During my recent visit to Oro Verde Cooperative in Amazonian Peru, I stayed with a number of indigenous farmers who are supplying us with an incredible cocoa. It is incredible for its taste – last month our farmers took first and third place in the World Chocolate Competition in Paris!- but it is equally as incredible for the story behind the cocoa. These brave farmers have been growing cocoa beans as a replacement for the coca they have grown in the past to feed the deadly narco-traffic in cocaine.

We were the first company to import coffee from their village called Akan Shamboyaco (it was Alto Shamboyaco until my visit, when the people decided to reclaim the full name of their village from the Spanish Alto, meaning “high”). We are also the first and only company to import their sugar, paying the villagers ten times the amount they get on the local market. Yet it is the cocoa that has the most profound impact on the villagers’ lives.

Coca is an essential part of indigenous spirituality and the daily work life of many of the indigenous groups along the Peruvian Amazon and highlands. It provides energy for working at high altitudes and essential amino acids and vitamins not readily available in local foods. No problem there. But for the last two decades outsiders have come in and morphed the benign coca plant into the essential ingredient in cocaine production. In fact, by the end of the 1990’s this area accounted for more than a quarter of all cocaine production in Peru. The farmers received good money for the coca leaves that grow so easily here, but the price many paid was higher than the income gained. Farmers were harassed by Peruvian military and often arrested and jailed. Brutal narco dealers often forced farmers to grow more and more coca, kidnapping children (especially boys) to insure compliance and to gain “recruits” for the narco battles and allied extremist movements like the Shining Path, which was largely funded by cocaine. Drug dealers also set up cocaine processing sites throughout the jungles around Akan Shamboyaco and the many rivers in the Amazon basin at the foot of the area. The processing involved many hazardous chemicals, which were left to flow into water sources, poisoning fish and making water undrinkable.

“It was a bad trade for us”, said Belmar sadly.  Belmar is a traditional leader in the village, although only in his late twenties.  We sat around a lantern at his house one night, hearing stories of political and social struggle of the people here. But Belmar brightened when he spoke of the economics of cocoa and coffee these days. “We still have a lot of problems in our community, but the money from the cocoa and the coffee is much better.  We don’t have to worry about the coca problems anymore.”

Oro Verde has done an amazing job in organizing so many isolated villages into a powerful and successful cooperative. But helping the villagers of Akan Shamboyaco to increase their income and gain independence from the cocaine trade may be the sweetest victory yet.

Every time I visit a coffee village I hear the same question: why is the price of coffee to us farmers so low? Why is there no relation between the costs of production and a reasonable (if any) profit and the price we get for our beans? These questions apply to 99% of the coffee in the world, fortunately not ours. But here is the answer, from my perch atop a waterfall in northern Peru:

In New York City, half an earth away  from the coffeelands, a room full of overcaffeinated young men (who’d probably never heard of Yirgacheffe or Atsabe) are shouting themselves hoarse bidding down the lifeblood of rural coffee farmers. In the middle of this room is the circular trading floor of the New York Board of Trade (NYBOT), known to its denizens as “The Ring.” Here, investment houses, banks, financial speculators and large coffee companies bid on the future price of coffee. For the companies, the goal is to insure a future supply at a known price – a necessary planning tool for a business based on an agricultural commodity. But for the rest of the frenzied traders the point is to make a profit on the “float” between what they pay for coffee futures and what they hope to sell them for later. For two centuries, coffee had been a dull commodity, traded on a somnambulant market. Yet somewhere in the last decade, it had morphed from a morning brew into a raging speculative commodity on the trading floor.

In this wired world, these Lords of the Ring are supplied with up-to-the-minute financial, political, meteorological and other data from an army of consultants. An early frost in Brazil? The flowers necessary for the budding coffee fruit to develop could wither and die, shrinking the coming harvest. Supply down, price up; bid two cents more for March deliveries. A rumored peace deal in Colombia? Easier deliveries in three months; hold off and let the price drop. The rumors and intelligence are translated into Buy and Sell orders, little slips of paper carried across the floor by the Runners, the traders-in-training. Their street clothes covered in tunics carrying the colors of their houses, the Runners grab the slips from the phone and computer banks owned by the Lords and race them down to their warriors in the Ring, who scream out their offers to buy for a penny more or sell for a penny less. These players make the prices rise and fall in an incestuous system unrelated to the true cost of growing and processing the crop, and with no consideration at all for the needs of the growers to feed their families and keep their kids in school. As one trader told me:

“Traders are not guys with moral fiber when it comes to the conditions of the farmer’s lives. We’re seeing money and we’re making money."

