have be
etter chanc
ces trading
g
their prroducts and consequ

uently the grumbling
g w becom
will me a satisfa
action attitu
ude.
s revealed
The research has d that the awareness
a s about the
e existence
e of the FT
T system is
s
high. For
F INGRU
UMA and APECAFE
A study
s area
as it is important to ta
ake into ac
ccount thatt
both off them havve been wo h FT since years ago

orking with o. Despite tthat, some
e members
s
of both
h organizattions did not
n know about
a the existence
e of the FT system. In
n contrast,
despite
e that GEN
NOVA cooperative do
oes not wo
ork with FT
T, the awa
areness ab
bout it was
s
kable in comparison with

remark w the other two stu
udy areas.
Graph 8
8: PRODUCERRS AWARENESSS AND INTER REST ABOUT
THE FAIR TRADE SYSTTEM ‐ INTERV
VIEWEES IN TH
HREE COFFEE
ASSOCIATIO
ONS
100%
100,00% 9
90,50%
8
83,30%
71,,40% 7
75%
80,00% 66,70%
60,00%
33,30% 28,60%
40,00% 25% FT existance
16,70%
20,00% 9,50%
0% FT Inteerest
0,00%
Y
Yes No Yes
Y No Y
Yes No
IN
NGRUMA GENOVA APECAFE
Moreov
ver, the interest whic
ch producers have a
about FT is
i notably high. The
e research
h
indicate
es that alm
most all the
e producerrs in the th
hree samples are exxtremely intterested in
n
54

____________________________________________________________________________ __________ _
FT. De
espite that GENOVA producers
s are not working
w with
h FT they w
would like to engage
e
with it and also tthey show the intere

est asking the researrcher how to do so and
a to link
k
them with
w a poss
sible contac
ct in FLO Colombia.
C
Overall, the rese

earch revea
aled that among
a all the samples 91,5% are interested in FT
T
and 71,5% are aw

ware abou
ut its existe
ence.
Grraph 9: TOTAL % AWARENNESS AND INTTEREST
ABOUT THE FAIR TRA
ADE SYSTEM
8,50%
Interest
No
FT
Yes 91,50%
existance
No 28,50
0%
FT
Yes 71,,50%
0,00% 20,00% 40,00%

% 60,00% 80,00% 100,00%
4.4. Developiing counttries prod
ducers’ be
enefits gaiined throu
ugh fair trrade.
Consid
dering the FT sales’ volume and
a value growth du
uring the llast years,, FLO has
s
conclud
de that the
ere was th
he need to
o measure the FT im
mpact on fa
armers and
d workers,
their fa
amilies as w
well as the wider com
mmunity (F
FLO, 2009**).
FLO ha
as designe
ed some methodolog
m gies for the
e measure of the FT impact. Th
here is the
e
Monito
oring and Evaluation
E system an
nd the Casse study ap
pproach fo
or assessin
ng the long
g
term im
mpact of FT.
F The former provides data from all producer orrganization
ns and the
e
latest focus
f on sm
mall numbe
er of produ
ucers.
55

______________________________________________________________________________
Having said that, it is important for producers to have a close contact with organizations
as well as organizations have a close contact with FLO or FLO-cert. As a result, this will
enable the latest to gather information from the formers, thus, the processing of these
data will help FT to improve in any aspect they consider and helping at the same time
the main beneficiates in the FT system which are the producers.
During the Monitoring and Evaluation system which FLO has carried out during 2007,
2008 and part of 2009, the impact of FT was encouraging. It was carried covering the
number of certified organizations at that period. This number has increased by almost
40% reaching up to 800 members 2010 in comparison with the 553 which were
members during the evaluation.
The evaluation has revealed that nearly 1.000.000 million members and workers were
beneficiated with FT activities (FLO, 2009*). Taking into account that these members
and workers have dependents the figure could rocket up to 6 to 7 million people been
beneficiated.
Economically taking, the benefits of fair trade during the period of the evaluation were
the premium in addition of the product price. This premium has reached € 32 million just
for members of small producer organizations. From this amount, € 7.3 million were
shared as FT premium money and € 24.5 million were invested in strengthening their
business and production, in support local community projects and health, education and
environmental issues (FLO, 2009b).
56

