The Coffee Clash

In a corner of a dilapidated brick coffee mill, Lindsey Bolger is deep in concentration. Outside the window, the lush cloud forest of Mexico's Veracruz state stretches to a blue-green horizon, and hummingbirds dip into the wild hibiscus. The American, 40, closes her eyes, bending over a row of 12 white cups on a round metal table. Each contains coffee from the new harvest, toasted at 400F in a small roaster on the counter. Bolger shakes each cup and sniffs deeply. "I'm looking for defects," she says. "Underripe beans, overripe beans, sour flavors, mold. If even one bean out of 60 is flawed, you can tell."

Bolger is chief buyer for Vermont's Green Mountain Coffee Roasters, the Mexican mill's largest customer. For the 1,900 farmers who belong to the Huatusco cooperative, her opinion can mean food on the table — or not. If her standards are high, it is understandable. She pays twice the market price for 456,000 lbs. of their coffee. Why? Co-op president Josafat Hernandez has a simple explanation: "It allows us to survive." Coffee prices on the world market have fallen by two-thirds in the past five years to below what it costs to grow the beans here. Misery stalks the co-op's 43 hamlets, where as many as half the men have emigrated to Mexico City's slums or the U.S. Along the roads, children as young as 5 pick coffee, baskets strapped to their waists.

But the sweet deal — in which Green Mountain guarantees the co-op at least $1.26 per lb. for some of its coffee even though the world price is around 60 — also helps the $117 million company position itself as a socially responsible corporate citizen. On 42 of the 100 varieties of coffee that Green Mountain sells in supermarkets, gas stations and offices, it pastes an official seal that reads fair trade certified, proof that it paid a living wage to the growers. "The Taste of a Better World" is Green Mountain's marketing slogan, and its Fair Trade sales grew 92% last year. Says spokesman Rick Peyser: "Fair Trade puts the farmer's face on the cup of coffee. Our customers want the human link."

Coffee, the world's most valuable traded commodity after oil, is a flash point in the struggle over globalization, and the drama is being played out everywhere, from supermarkets to college cafeterias. A decade-long supply glut has impoverished some 25 million small farmers in 50 countries. Three American multinationals — Kraft, Procter & Gamble and Sara Lee — plus the Swiss giant Nestle together buy almost half the world's beans, and their profits have percolated as farmers' incomes have dripped dry. With human-rights activists crying foul, some consumers are turning to Fair Trade — and away from unfettered "free" trade — as a way to help.

But are they really helping? To orthodox capitalists, the glut can be remedied only by cutting supply or increasing demand. Fair Traders counter that giving consumers product information to make a choice is merely classic marketing. Fair Trade coffee is a better product because growers can afford to invest in their farms, argues Paul Rice, the head of a nonprofit that certifies Fair Trade. Moreover, consumers are connoisseurs. "They don't just want French roast. They want Guatemalan Antiguan, and they know where Antigua is," he says. "Fair Trade fits that because we tell a story about helping people to help themselves — not a story about poverty that makes you feel guilty."

If Fair Trade is taking off in the U.S.--and it is — much of the credit goes to Rice, 43, a Texan who, as a Yale senior, went to Nicaragua to study Sandinista land reform. He stayed a decade, setting up a cooperative for 2,500 coffee farmers. Five years ago, armed with an M.B.A. from the University of California, Berkeley, Rice raised money from the Ford Foundation and others to set up TransFair USA, a certification agency. Under the system, first launched in Europe, co-ops in 25 countries agree to divide their profits equitably and open their books to inspectors. To earn the label, companies must prove they paid at least $1.26 per lb. ($1.41 for organic) and also offered preharvest financing.

Last year Rice's agency certified $208 million worth of Fair Trade coffee. That's not much, given the $19.2 billion American coffee market. But Fair Trade sales have tripled in the past three years and constitute a growing slice of the booming $8.4 billion gourmet-coffee market. Today Fair Trade coffee is imported and roasted by 280 U.S. companies and sold at 18,000 retail outlets.

This year sales are expected to spurt, thanks to two new converts. Ahold USA — part of the Dutch conglomerate that controls Giant Food, Stop & Shop and other chains — will launch five varieties of organic Fair Trade beans (cost: $7.99 per lb.) under its Javana brand in 1,200 supermarkets. And Dunkin' Donuts, the No. 1 U.S. retailer of coffee by the cup, is rolling out an all — Fair Trade espresso line ($1.79 to $2.69 a cup) in 4,200 shops to go testa a testa with the baristas of Starbucks. "This is the beginning of a movement, and we want to get in on it," says marketing director Ed Valle. "We expect to serve 30 million Fair Trade lattes and cappuccinos this year."