It always amazes (and angers) me that when the market price determined by the Lords of the Ring goes up, roasters and retailers are quick to raise their prices to the consumer. “We have to charge the replacement value of the coffee” one broker told me. But when the world prices go down, these same brokers and buyers never drop their prices.

To me, Fair Trade is not just a formula to keep the price at a level sufficient for the farmers to rely on to improve their lives, it is a deeper commitment to social change that challenges the basic assumptions about the market and the human relations that lie beneath the surface.

While I sat above that waterfall, the market price dropped below 60 cents per pound - the price it costs a farmer to grow and harvest the coffee. From that day forward, each pound produced would drive the farmer who grew it deeper into debt and bewildered despair. For half a decade to come, farm families would suffer malnutrition and infant mortality would soar. At the same time, corporate profits were about to rise to historic heights, as the Lords of the Ring made their killing.

(Dean is currently in the field in Peru. Stay tuned for a new blog upon his return. In the meantime, here is Dean's Beans' 2009 Year in Review and a sneak peak of what's in store for the year to come...)

We don’t have to tell you how rough 2009 was. All of us had to struggle with a decimated economy, lost jobs and demolished savings, a polarized political system and a swine flu epidemic. Whether it was people’s desire to brew coffee at home instead of paying a tuition’s worth for a cup at those chain stores, or folks looking for a company that reflected their values and they trusted, we actually grew in 2009. In recognition of our good fortune, we gave away over a thousand pounds of coffee to folks who you told us were having a rough time due to the economy and otherwise. We committed to supplying all the coffee needed all year long to the overburdened Amherst Survival Center. We even got our coffee back from those Somali pirates.

At home we started a new program with Somali refugee women in Massachusetts to create an economic base for them. Our reusable grocery tote project was so successful that we had to suspend it after a week. We will be back on it as soon as “the ladies” (as they call themselves) crank out more bags made from the burlap bags our coffee arrives in. After twenty years of false starts, this is the first successful economic development program in this community. Congratulations, Walaalo Sisters!

Internationally, we kept our promises and our programs with our farmer partners. This was not easy. The dollar fell to record lows internationally, which actually forced up the price of coffee. In most of the coffee world that didn’t mean more money to farmers, only to the exporters. But for us it meant more money for the farmers themselves and no passing it on to the consumer. That’s how we do business regardless of convenience or cost.

Here is an update on some of our People-Centered Development work in the coffee lands:

• Peru – We are working hard with both our partners in Peru, Pangoa and Oro Verde. In Pangoa, our Restoring the Sacred project keeps growing, having reforested with local trees and local knowledge a large part of the deforested sacred lands of the Ashaninkas peoples. Our Women’s Loan Fund continues to offer the only credit available to coop women, and our latrine program (with our logo on the doors! Talk about off the wall marketing!) continues to, uhh, blossom. Additionally, we have supported the travels of General Manager Esperanza Castillo to international events so that she can tell the story of women in coffee to the world. Powerful stuff.

• Colombia – In Colombia we have dedicated our program to supporting indigenous self-determination and the maintenance of sacred knowledge.  We have helped start a land re-purchase program that brings communal land back into the fold after years of government programs that saw the land base shrink. We are also supporting a new initiative to bring Elders of the four tribes of the Sierra Nevada together to walk the sacred spots around their mountains (the “Heart of the World”) and teach the knowledge to the next generation. Additionally, through the Coffeelands Landmine Victims Trust, we are supporting meaningful job training for coffee farmers disabled by explosives in the on-going violence in this country.

• Guatemala – We continue to support the great programs of APROS, the women’s health collective on Lake Atitlan, including new programs with the women’s teen daughters. This is the first girls-training-girls program in Central America and is powerful and successful in self-esteem building and small scale income generation for scholarships.

