On a trial basis, Harvard University Dining Services (HUDS) has decided to serve the fairly traded coffee one day each week for the rest of the semester. This decision proves that morally responsible actions do not necessitate an economic sacrifice. More importantly, however, the decision will increase the quality of the Harvard dining experience for students by providing better coffee.
Some might claim that fair trade coffee importers distort the market by instituting a price floor of $1.26 per pound for the fairly traded beans. Any distortion of a market often makes proponents of laissez faire economic theory very uncomfortable. The market for coffee, however, is already distorted by parasitic middlemen—often referred to as “coyotes” by Latin American coffee farmers.
Like all middlemen, these coyotes serve a purpose in the market: to buy coffee from small farms and sell it to American coffee distributors at a huge markup.
Where an individual farmer cannot sell his small crop to Nestle or Starbucks, a middleman can collect enough coffee to sell. Many of these coyotes, however, are manipulative—acting simultaneously as loan sharks for the small coffee growing families in a manner reminiscent of sharecroppers in antebellum America.
Some farmers have decided to eliminate these middlemen by forming cooperatives and selling directly to American distributors like “Equal Exchange.” Equal Exchange agrees to buy the fairly traded coffee at $1.26 per pound—$1.41 if it is organically grown. The market price paid by coyotes to farmers fluctuates around 40 cents per pound—the extra dollar goes into the often poverty stricken hands of Latin American, African and Asian coffee farmers.
This redistribution to the workers is consistent with the economic notion of “sweat equity”—those who produce the product have more of a right to it than the middlemen who have take a large percentage of the sale price but add nothing to the product itself.
Buying from farmer cooperatives rather than coyotes does not artificially increase the cost of coffee to consumers. In retail stores, fair trade coffee is equally priced with other blends of similar quality. Adam Smith’s invisible hand may be reaching for a fairly traded cup of joe after all.
As a part of Harvard University, HUDS should be concerned about the conditions of Latin American coffee farmers, and others who produce food for the College. Simultaneously, as a student service, HUDS must make student satisfaction—specifically cost and taste—its main concern. While the organic, fair trade coffee is higher in price than New England Coffee, HUDS’ non-fair trade brand, the increase in cost is consistent with an increase in quality. The Equal Exchange coffee is organic and presumably tastes better—at least it does to me.
To guarantee that the students prefer the fairly traded blend enough to justify the additional cost, HUDS surveyed students who went for a cup in the dining hall yesterday and today. When these results are in, the HUDS can more conclusively determine student preferences.
The quality of coffee issue is no small concern. According to the NCA Coffee Drinking Trends Survey, 2000, 25 percent of Americans aged 18-24 drink coffee daily—one would expect similar numbers at Harvard. Between Harvard’s daily drinkers and occasional coffee fans, the increase in coffee quality affects the lives of thousands of students. An increase in quality coffee is consistent with HUDS’ more widespread move towards organic foods.
If you found that fairly traded coffee tasted better, or if you value that payments are going directly to farmer cooperatives rather than middlemen, make sure to fill out a comment card or tell your dining hall manager. If you didn’t get a chance to smell the sweet scent of redistribution or savor the smooth taste of high quality organic coffee, make sure to catch a cup next week.