South-Western - Management  
Brewing Social Change
Topic Social Responsibility
Key Words social responsibility, Fair Trade
News Story

Coffee is one of the world's most heavily traded commodities, with close to 25 million people relying on it for income. Yet, many farmers and hired laborers live in abject poverty. As president of Peace Coffee, Scott Patterson hopes to help change that by paying a decent price for Fair Trade coffee, and convincing customers that they choose coffee blends grown under conditions that allow farmers to make a decent living.

The company buys organic coffee for about $1.40 a pound directly from farmers' coops in Mexico, Guatemala, and Ethiopia. Then Peace Coffee sells it to American consumers at high-end markets and natural food stores. The prices the company pays are set according to international Fair Trade standards, which guarantee the farmers a minimum of $1.26 per pound. That's nearly three times as much as they would ordinarily get from exploitative middlemen. The farmers, in return, agree to grow the coffee under strict standards of organic farming.

Fair Trade began in Europe in the 1960s. Of $3.6 trillion of all goods exchanged globally each year, Fair Trade products account for only .01%, but that number is growing. Peace Coffee is one of the few companies that specialize in exclusively selling coffee that meets Fair Trade criteria. To label itself as a Fair Trade roaster, a business must deal with farming coops directly, foster long-term relations based on mutual respect, provide advanced credit during harvest to keep farmers out of debt to middlemen, and purchase only from farms that practice chemical-free, sustainable agriculture.

Peace Coffee sells primarily to food coops, independent cafes, and natural food markets. It also has sales through its website. Its goal now is to expand outside of Minneapolis. In keeping with Fair Trade environmental goals, Peace has moved into the Green Institute, located in a state-of-the-art business center built of recycled materials. The offices use recycled rain water for internal plumbing, have a roof garden, and provide changing rooms for employees who bike to work.

Patterson believes that customer support for 100% Fair Trade certified products in the U.S. could ultimately change life for small coffee farmers around the world. Thus far, Fair Trade policies have brought about advances in healthcare, housing and education.

Questions
1.

Go to the website TransFair USA at http://www.transfairusa.org/ and answer the following questions: What is Fair Trade? Who benefits from Fair Trade, and in what way? Then visit the website for Peace Coffee to learn more about this company and its product - http://www.peacecoffee.com/home.htm. Summarize what you learned?

2.

This company is an example of social responsibility in the extreme. What are some ways other coffee companies can demonstrate social responsibility without becoming a Fair Trade company?

Source "Brewing Social Change," Fortune December 10, 2002
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