• Nicaragua – Our work with Prodecoop continues as it has for sixteen years. Last year we worked on the design and funding of a farmer-owned café/roasterie, modeled on our successful project in Leon, Nicaragua that supports land mine victims. We also sent volunteers down to assess educational needs, which we will continue to do this year as we evolve a new program for needs assessment on the farm level and how best we can participate.

• Kenya – We keep struggling against corruption and inefficiency in the government to help farmer coops get fair trade and organic certification. We established an organic demonstration plot in Embu so that the farmers could see the real results of going organic. We held a training in Fair Trade and organic techniques that drew a roomful of farmers representing ten thousand coop members. We are designing an Internal Control System with Rianjagi Coop to help it become the first Kenyan coop to get organic certification. At the same time, change comes very slowly in Kenya.

• Rwanda – Our groundbreaking Men Overcoming Gender Violence trainings last year were so successful that the UN funded some of the farmers who had received the training to go share their work with other cooperatives in Rwanda. This is a groundswell of work in a land so torn by gender violence. We have also begun a weaving project with women genocide survivors at COOPAC cooperative, starting with coffee canister sized baskets with “Dean’s Beans” woven into them! Available soon!

• Ethiopia – This year we brought water directly to the new school in Negele Gorbitu. We also paid the salary of the new teacher at the school (three times the salary of the government supplied teacher, but three times the quality as well!). We are still in the planning stages of a farmer owned and operated well drilling company.

• East Timor – Working both with and against the system in East Timor, we managed to create the first direct relationship in the coffee industry with a village level farm coop, in Atsabe, Ermera District. This has allowed us to be able to put our profit share and development assistance directly into the farmers’ hands and assure accountability and impact. Our first project was to supply 200 fair trade soccer balls to the President’s Youth Anti-Violence Initiative, giving young Timorese their first insight into progressive business and hope. We are working to establish a recording studio for young Timorese musicians and a farmer owned and operated café/roasterie. We hope our example will lead other companies to buy directly from farmers in East Timor.

• Papua New Guinea – This is one distant and difficult place to work! We continue to provide organic certification and training to farmers we buy from, as well as to fund the microloan program.

Some of our really exciting new programs for 2010 include:

• The creation of a Bulletin Board, where farmers post their needs (“experienced electrician”, “English teacher”, “computer help”, etc.) and our customers (that’s you!) step up and volunteer to help out. Still working out the many bugs in this one but it will be the best thing we’ve ever done!
• Dean’s Constitutional Convention – help us design the progressive company of the future! (I ain’t getting any younger!). No progressive founder has ever left a company that really sticks to its ideals. Can we?
• Coops Supporting Coops – We are putting together a program where our cooperative customers can choose which projects they’d like to support from their purchases. It will be a great way for coops here to connect directly with coops there.

We’ll keep providing great coffee at reasonable prices, great opportunity for the farmers and increased opportunity for you to participate in making the world a better place. Really.

I often hear comments by café owners or some of the less enlightened in the coffee business such as, “aren’t all coffees organic?” or “we only buy organic coffee --the broker told me that the farmers don’t use pesticides”. Unfortunately, neither of these comments is true, and I thought it was about time to state the case for certified organics right here.

First of all, it is important for folks to realize that coffee is the second most heavily pesticided crop in the world after cotton. Period. The top ten chemicals used on coffee are either banned for use in the USA or strictly limited and heavily regulated. Twenty years ago, many of us young (-er) eco-activists tried to stop the export to the developing world of chemicals that were not allowed to be used in the USA. The ethical reasoning was clear enough, if we aren’t allowed to put them on our workers and in our environment, why should we dump them in less tightly regulated environments? Also, since most of these chemicals were used on food that would be exported to us, shouldn’t we stop this exporting Circle of Poison? Good luck, we couldn’t overcome the agricultural lobby then or now on this one. Some of the chemicals used in coffee are DDT, malathion, parathion, dieldrin, endrin, roundup and paraquat. Does that leave a good taste in your mouth?