______________________________________________________________________________
Concerning the premium, it is a huge benefit to the FT producers having thought that
this premium does not exist in a common trade. The investments made in a community
help this to get closer and improve the quality of live. Some of the projects for example
are, community infrastructure, buildings and home improvements, disaster-relief,
support elders, cultural events, micro-credits, scholarships, school infrastructure, school
supplies, organic certification reforestation, training, waste management, clinics,
sanitation, health training, medication, emergency, vehicle purchase, farming and
processing facilities, computers, running costs of the organization, alternative income
for women, family planning, projects for mothers, and so on (FLO, 2009b).
Table 9: FT PREMIUM RECEIVED BY PRODUCERS GLOBALLY 2007 - 2008
REGION FT PREMIUM RECEIVED
Small producer Hired labour
organizations Organizations

Caribbean € 5,371,463.00 € 288,471.00
Central America € 3,226,517.00
South America € 8,878,430.00 € 2,886,299.00
Northern Africa € 30,748.00 € 328,540.00
Eastern Africa € 2,989,608.00 € 2,638,515.00
Western Africa € 1,172,542.00 € 292,071.00
Middle Africa € 220,309.00
Southern Africa € 31,383.00 € 686,848.00
Eastern Asia € 235,310.00
South‐eastern
Asia € 990,399.00
Southern Asia € 1,208,944.00 € 435,720.00
Melanesia € 217,628.00
Total € 24,573,281.00 € 7,556,464.00
€
Grand total 32,129,745.00
Source: Information collected from (FLO, 2009b)
57

______________________________________________________________________________
The main benefits gained by producers through the FT system are the price which they
are paid for their products, the premium which they obtain annually, the benefits which
FT organizations bring them such as trainings or support, the opportunity to have a
better and decent life, the opportunity to have a product which is recognized as a better
quality product in other countries, the opportunity to be integrated in a trade no matter
the size of their activity, among others.
Considering the better and decent life issue; when producers get more money they will
solve economic problems, give better opportunities to their family such as education,
health insurance and food supply, and so on; which make it possible to improve quality
life.
Some other benefits which could be gained by FT producers are mentioned in the next
section of this chapter (4.1.4).
4.5. Colombian Fair trade coffee producers’ benefits
Some of the benefits which FT system offers were mentioned above. The majority of
them were also described as gained benefits by the FT coffee producers and
organizations samples. In this case, just INGRUMA and APECAFE associations were
taken into account due to the fact that they produce FT coffee which is not the case for
GENOVA association.
58

______________________________________________________________________________
Among the benefits mentioned by the producers are the minimum price, the premium,
loans, trainings and others. Concerning the minimum price, 8.9% of the producers’
sample has mentioned it as a benefit gained when fair trading. Moreover, they think that
the minimum price is giving them a strong hand to overcome from their situation before
become FT producers. When they use to work with conventional coffee which is subject
of market prices fluctuations they could not support neither their costs of production,
their costs of life or the loans they had with the banks. They highlight that FT minimum
prices give them a better opportunity and they can breathe more tranquilly.
Few of the producers sample were not aware about what the term premium means in
FT. Nevertheless, 4.50% of them consider it as the benefit which they have gained
through FT. Some of the producers have mentioned benefits such as building
edifications, roads, scholarships among others as the benefits they have reached.
Furthermore, they did not know that those benefits are possible to be made just through
the FT premium. The producers that were aware about the premium said that the
advantages they now have because the premium are not just for producers but for
whole the community. For example, they mentioned that their children now can go to
the school easily than before. It is due to the fact that they have more schools build
through the premium so they are able to commit to closer schools than before.
Moreover, INGRUMA has a subsidy for students of lower resources giving them the
lunch at the school. The association carries out this in 50 schools feeding about 900
students.
59

______________________________________________________________________________
INGRUMA association has received $567.837.575 million Pesos of Colombia
(£198.930) in 2008 for resources of FT (premium).
The majority of the producers have admitted that loans and trainings were the benefits
they have gained with FT with 31.1% and 33.3% respectively. Firstly; it is important to
take into account that the loans which are given by the FT organizations are with
resources from the premium. On the other hand, any kind of loan with a bank institution
is strict and also has a sort of requirements to be given to producers. Moreover, some of
the requirements demanded by the banks are impossible to fulfill for some of the
producers. Furthermore, the interest-monthly payment of a common loan is too high in
comparison with the interests which are given with the FT organizations loans.
The system which the FT organizations manage with the loans is a huge advantage for
the producers’ members. For example, INGRUMA organization has a system which is
flexible with the requirements, does not charge interests until the forth loan acquired by
the same producer, then the interest is really low compared with the common loan with
7 – 9% against 12 – 15% annually, and also the producer receives the money between
15 days and one month after the application.
In 2009, the loans given by INGRUMA association accounted for $415.000.000 million
Pesos of Colombia (£145.500 approximately), which is a considerable amount taking
into account that the monthly minimum wage in the country is less than £200. This
60

