Globalising justice within coffee supply chains? Fair Trade, Starbucks and the transformation of supply chain governance

Abstract

This paper reviews a range of initiatives that attempt to transform the global institutional arrangements through which production and trade of coffee is organised and governed. Specifically, it examines the Fair Trade system, Starbucks' CAFÉ Practices Program, and a range of wider campaigning activities around issues of ‘trade justice’. These initiatives are shown to have contributed to the empowerment of marginalised workers and producers in the global coffee industry, to the extent that they have complied with the following three conditions: promoting the acceptance of expanded responsibility for tackling disempowerment among relevant decision makers in the global North; strengthening institutional capabilities necessary for these responsibilities to be effectively discharged; and enabling marginalised groups themselves to exercise some control over processes of institutional transformation. However, these initiatives have typically been designed as discrete systems of ‘supply chain’ governance, which has limited their ability to advance those dimensions of worker and producer well-being that are shaped by a range of state and non-state actors beyond as well as within supply chain institutions. In theory this limitation could be overcome via appropriate allocation and co-ordination of partial and shared responsibilities across a plurality of relevant decision makers. In practice, however, the failure of these initiatives to develop either transparent means of defining the boundaries of partial responsibilities, or institutional modalities to enable their co-ordination, has significantly weakened their capacity to entrench empowerment principles throughout the governance system of the coffee industry as a whole. It is concluded that the development of such conceptual and institutional models will be necessary to enable both consistency and enforceability of empowerment outcomes, and thereby to ensure that principles of justice can be realised among workers and producers throughout the global coffee industry.

Notes

1 The restricted focus of this paper on Nicaraguan evidence limits the extent to which findings presented here can be directly generalised to the global industry as a whole. However, many of the dynamics documented and analysed in the Nicaraguan case have important implications for production sites elsewhere, and can be considered ‘transferable’ on a more selective and case-specific basis.

2 I take the term ‘well-being’ to encompass core dimensions of material welfare such as basic income and access to social services, as well as ‘agency’, understood as freedom and capacity to act in pursuit of perceived self-interest, both autonomously and in interaction with wider social actors and institutions. See Anthony Giddens, ‘Structuration theory: past, present and future’, in, Christopher GA Bryant & David Jary (eds), Theory of Structuration: A Critical Appreciation, London: Routledge, 1991, pp xi, 252; David, Held, Democracy and the Global Order: From the Modern State to Cosmopolitan Governance, Cambridge: Polity Press, 1995; Naila Kabeer, Discussing Women's Empowerment: Theory and Practice, Stockholm: Swedish International Development Cooperation Agency, 2000; and World Bank, Empowerment and Poverty Reduction: A Sourcebook, Washington, DC: World Bank, 2002.

3 I use the term ‘governance’ in a conventional manner to refer to a process whereby an organisation, society or social sub-system steers and co-ordinates itself. See James N Rosenau, ‘Governance in a globalizing world’, in David Held & Anthony G McGrew (eds), The Global Transformations Reader: An Introduction to the Globalization Debate, Cambridge: Polity, 2000; and Jan Aart Scholte, ‘Civil society and democracy in global governance’, Global Governance, 8, 2002, pp 281 – 304.

4 See Karla Utting-Chamorro, ‘Does fair trade make a difference? The case of small coffee producers in Nicaragua’, Development in Practice, 15 (3 – 4), 2005, pp 584 – 599.

5 Both workers and smallholder producers face problems as a result of the terms of their participation in the global coffee industry, but the nature of these problems differs in many respects between these two ‘categories’ of marginalised groups. I therefore frequently distinguish them from one another in the analysis presented below. In practice, however, the distinction between these categories at the level of individual households is often blurred, since many smallholder producers or their household members commonly work as wage labourers on larger farms during periods when their own production fails to generate sufficient food and income to support the family. Christopher Bacon, ‘Confronting the coffee crisis: can Fair Trade, organic and speciality coffees reduce small-scale farmer vulnerability in northern Nicaragua?’, World Development, 33 (3), 2005, pp 497 – 511; and Benjamin Davis & Marco Stampini, Pathways Towards Prosperity in Rural Nicaragua; or Why Households Drop in and out of Poverty, and Some Policy Suggestions on How to Keep Them Out, Pisa: fao and Scuola Sant'Anna, 2002.

