This is going to be a quick post...Yet there are so many thoughts running around this brain of mine that must be updated here.
First, I saw Black Gold...The documentary that I mentioned right below. They are showing it again today in Pittsburgh. It ran for about 80 minutes and went into Ethiopia, Europe and America. Definitely a bias documentary, but aren't they all?? The people the produced the video, I believe, are from Europe. At first Europe was the good guy with some faults and America was viewed as consumer whores. Which is true, to an extent. But take a trip into inner city Chicago or New York, we cannot take care of our own poor and oppressed. We act like we have wealth upon wealth yet cannot distribute it properly in the confined of our own country. Yes though I do agree the Africa is not getting paid properly for it's raw product and in, some sense, they are almost forced to sell Chat, a narcotic, in order to provide for their families.
One part of me wants to go over there and set up a boycott in order to receive justice for these people, and yet the other half of me knows there is more to this issue than just raising the price of coffee. I have yet to figure that out. Once the price for the raw product rises, then the price of everything else will rise...It is like a double edged sword that can never be dulled. However, I do not think that we can only accept that fact and ignore the issue.
On the other hand I don't know if Fair Trade is really fair trade anymore. Are we dividing up community by creating a huge income gap among villages? And is fair trade just a label now adays and not so much what everyone has hyped it up to be? Also, are we willing to buy fairly traded coffee from these corporations or companies that are in far away states and ignoring the local business, right next door, that is trying to pull community together and roast coffee properly to give the best to their customers ?
There are a lot of angles.
I was going to say more but I'll stick to the first.
1 comment:
Most people don't spend much time think about the commodities markets. If I said that hydrochloric acid sells for a mere 10 dollars per 55 gallons, nobody gets too upset about it. They don't deal with acid on a day-to-day basis, and don't have a point of reference when thinking about prices.
Likewise, if I said iron only costs 50 dollars a ton, nobody is upset, even though they know that a two ton truck might cost 30,000 dollars...a huge increase. At some level, we understand that iron undergoes a great deal of transformation before becoming a truck. That transformation is called "value-added". The varying results between trucks is called "differentiation". Those two things help determine price.
Now, with coffee, we compare the commodity price and the retail price, but (even after close examination) can't see any real differentiation. And so we detect a bit of hucksterism on the part of the middlemen. "What are they doing to deserve the markup?" But retail coffee is differentiated the same way a Lexus is from a Toyota: Presentation, and not much else. You're paying for the packaging, the reputation, the extra service, etc. Not one farmer in the world can give you those things, and that's what makes them rare. The rarity makes them valuable.
The same is true of any farm good. A plate of pancakes can cost much more than a bushel of wheat.
So, what to do:
1. Sell directly to retailers. Sounds like a good idea, but commodities markets like the Chicago board of trade are successful because they are efficient. You aren't likely to be more efficient than them, ever.
2. Differentiate. Setting industry standards for labels like "fair trade" and "organic" can allow farmers to add perceived value. Farmers in Champagne and Cognac and Parma have done the same thing with their place names.
3. Cut costs. This is how wheat farmers make money: Through automation. Coffee-growing perhaps can't be automated. Likewise, cheap labor can't easily be imported into Ethiopia, as it can into Napa.
4. Government protection: And, of course, if all else fails, you can beg for beneficial tariffs, subsidies, etc. This is why there are still rice paddies outside of Tokyo.
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