____________________________________________________________________________ __________ _
figure gives us a clear ide
ea. INGRU
UMA has more
m than
n 10 differe
ent lines or
o kinds off
loans (see
( table 10).
Table 10: DIFFEREENT LOANS O OFFERED BY INGRUMA
Line Exaample
1 Machineery Wet cofffee pulper
2 Agricultu
ural Organic p production
3 Agrricultural con nstruction Sta
able
4 R
Renew coffe ee crops
5 Land purcchase
6 Communityy loans Aqueduct
7 Processing bbuilding
8 Member's ch hildren al production
Agricultura n
9 Organic ferrtilizer Processing‐purchase
10 Biodigestters
11 Woman lloan Kitchenn garden
The £145.500 loa

ans are dis
stributed in
n 500 crediits giving benefit
b to a
almost 1/3 of its 1500
0
ers highlig
membe ghting that some of the people which apply
a for the loans are sons,
daughtter or wives
s of the pro
oducers.
Graph 10: % O
OF FAIR TRADEE BENEFITS GAINED
BY PRODUCEERS IN INGRUM MA AND APEC CAFE
SAMPLESS
10% 33,30%
31,1
35,00%
30,00% 2
22,20%
25,00%
20,00%
15,00% 8,90%
%
10,00% 4,50%
5,00%
0,00%
61

______________________________________________________________________________
The mostly of the producers invest the loans in improving their coffee crops or
edifications for the productions such as the processing building. The loans for sons and
daughter usually are invested in small projects such as poultry, pork production, and
cane crops among others.
The trainings which the producers receive through the associations are well seen
among the members. There is the advantage of having the opportunity of being trained
in different activities and topics concerning the coffee production. There are trainings
since management and finances of the farm, organic production, agriculture of different
products, environmental protection, to water use, among others. Normally producers in
conventional production or associations do not receive such trainings or usually have to
pay any amount for it.
Receiving trainings in different topics producers will be beneficiated and will be able to
improve performance in their farms and in their production.
The rest 22.2% of the producers have answered other benefits such as the advantage
of caring the land with the organic production (no chemicals), the scholar ships for their
children, the building of structures in farms, the recognition of their products, the just
trade which they work with when fair trading, repairing of roads, repairing houses, and
protection of headwater basins among others.
62

____________________________________________________________________________ __________ _
4.6. The motivation of Colombia
an coffee producerrs to enga
age with fa
air trade.
As it ha
as been mentioned,
m it is importtant to take into acco
ount that th
he advanta
ages of FT
T
coffee producerss against th

he conven
ntional cofffee produc
cers are nu
umerous. Among
A the
e
coffee producers
s sample 31.5% prod
duce FT orrganic coffe
ee, 51.1% FT coffee
e, and 17%
%
ntional cofffee. The last figures are distributed among the three association
conven a n
sample
es as show
wed in Grap
ph 11 and 12.
Graph 11
1: TOTAL % PR
RODUCERS BYY
SPECIALLTY AMONG TTHE SAMPLE
FTT/organic 31,50%
Convv/organic 0%
FT 51,50%
convventional 17,0
00%
0,00% 20,00% 40,00% 6

60,00%
Graph 12: %
% OF COFFEE P
PRODCURES B BY SPECIALTY ‐ INTERVIEW
WEES
IN THREEE COFFEE ASSOCIATIONS
100%
88%
10
00%
9
90%
8
80% 5
52%
7
70% 48%%
6
60%
5
50%
4
40% 12%
3
30%
2
20% 0% 0% 0% 0% 0% 0% % 0%
1
10%
0%
conventional
conventional
conventional
FT/organic
FT/organic
FT/organic
Conv/organic
Conv/organic
Conv/organic
FT
FT
FT
IN
NGRUMA GENO
OVA APECAFE
63

____________________________________________________________________________ __________ _
In this section off this pape
er the researcher wanted to pro
ove if coffe
ee produce
ers among
g
mple are also

the sam a satisffied within their activ
vity no ma
atter if it iss conventio
onal or FT
T
coffee production
n. The 100
0% of the producers ee as a firrst activity.
s’ sample grow coffe
They do
d have secondary
s activities as a way
y of incom
me or autto-consumption. The
e
second
dary activitties are me
entioned above
a in ta
able 7. Sec
condly, the
e research
her wanted
d
to highlight the re
easons which motivated the pro
oducers to engage w
with FT.
As a measure
m off matter th
he research
her has co
onsidered the produccers’ idea of change
e
their ag
gricultural activity. Considering
g also the idea to change from
m conventio
onal coffee
e
ction to FT coffee pro