6 Jon Jonakin, ‘The impact of structural adjustment and property rights conflicts on Nicaraguan agrarian reform beneficiaries’, World Development, 24 (7), 1996, pp 1179 – 1191.

7 Pedro Viskovic Cespedes & Fair Trade Assistance, Fair Trade Impact: The Nicaraguan Case, Managua: American Consulting Group, 2002; and mific, El Café en Nicaragua 2005, Managua: Ministerio de Fomento Industria y Comercio, 2005.

8 Author interviews with members of coffee growing communities in Matagalpa, Nicaragua (November and December 2004). See also Christopher Bacon, ‘Confronting the coffee crisis: Nicaraguan farmers’ use of cooperative, Fair Trade and agroecological networks to negotiate livelihoods and sustainability', PhD thesis University of California, Santa Cruz, 2005.

9 An extensive and widely cited literature has developed in recent years analysing the industrial organisation of conventional coffee supply chains, and distributions of ‘rent’ between differently positioned participants in these chains. See, for example, Gary Gereffi & Miguel Korzeniewicz, Commodity Chains and Global Capitalism, Westport, CT: Praeger, 1994; Peter Gibbon, ‘Global commodity chains and economic upgrading in less developed countries’, 2000, at http://www.cdr.dk/working_papers/wp-00-2.pdf; Richard Hampson, ‘2000: the year of self-evaluation’, Tea and Coffee, 07/00, 2000; Kris Herbst, ‘Revolution in a coffee cup: waking the sleeping consumer giant’, Changemakers, 1 March 2001; Stefano Ponte, ‘The latte revolution? Winners and losers in the re-structuring of the global coffee marketing chain’, cdr Working Paper 01.3, Centre for Development Research, Copenhagen, 2001; and John M Talbot, ‘Where does your coffee dollar go? The division of income and surplus along the coffee commodity chain’, Studies in Comparative International Development, 32 (1), 1997, pp 56 – 91.

10 Republica de Nicaragua, Informe Liquidacion Del Presupuesto General De La Republica 2005, Managua: Direccion General de Presupuesto, 2005.

11 Davis & Stampini, Pathways Towards Prosperity in Rural Nicaragua.

12 I use the term ‘accountability’ to refer to a property of an institutionalised relationship in which the exercise of power by a given actor is constrained subject to some requirement of responsiveness to those over whom their power is exercised.

13 The definition of Fair Trade articulated by the movement itself can be found at http://www.eftafairtrade.org/pdf/FairTDAP.pdf#search=%22FINE%20fair%20trade%20definition%22.

14 See Christopher Bacon, ‘Participatory action research and support for community development and conservation: examples from shade coffee landscapes in Nicaragua and El Salvador’, Research Brief #6, Center for Agroecology and Sustainable Food Systems, University of California, Santa Cruz, 2005.

15 The certified Fair Trade system (based around the Fairtrade Labelling Organisation) guarantees that producer co-operatives receive a minimum of $1.26 per pound for non-organic beans and $1.41 for organic beans, plus an additional ‘social premium’ of five cents per pound.

16 Catherine Dolan, ‘Fields of obligation’, Journal of Consumer Culture, 5 (3), 2005, pp 365 – 389; Martha Finnemore & Kathryn Sikkink, ‘International norm dynamics and political change’, International Organisation, 52 (4), 1998, pp 887 – 917; Laura Raynolds, ‘Consumer/producer links in fair trade coffee networks’, Sociologia Ruralis, 42 (4), 2002, pp 404 – 424; and Samuel Scheffler, Boundaries and Allegiances: Problems of Justice and Responsibility in Liberal Thought, Oxford: Oxford University Press, 2001.

17 Peter Leigh Taylor, ‘In the market but not of it: Fair Trade coffee and Forest Stewardship Council certification as market-based social change’, World Development, 33 (1), 2005, pp 129 – 147; and Raynolds, ‘Consumer/producer links in fair trade coffee networks’.