Add to the inherent dangers in these chemicals the problem that most farmers who use them can’t read the warning labels in English, German and Spanish and a real problem ensues. The majority of farmers in the world are indigenous peoples who may not read or write the languages on the warning labels. Even in Latin America I usually work with farmers who can’t read Spanish, and the warnings aren’t printed in Quiche, Mam, Tzutujil or other indigenous languages. I can’t tell you how many times I have seen children or adults throwing handfuls of white chemicals over plants without using any protective gear or applicators, or even knowing what the chemical was.

It is essential for consumers to understand that “certified organic” is more than just farmers not using pesticides. In order to become certified, farmers must undertake a three year chemical free period, complemented by training in erosion control water protection, mulching and composting of plant wastes and a lot more. A very stringent, transparent system of internal controls must be adopted and followed to monitor adherence to the organic program. Certified organic farms make a strong commitment to the earth and her inhabitants that is far beyond that of the ordinary farmer.

It is often difficult for consumers to read past the marketing hype of major companies and organizations that would like the commercial benefit of organics without paying the farmer more or making a real commitment. I am sorry to say that Rainforest Alliance and Fair Trade share this lack of commitment. Neither major label requires certified organic status from its growers, but both make all sorts of earth friendly claims about their products. Many people associate Fair Trade with organic, because historically most Fair Trade cooperatives were also certified organic.  However, as Fair trade has, ahem, broadened its reach to embrace large multinational players in the coffee, banana, and other markets, that equation can no longer be assumed. For example, Starbucks only Fair Trade coffee, “Estima”, is not certified organic (which also means Starbucks doesn’t have to pay the twenty cent organic premium to the farmers!). Interestingly, neither of the two (that’s it??) organic Starbucks coffee are Fair Trade (so they don’t pay the Fair Trade premium on these!)! I have heard that where once 85% of all Fair Trade certified coffees were also organic, the figure is now down to about 65%. That’s certainly better than Rainforest Alliance, which has a strong environmental program but has no requirement for organics either.

We are 100% certified organic because we believe in the value of organics to the earth, the farmers and their ecologies and to the consumers, as well. Coffee people who make claims that their products are organic but are not certified are either blowing smoke or are truly ignorant of what this issue is all about.

Most people think that Fair Trade is just about a minimum price guaranteed to the farmers. That is a critical piece of the system, but Fair Trade provides many powerful tools for social change – something that no other label or system offers. One of the most significant is the requirement that farmers organize into democratic and transparent cooperatives.

In order to understand what this is about, it is necessary to appreciate why Fair Trade was founded in the first place. In the coffee world, the vast majority of farmers are small scale and indigenous. That means they have little access to information about prices, how the market operates, the needs of northern buyers, access to credit and more. They may not even speak their own national language, but rather their indigenous language. Therefore, they need middlemen to either provide the services for them or buy their coffee outright as cherries picked earlier that day. Since most are physically far removed from the major population or processing centers, they also have to rely on middlemen to get their coffee out of the mountains and into the stream of commerce. As you can see, they are not effective participants in the world market (even though economic models assume that they are), and are at a terrible disadvantage in trying to get a good price for their products.

By organizing into cooperatives, the farmers have the joint buying power to get better prices for farm inputs, they have joint processing power and a greater ability to get information about current prices and market conditions. They get to vote and have a real say (often for the first time in their lives) on the things that impact their families’ health and well-being. The requirement of transparency means that for the first time in their lives they know what they are getting, how much goes into the coop’s coffers, how much everyone else is getting and they can see the impact of the cooperative on their personal and joint bottom lines. Further, the coops provide valuable and often nonexistent social services, such as loans and health care (or at least money to obtain care).

Fair trade coops often pool their premiums together to have a powerful joint impact on their communities. This may take the form of building wells and schools (and believe me, most farming communities are in desperate need of both!) such as we have seen and participated in in Nicaragua, Ethiopia, Peru and elsewhere. Often, it takes the form of purchasing and building upstream capacity – that’s biz talk for buying the plants that process, grade, package and export their beans, thereby keeping that entire income stream in the local community, not giving it away to layers of middlemen. In Ethiopia, our Oromia partners have even created a national bank that takes deposits from non-members, makes low cost loans to members and has creatively diversified the income of the coop.

These are the unique, important and largely unknown benefits of cooperation in the coffeelands, and tens of thousands of farming families have gained better lives as a result. These are the reasons why we have focused on cooperatives and will continue to do so.