produc oduction.
Graph 13: PRODUCEERS WITH COFFFEE AS 1ST A
ACTIVITY ANDD PRODUCERSS THAT
WOULD LIKE TO CHANG
GE ACTIVITY IINTERVIEWEEES IN THREE C
COFFEE ASSOC
CIATIONS
100,000% % 100,00%
100,00% 100%
100
0,00% 87,50%
90
0,00%
80
0,00% 66,70%
70
0,00%
60
0,00%
50
0,00% 33,30%
40
0,00% Cofffee as 1st Acctivity
30
0,00%
12,50% Chaange Activity
20
0,00%
10
0,00% 0,,00% 0,00% 0,,00% 0%
0
0,00%
Yess No Yes No Yess No
IN
NGRUMA GENOVA A
APECAFE
The research has revealed

d that the considerab
c ble majority UMA and APECAFE
y of INGRU E
associa
ations sam
mple are not
n interested in cha
ange agric
cultural acttivity with 100% and
d
87.5% respective
ely. On the
e other ha
and, the majority
m of coffee pro
oducers off GENOVA
A
associa
ation cons
sider the id
dea of change agricu
ultural activ
vity with 6
66.7% agaiinst 33.3%
%
produc
cers which do not like
e to change
e activity fo
or this asso
ociation.
64

____________________________________________________________________________ __________ _
Overall, it is clea
ar that the
e majority of the sa
ample is co
omfortable
e with the activity off
growing coffee w
with 85.7%
% in com
mparison with
w 14.3%
% which like to cha
ange. It is
s
ant to highlight that th

importa he majority oducers which are ha
y of the pro appy with the
t activity
y
they ca
arry out are
e FT coffee
e producerrs.
G
Graph 14: TOTTAL % PRODUCERS WITH CO
OFFEE
ASS 1ST ACTIVITY
Y AND PRODU
UCERS THAT W
WOULD
LIKE TO CHANGE A
ACTIVITY
85,70%
Change
No
activity
Yes 14,30%
1st Activity
Coffee As
No 0,0
00%
Yes 100,00%
%
0,00% 20,00%
2 40,00%
% 60,00% 80,00%
%100,00%
Furtherrmore, som
me of the main
m reaso
ons why prroducers would
w like to
o change activity
a are
e
due to the fact that they are

a having negative figures ec
conomically
y talking, they
t are in
n
es when ha
trouble ave to pay bills, and the costs of producttion are hig
gher than the
t money
y
they re
eceive for ttheir produ
uction or th
he differenc
ce is not im
mportant le
eaving them with nott
enough
h profits.
The re
esearch re
evealed tha
at the pro
oducers who like to change a
activity be
ecause the
e
problem
ms mentioned above
e are mainlly GENOV
VA associattion produc
cers which
h work with
h
the con
nventional coffee. On
n the otherr hand, the producers
s who workk with FT seem
s to be
e
highly comfortab
ble with the
e price they get pay for theirr productio
on and forr the otherr
65

____________________________________________________________________________ __________ _
numero
ous advantages whic
ch FT bring
gs to them.
Moreov
ver, the producers who like
e to change activ
vity consid
der to sw
witch from
m
conven
ntional cofffees to pe
erhaps orga
anic coffee
e or if therre is a pos
ssibility to FT coffee
e
produc
ction.
Graph 15: BEN
G NEFITS THAT HAVE MOTIVVATED
PRODUC CERS TO ENGAAGE WITH FT
45,50%
4
50%
%
40%
% 27,50
0%
30%
% 1
15%
20%
% 5% 7,50%
10%
%
0%
%
Consid
dering the issues in what
w FT is
s strong, th
he thoughtts of the prroducers about
a whatt
motivated them to engage

e with FT,, and the fact in the
e fields an
nd crops; producers
s
bed the rea

describ ason for them to still with FT or to become
e FT produ
ucers.
search am
The res mong the sttudy samp
ple shows that
t among
g the main
n reasons why
w coffee
e
produc
cers engag
ge with FT
T are the gain
g of the
e FT label,, the differrent advan
ntages and
d
benefitts which ccould be gained

g thro
ough FT, the encou
uragementt that FT induces in
n
produc vironment, the quality

cers to carre the env y life imprrovement w
which prod
ducers are
e
able to
o develop with FT prices, prem
miums, an
nd benefits
s; and for some prod
ducers the
e
idea off a just trad