18 Author telephone interview with representative of Interfaith Trading Initiative, September 2004.

19 April Linton, Cindy Chiayuan Liou & Kelly Ann Shaw, ‘A taste of trade justice: marketing global social responsibility via fair trade coffee’, Globalizations, 1 (2), 2004, pp 223 – 246.

20 See, for example, Fabrizio Adriani & Leonardo Becchetti, ‘Fair trade: a “third generation” welfare mechanism to make globalisation sustainable’, Working Paper No 62, Centre for International Studies on Economic Growth, 2004; and Mark Leclair, ‘Fighting the tide: alternative trade organisations in the era of global free trade’, World Development, 30 (6), 2002, pp 949 – 958.

21 See René Mendoza, La Paradoja Del Café: El Gran Negocio Mundial y la Peor Crisis Campesina, Managua: Instituto de Investigación y Desarrollo Nitlapán – uca, 2002.

22 Transfair USA, 2005 Fair Trade Almanac, Oakland, CA: Transfair USA, 2006.

23 See Cespedes & Fair Trade Assistance, Fair Trade Impact. This figure refers to the actual difference in household income between producers participating in Fair Trade-certified co-operatives and those unconnected to Fair Trade markets. The figure therefore incorporates the ‘dilution’ effects created by both sale of some coffee to non-Fair Trade markets, and the allocation of a share of the Fair Trade price differential to fund collective governance functions performed by producer co-operatives.

24 Christopher Bacon, ‘Resistiendo la crisis de café: midiendo el impacto de las cooperatives, comercio justo y café organico en las familias asociadas’, in Bacon, ‘Resumen de los resultados preliminares de la tesis doctoral de Chris Bacon’, unpublished.

25 Small neighbourhood grocery store.

26 Author interview with members of a Fair Trade co-operative, San Ramon, Matagalpa, November 2004.

27 Bacon, ‘Confronting the coffee crisis: can Fair Trade, organic and speciality coffees reduce small-scale farmer vulnerability in northern Nicaragua?’; Cespedes & Fair Trade Assistance, Fair Trade Impact; Mendoza, La Paradoja Del Café: El Gran Negocio Mundial y la Peor Crisis Campesina; René Mendoza & Johan Bastiaensen, ‘Fair trade and the coffee crisis in the Nicaraguan segovias’, Small Enterprise Development, 14 (2), 2003, pp 36 – 46; and Utting-Chamorro, ‘Does fair trade make a difference?’.

28 Author interview with members of a Fair Trade co-operative, San Ramon, Matagalpa, December 2004.

29 www.flocentroamerica.net; www.fairtrade.net. See also Douglas Murray, Laura Raynolds & Peter Leigh Taylor, ‘One cup at a time: poverty alleviation and fair trade coffee in Latin America’, Colorado State University, 2003, at www.colostate.edu/Depts/Sociology/FairTradeResearchGroup; and Utting-Chamorro, ‘Does fair trade make a difference?’.

30 Leigh Taylor, ‘In the market but not of it’; and Alex Nicholls & Charlotte Opal, Fair Trade: Market Driven Ethical Consumption, London: Sage, 2005.

31 See Cespedes & Fair Trade Assistance, Fair Trade Impact.

32 See, for example, mific (ed), Informe de Logros de Proyectos de Inversion Publica, Managua: mific, 2005; Republica de Nicaragua, ‘Comunicado’, Managua, Casa Presidencia, 6 August 2003; Nicholas Hoskyns, ‘Fairtrade, gender and grassroots action—the experience of Nicaraguan coffee cooperatives’, paper presented at the conference on ‘Gender in Global and Regional Trade Policy: Constrasting Views and New Research’, University of Warwick, 5 – 7 April 2006; and Utting-Chamorro, ‘Does fair trade make a difference?’.

