Fair Trade: How to Brew Justice

In the mid-1980s, Rink Dickinson wanted to go into business to help an unusual constituency: his vendors. He proposed to import coffee by paying impoverished Latin American farmers double the going rate for their beans. Reaction from potential investors was predictably cool. "People were just, like, 'That's a bad idea,'" he recalls. "The concept of having your values embedded in everything you did in your business ... was just not happening in any major way at all." Nonetheless, with just $100,000 from family, friends and a few supportive idealists, Equal Exchange was born in 1986 in a 2,000-sq.-ft. room in Boston's South End. Today copresident Dickinson boasts a 77,000-sq.-ft. facility outside Boston, a full-time staff of 80 and a 33% average annual growth rate over 19 years.

But the real accomplishment, Dickinson will tell you, is what has happened in the 15 developing nations where Equal Exchange buys from indigenous farmer cooperatives. In Oaxaca, Mexico, residents ride a fleet of cooperative-funded buses on routes that take hours to walk. In La Libertad, El Salvador, children who used to walk past an empty school building now study inside with a teacher who is paid by the cooperative. In Chajul, Guatemala, a cooperative-funded health clinic is helping reduce child mortality. And in remote corners of Peru, growing numbers of children of uneducated farmers are leaving to pursue university degrees, thanks in part to a predictable market for family-grown crops.

Equal Exchange can also boast that it started a trend. About 450 coffee importers opt to pay above-market rates for certain beans and then sell the product as premium coffee in 45,000 stores nationwide with Fair Trade certification, an independent audit from TransFair USA. The Fair Trade sector accounts for just 2% of the $22 billion domestic retail coffee market. But the industry is striving to keep up with rising public expectations for the way the brew comes to market.

Starbucks Coffee, for instance, in 2004 piloted its own certification program known as Coffee and Farmer Equity (C.A.F.E.) Practices. By 2007, the company intends to buy more than half its coffee from a supply chain that independent auditors have inspected. Among the criteria: growers must minimize deforestation and receive "premium" prices, that is, those high enough to turn a profit.

Equal Exchange has helped create a new paradigm in an industry with a reputation for keeping suppliers poor. "The coffee industry for several hundred years has been viewed as a competition between producers and consumers," says Ted Lingle, executive director of the Specialty Coffee Association of America. "Where the specialty market is changing is in getting everyone in the supply chain to recognize that there's a partnership [which entails] some sort of shared prosperity."