de is enoug
gh to be motivated to
o become FT.
F
66

______________________________________________________________________________
The idea of acquire a label of FT is a motivation for 5% of the producers. Their though is
that doing so they will have a better recognition for their product, thus it will be a product
of higher quality. Moreover, 45.5% of the producers’ sample is motivated for all the
benefits and advantages which brings FT. For example, those benefits could be the
premium, the price, and the trainings among others (see more in section 4.1.1).
4.7. The role of the Colombian government in monitoring the fair trade in
the coffee production.
The research revealed that the Colombian government does not have anything to do
with the monitoring of the FT coffee production. On the other hand, the organizations
responsible to carry out this task are the same producers organizations, FLO –cert and
FLO its self.
Furthermore, the majority of the coffee producers’ samples believe that they do not
receive any kind of help from the Government. A considerable amount of them with
62.9% think that they are abandoned in the hard situation of the agricultural sector. In
contrast, 31.5% of the sample believe that the government helps the producers even if
they have not received any support from them jet. The rest 5.6% of the sample does not
know or do not have any opinion about the issue.
67

____________________________________________________________________________ __________ _
Graph
h 16: THOUGH
HT ABOUT
G
GOVERNMENT T HELP
80
0,00% 62,9
90%
60
0,00%
31
1,50%
40
0,00%
20
0,00% %
5,60%
0
0,00%
Y
Yes No
o Does no
ot
know
In fact,, there are ways of support

s from governm
ment to pro
oducers bu
ut those arre possible
e
to obta
ain in some areas off Colombia
a or have some spe
ecial requirrements which some
e
produc
cers do no
ot fulfil. Co
olombian governmen
g nt does no
ot bring an
ny type off subsidies
s
which are disadv

vantageous for prod
ducers and
d as conse
equence the farmers feel thatt
they arre alone in the countrryside daily

y activities.
68

______________________________________________________________________________
CHAPTER 5: CONCLUSIONS

- The producers’ awareness of the organizations which rule the global trade is limited
and in some cases the producers mixed up the global organizations for trade with other
local coffee organizations, for example with the NFCG.
- The majority of the producers are aware of the existence of the FT. This figure may be
high due to the fact that the research was carried out in some coffee organizations
which were already working with FT system. Nevertheless, there is a lack of information
about the existence of the system among the producers of conventional coffee. On the
other hand, the interest showed by the small producers in join a FT system was also
high confirming that if there were more information and awareness of the FT among
them, the number of small-holders getting benefits around the world could be higher.
- Considering the growth of the FT value during the last decade, FLO constantly
evaluates the impact of it on the producers. Generally speaking, the impact of the FT on
the sample was positive and gives advantages in issues such as supporting local
community and health, education and environmental issues, improving quality life,
better opportunities, and access to better markets among others. The majority of the
coffee producers of the sample working with FT agree that now they have more
possibilities than working without the FT system. Improving this system in more
communities around the world will solve a sort of poverty problems at least in those
communities.
69

______________________________________________________________________________
- FT brings a variety of benefits to the farmers which will allow them to have better
opportunities in comparison with conventional producers.
- An important issue that motivate farmers to join the FT is that the system encourages
the producers to work in a way having in mind their role and their responsibility for the
environment and its protection.
- When conventional producers realize the advantages that FT offers them, they would
like to join the FT production without any doubt; and FT producers stand with the FT
system due to the benefits that they have now.
- There is a lack of contact from the government in monitoring the FT system. FLO and
the local organizations which join the FT are the only ones monitoring the production
and the FT activities among the producers.
- importance that producers get informed about FT in order to improve their life quality.
70

______________________________________________________________________________
CHAPTER 6: RECOMENDATIONS

- A better integration of the Governments, FLO and FT organizations in the different
countries would be a key strategy to reach more places awarding and informing the
small producers about the FT system and its advantages encouraging them to join it.
- Inform consumers around the world of the impact of FT in the life of the producers in
developing countries could be a initiative to encourage them to buy FT products leading
the sells to increase, thus more producers could be beneficiated.
- Increasing the FT premium in a small percentage will bring to the producers more
opportunities to solve their financial problems and reduce the world population living in
the poverty line.
- It is important that FT system and FLO continue and improve their work related to the
environmental issues. Educating the producers on the effects of conventional methods
of production on the environment, will aware them of the benefits and advantages of
working with sustainable and organic methods.
71

