The Coffee Clash

Free-market advocates see the oversupply as an unavoidable effect of economic progress. The end of export quotas allowed Brazil to boost mechanized production and encouraged Vietnam to plunge into planting coffee with cheap labor and low-quality beans. The glut, says Brink Lindsey, a Cato Institute trade expert, is "a signal to high-cost producers — for example, in Central America — to supply a higher value product or exit the market." Free traders fear Fair Trade premiums could spur even more production. Their solution to the crisis: encourage more Java drinking. In Veracruz, however, and among at least some of the 674,000 farmers who belong to Fair Trade co-ops worldwide, politics and economics intersect for a better life. The Huatusco co-op is building health centers and schoolrooms. The extra money also allows it to focus on the complexities of picking, depulping, fermenting, washing, drying, husking and sorting with the meticulousness that the gourmet market demands.

Global agriculture is hardly an exercise in unfettered capitalism. Vietnam's coffee planting was funded by government loans. In the U.S., grain farmers fatten themselves on $180 billion in subsidies. And sugar in America costs nearly twice the world price because of protective quotas that mainly benefit corporate farmers.

Increasingly, politically correct labels are becoming a brand attribute no different from price, performance or advertising. Organic certification is growing exponentially as consumers seek to avoid pesticides; 85% of Fair Trade coffee in the U.S. is also organic. Most tuna fish is labeled dolphin safe — caught without netting the popular sea mammals. The Rugmark label promises carpets woven without child labor. Activists persuaded Home Depot to sell wood that is certified as sustainably harvested, avoiding the razing of endangered forests. And environmental groups label some coffee shade grown, bird friendly or Rain Forest Alliance certified if it protects wildlife.

Meanwhile, the Fair Trade seal has expanded to tea, chocolate and bananas. Mangoes, pineapples and grapes are short-listed. It won't necessarily improve the flavor of those products, but for many consumers, it will leave a better taste in their mouth when they make a purchase. And if the grocer stands to make more profit, capitalism will be served too.