33 Nicholls & Opal, Fair Trade.

34 Author interview with representative of the second level co-operative Soppexca, Jinotega, September 2004.

35 See, for example, Christian Barry, ‘Applying the contribution principle’, in Andrew Kuper (ed), Global Responsibilities: Who Must Deliver on Human Rights?, New York: Routledge, 2005; Joel Feinberg, ‘Collective responsibility’, Journal of Philosophy, 65 (21), 1968, pp 674 – 688; Robert Goodin, ‘Apportioning responsibilities’, Law and Philosophy, 6, 1987, pp 167 – 185; Michael J Green, ‘Institutional theories of justice and responsibility’, paper presented at the Global Justice Seminar, 2001; Iris Marion Young, ‘Responsibility and structural injustice’, at http://socpol.anu.edu.au/YoungRespStrlnj6.05.doc, 2004; and Larry May, Sharing Responsibility, Chicago, IL: University of Chicago, 1996.

36 Author interviews with representatives of co-operative organisations Soppexca, Cafenica and Cecocafen, Jinotega and Matagalpa, August – December 2004.

37 Starbucks commands a market share of roughly 2% of the global market, and around 20% of the US speciality coffee industry. See www.organicconsumers.org/starbucks/coffback.htm.

38 14.5% of Starbucks coffee purchases were sourced under CAFÉ Practices in 2004, and 24.6% in 2005, with this target doubled for 2006. Starbucks, ‘Beyond the cup’, in Corporate Social Responsibility 2005 Annual Report, Seattle: Starbucks, 2005.

39 Karen Foley, ‘Deconstructing relationship coffee: how this emerging business model fits into the industry’, The Specialty Coffee Chronicle, May/June 2004; and Allison Linn, ‘Starbucks smelling the coffee’, Miami Herald, 17 April 2004.

40 There are, however, minimum required standards with regard to wages, overtime, child labour, discrimination and forced labour.

41 For details on the system of rewards, see Starbucks, ‘Beyond the cup’; and http://www.scscertified.com/csrpurchasing/starbucks_documents_participants.html.

42 See http://www.scscertified.com/csrpurchasing/starbucks_documents_verifiers.html.

43 Author interviews with representatives of Cecocafen, Soppexca and Cafenica co-operatives, Matagalpa and Jinotega, September – December 2004. See also Karla Utting-Chamorro, ‘The application of an impact assessment framework for responsible trade initiatives: a case study from Fair Trade coffee in Nicaragua’, forthcoming.

44 According to interviews with both Starbucks and a number of their suppliers, Starbucks is paying prices that are higher than average in the speciality industry as a whole, but in most cases they are still lower than fair trade prices.

45 Author interview with representative of Exportadora Atlantic, Matagalpa, November 2004.

46 Author interview with representative of Mercon Coffee Group, New Jersey, September 2004.

47 Author interview with producer supplying Starbucks, Matagalpa, November 2004.

48 Author interview with representative of Technoserve, Managua, November 2004.

49 Ibid.

50 Author interview with representative of Scientific Certification Systems, San Francisco, December 2004.

51 Author interview with representative of Specialty Coffee Association of America, Los Angeles, December 2004.

52 Author interview with representative of Scientific Certification Systems, San Francisco, December 2004.

53 US/Guatemala Labor Education Project, ‘Update and analysis of Starbucks’ progress towards implementing a code of conduct', 1998, at http://www.usleap.org/Coffee/SBCampaign/sbanalysis98.html.

54 Global Exchange, ‘Socially responsible investors will attend Procter & Gamble shareholder meeting to demand that Folgers guarantees a living wage for families harvesting its coffee beans’, press release, 2001, at http://www.globalexchange.org/campaigns/fairtrade/coffee/news2001/gx100801.html.pf.

55 Author interview with past staff member of Oxfam UK, Oxford, August 2004.

56 Author interview with representative of Rainforest Alliance, New York, September 2004.

57 Ken Abbott & Duncan Snidal, ‘Nesting, overlap and parallelism: governance schemes for international production standards’, memo for Alter-Meunier Princeton Nesting Conference, 2006, at http://www.princeton.edu/∼smeunier/Abbott%20Snidal%20memo.pdf.