______________________________________________________________________________
REFERENCES

Black Gold: Your coffee will never taste the same again (2006): Sundance Film Festival,
Utah. Fulcrum Productions. Mark Francis & Nick Francis. The channel 4 British
Documentary Film.
Crane, A., Matten, D. (2007): Business Ethics. Second Edition. Oxford press. New York.
DAWS (August 2008): (Dutch Association of World-shops). Jean-Marie Krier (2008).
Fair Trade 2007: new facts and figures from an ongoing success story. Drukkerij Dione
Boekproducties. Netherlands.
EFTA –European Fair Trade Association- (2006): Sixty Years of Fair Trade. A Brief
History of the Fair Trade Movement. Europe.
Emmylou Tuvhag (2007): The Costa Rican Experience of Fair Trade Coffee. Impact on
Producers and Producer Organizations. Lund University. Sweden.
Espinal, C. et al (2005): Coffee Chain in Colombia. An Overview of its Structure and
Dynamic. Agriculture and Rural Development Department. Agrocadenas. Bogota.
Fairtrade Labeling Organization International (2009a): Fairtrade Leading the Way.
Annual Report 2008-09. Print Gepruft. Germany.
72

______________________________________________________________________________
Fairtrade Labeling Organization International (2009b): The Benefits of Fair Trade. A
Monitoring and Evaluation Report of Fair Trade Certified Producer Organizations for
2007. Bonn. Germany.
Fisher, C., Lovell A. (2009): Business Ethics and Values. Individual, Corporate and
International Perspectives. Third Edition. Prentice Hall. England.
Foundation Chicago Materials and Publications (2007): Globalization and Fair Trade.
Deliberating in a Democracy. U.S.
Fridell, G. (2007): Fair Trade Coffee. The Prospects and Pitfalls of Market-Driven Social
Justice. University of Toronto press. Canada.
Giovannucci, D. et al (2002): Colombia Coffee Sector Study. Electronic edition. CEDE.
Los Andes University. Bogota.
Hoekman B.M., Kostecki M.M. (2001): The Political Economy of the World Trading
System. The WTO and Beyond. Second Edition. Oxford University Press. UK.
IICA – Instituto Interamericano de Cooperación para la Agricultura (Interamerican
Institute for the Agricultural Cooperatrion) (2008): El Comercio Justo como Alternativa
para el Desarrollo Equitativo (Fair trade as an alternative for the equitative
73

______________________________________________________________________________
development). IICA press. Costa Rica.
Khor, M. (1999): Developing World Voices Doubts on Globalisation. Third World
Network. October:
Latinoff, M., Madeley, J. (2007): 50 Reasons to Buy Fair trade. Pluto press. London.
National Federation of Coffee Growers (NFCG) (2009): Colombian Coffee Market
Behaviour During 2008. NFCG. Colombia.
Patel, R. (2007): Stuffed and Starved. From Farm to Fork, the Hidden Battle for the
World Food System. Portobello Books. London.
Saunders, M., Lewis, P. & Thornhill, A. (2000): Research Methods for Business
Students. Second edition. Prentice Hall. UK.
Setem, A. (1997): Café Amargo. Por un Comercio Norte-Sur Más Justo (Bitter coffee.
For a North-South Trade More Just). First edition. Icaria. Spain.
Shiel, C., Mann, S. (2007): Global Perspectives. Guide to Fair Trade. Bournemouth
University. UK.
Somerville, D. (2008): The Ultimate Illustrated History of World War II. Hermes House.
74

______________________________________________________________________________
London.
The Economist Group (2005): Globalization With a Third-world Face. The Economist.
7th April.
Thomas, C. (2000): Global Governance, Development and Human Security. The
Challenges of Poverty and Equality. Pluto press. London.
Trans Fair USA (2006): 2005 Fair Trade Facts and Figures. Trans Fair. USA.
Tuvhag, E. (2008). A Value Chain Analysis for the Fair Trade Coffee. Master Thesis.
Lund University. Sweden
Van Den Bossche, P. (2005): The Law and Policy of the World Trade Organization.
Cambridge. UK.
Witkowsky T.H. (2005): Fair Trade Marketing. An Alternative System for Globalization
and Development. Journal of Marketing theory and practice. 13th April, Fall. pp 22.
World Trade Organisation (2008): World Trade Organisation in Brief. WTO Publications.
Switzerland.
75

______________________________________________________________________________
www.dictionary.cambridge.org
www.fairtrade.net
www.fairstrade.org.uk
www.fao.org
www.imf.org
www.wto.org
www.oxfam.org
www.ico.org

76

______________________________________________________________________________
BIBLIOGRAPHY
Barrientos, S. (2006): Ethical Sourcing in the Global Food System. Challenges and
Opportunities to Fair Trade and the Environment. Earthscan. USA.
Bentley, J.W., Baker, P.S. (2000): The Colombian Coffee Growers’ Federation.
Organized, Successful Small-holder Farmers for 70 Years. UK Department for
International Development. UK.
Black Gold: Your coffee will never taste the same again (2006): Sundance Film Festival,
Utah. Fulcrum Productions. Mark Francis & Nick Francis. The channel 4 British
Documentary Film.
Crane, A., Matten, D. (2007): Business Ethics. Second Edition. Oxford press. New York.
D. Jaffer (2007): Brewing justice. Fair Trade Coffee, Sustainability, and Survival.
University of California Press. USA.
DAWS (August 2008): (Dutch Association of World-shops). Jean-Marie Krier (2008).
EFTA –European Fair Trade Association- (2006): Sixty Years of Fair Trade. A Brief
History of the Fair Trade Movement. Europe.
Emmylou Tuvhag (2007): The Costa Rican Experience of Fair Trade Coffee. Impact on
Producers and Producer Organizations. Lund University. Sweden.
77

______________________________________________________________________________
Espinal, C. et al (2005): Coffee Chain in Colombia. An Overview of its Structure and
Dynamic. Agriculture and Rural Development Department. Agrocadenas. Bogota.
Fair Trade 2007: new facts and figures from an ongoing success story. Drukkerij Dione
Boekproducties. Netherlands.
Fairtrade Labeling Organization International (2009a): Fairtrade Leading the Way.
Annual Report 2008-09. Print Gepruft. Germany.
Fairtrade Labeling Organization International (2009b): The Benefits of Fair Trade. A
Monitoring and Evaluation Report of Fair Trade Certified Producer Organizations for
2007. Bonn. Germany.
Fisher, C., Lovell A. (2009): Business Ethics and Values. Individual, Corporate and
International Perspectives. Third Edition. Prentice Hall. England.
Foster, C. (1992): Cooking with Coffee. Fireside. USA.
Foundation Chicago Materials and Publications (2007): Globalization and Fair Trade.
Deliberating in a Democracy. U.S.
Fridell, G. (2007): Fair Trade Coffee. The Prospects and Pitfalls of Market-Driven Social
Justice. University of Toronto press. Canada.
78

______________________________________________________________________________
Giovannucci, D. et al (2002): Colombia Coffee Sector Study. Electronic edition. CEDE.
Los Andes University. Bogota.
Goodman, D. (2008): Confronting the Coffee Crisis. Fair Trade, Sustainable Livelihoods
and Ecosystems in Mexico and Central America. Mit Press. USA.
Hoekman B.M., Kostecki M.M. (2001): The Political Economy of the World Trading
System. The WTO and Beyond. Second Edition. Oxford University Press. UK.
IICA – Instituto Interamericano de Cooperación para la Agricultura (Interamerican
Institute for the Agricultural Cooperatrion) (2008): El Comercio Justo como Alternativa
para el Desarrollo Equitativo (Fair trade as an alternative for the equitative
development). IICA press. Costa Rica.
Khor, M. (1999): Developing World Voices Doubts on Globalisation. Third World
Network. October:
Latinoff, M., Madeley, J. (2007): 50 Reasons to Buy Fair trade. Pluto press. London.
Maitha, J.K. (1974): Coffee in the Kenyan Economy. An Econometric Analysis. East
Africa Literature Bureau. Nairobi.
79

______________________________________________________________________________
Montenegro, A. (1993): Coffee, Money and Macroeconomic in Colombia. Fescol.
Colombia.
National Federation of Coffee Growers (NFCG) (2009): Colombian Coffee Market
Behaviour During 2008. NFCG. Colombia.
Nutzanadel, A., Trentmann, F. (2008): Food and Globalization. Consumption, Markets
and Politics in the Modern World. Berg. USA.
Patel, R. (2007): Stuffed and Starved. From Farm to Fork, the Hidden Battle for the
World Food System. Portobello Books. London.
Sachs, W. (2007): Fair Future. Resource Conflicts, Security and Global Conflicts. Zed
Books. Canada.
Saunders, M., Lewis, P. & Thornhill, A. (2000): Research Methods for Business
Students. Second edition. Prentice Hall. UK.
Setem, A. (1997): Café Amargo. Por un Comercio Norte-Sur Más Justo (Bitter coffee.
For a North-South Trade More Just). First edition. Icaria. Spain.
Shiel, C., Mann, S. (2007): Global Perspectives. Guide to Fair Trade. Bournemouth
University. UK.
Somerville, D. (2008): The Ultimate Illustrated History of World War II. Hermes House.
80

______________________________________________________________________________
London.
Stiglitz, J.E., Charlton, A. (2005): Fair Trade for All: How Trade Can Promote
Development. Oxford University press. UK.
The Economist Group (2005): Globalization With a Third-world Face. The Economist.
7th April.
Thomas, C. (2000): Global Governance, Development and Human Security. The
Challenges of Poverty and Equality. Pluto press. London.
Topik, S.C. (1998): The Second Conquest of Latin America, Coffee, Henequen and Oil
During the Export Boom 1850 – 1930. University of Texas press. USA.
Trans Fair USA (2006): 2005 Fair Trade Facts and Figures. Trans Fair. USA.
Tuvhag, E. (2008). A Value Chain Analysis for the Fair Trade Coffee. Master Thesis.
Lund University. Sweden
Van Den Bossche, P. (2005): The Law and Policy of the World Trade Organization.
Cambridge. UK.
Witkowsky T.H. (2005): Fair Trade Marketing. An Alternative System for Globalization
and Development. Journal of Marketing theory and practice. 13th April, Fall. pp 22.
81

______________________________________________________________________________
World Trade Organisation (2008): World Trade Organisation in Brief. WTO Publications.
Switzerland.
www.dictionary.cambridge.org
www.fairtrade.net
www.fairstrade.org.uk
www.fao.org
www.imf.org
www.wto.org
www.oxfam.org
www.ico.org
For FT standards check: http://www.fairtrade.net/standards.html
For FT certification process, policies, rules, standards: http://www.flo-cert.net/flo-
cert/main.php?lv=2&p=1
82

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Fair Trade ‐ Colombian Coffee Growers Case Study

DOES FAIR TRADE HELP PRODUCERS FROM THE

DEVELOPING WORLD, WHO SELL THEIR PRODUCTS TO

THE DEVELOPED WORLD?

The case of Colombian Coffee producers.

Researcher: Juan Antonio Beltran Paez

Supervisor: Dr. Bernadette Warner

London School of Commerce - University of Wales

Words Count: 13.400

and in Colombia. An enormous gratitude to the members of ASPROCAFE, Specialty

health was not the best, especially my family and friends.

1 The most traded agricultural commodities

1 Indices of real prices of agricultural commodities 1980 – 2000

DAWS Dutch Association of World-shops

EFTA European Fair trade Association

FAO Food and Agriculture Organization

FDI Foreign Direct Investment

FLO Fair trade Labeling Organization

FLO-CERT Fair trade Labeling Organization Certifier

GATT General Agreement on Tariffs and Trade

ICA International Coffee Agreement

IICA (Instituto Interamericano de cooperacion para la agricultura) Interamerican

Institute for the Agricultural Cooperation

IMF International Monetary Found

MNC Multinational Corporations

NFCG National federation of Colombian Coffee Growers

PAA Protocol of provisional Application on the GATT

TNC Transnational Corporations

WCSDG World Commission on the Social Dimension of Globalization

WTO World Trade Organization

great generation. Let your generation blossom”

Nelson Mandela, Trafalgar Square London, February 2005

Margaret Thatcher, Mar 3Th 1994, London

Speech to the World Trade after GATT Conference

be more integrated due to the considerably reduction in costs of transportation,

on the matters of the world trade activity.

world trade their goods.

produced in the world is produced by developing countries, such as Brazil, Colombia,

premium that is a certain amount of money which is going to be invested in the

community of these producers.

development, equality and more justice.

Colombian coffee producers’ organizations.

- Determine if the small-holder farmers in the developing countries are aware

about the world trade institutions.

kind of organizations among the farmers from the developing countries.

- Determine if the FT system is a real advantage for small coffee producers in

trade regulation institutions?

in the Developed world?

among coffee producers?

services between people or countries“.

the global trade (B. Hoekman and M. Kostecki, 2001).

undemocratic, especially controlled by large corporations. Near two thirds of

international trade is between Transnational Corporations (TNC‘s). TNCs are not

subject to international regulation, which is an advantage in comparison with those who

powerful enough to stop it (M Lavtinoff & J. Madeley, 2007)

so specially for industrialized country governments (B. Hoekman and M. Kostecki,

main objective of this committee was to work on the charter of an international

of 30 October 1947 (P Van Den Bossche, 2005).

was much stronger than the GATT (The WTO, 2008).

was created (G. Fridell, 2007).

Youngest of all the major international intergovernmental organisations, especially those

trade flows as smoothly, predictably and freely as possible (WTO, 2008).

training programs, and Cooperating with other international organizations and so on