Friday, October 16, 2009

Starbucks, Walmart and The $4 cup of coffee

Back to the question of "fair trade" coffee.

Here is the scoop.

When you buy that $4 cup of Starbucks fair trade coffee, where is your money going?

Well...the truth is that most of your money does not go into the beans. In fact the coffee beans actually seem to be a minor element in the whole "coffee experience". And after all, that is what we buy these days isn't it? We buy "the experience".

In the average $4 cup of fair trade coffee, about 5 cents covers the beans. And that is after the beans are roasted. So the farmer of those beans (who sells before roasting) is getting only a few cents for every $4 drink. (This info is from a very interesting book entitled Starbucked)

Is this marginally better than the farmer would get for non-fair trade coffee? Yes. Does that explain why you are paying $4? Probably not.

Essentially this is the problem, as many of you pointed out. With fair trade products, many times the producer is getting a few extra cents, while the retailers are charging way more. Fair trade products (along with "green" products) are becoming a great way to inflate your profit margin.

I have to say, I tend to side with "Podge" on this. I'd rather buy local. That way I know my purchase is making a difference to someone...that an individual...not to some mysterious corporation. In the end I have more faith in the small business owner, that local coffee shop owner who is trying to make a go of it (despite overwhelming odds), than in the most philanthropic corporation in the world. This may not help get my money back to the coffee farmer, but at least my money is going back into the community.

Maybe this is wrong. I suppose there are lots of very philanthropic corporations. I suppose I should support them. Certainly there are corporations that should be rewarded and those that should be punished. Take Starbucks for example, in some ways they do deserve to be rewarded. They have been a pioneer in offering health insurance to part-time workers, while the majority of fast food companies go out of their way to avoid this. I still haven't figured out all the secrets of fair trade coffee, but providing health benefits for part-time wokers...this is something I can support. In fact, I could use some myself.

But corporations, even the best of them, rub me wrong. They are just so.....big. And I am so... small. And I am simply not sure that I want to live in a world that is quite so full of corporations.

Of course, in full disclosure, I must admit that I believe all of these things in abstract. Everything always seems much easier in the abstract. Let's take that great symbol of American corporations...Walmart. Walmart has certainly not been a pioneer in offering any kind of benefits to its workers. Nor does it treat its suppliers well. And yet I wandered in there just the other day and I must confess I went through the check-out lane. It's the prices, who can beat the prices?

But every time I go in there it blows my mind. Literally, I went to a Good Will thrift shop first and bought some clothes. I then went to Walmart and discovered that I could have bought similar clothing FOR LESS at Walmart. How is it possible that Walmart can sell new clothing for less than Good Will can sell used clothing? How do you sell t shirts for $4 and jeans for $10? Do I really want to live in a world where this is possible? Having seen first hand the amount of work that the SHONA craftspeople put into our clothing, I have absolutely no faith that the producers of the $4 T shirt are receiving anything close to a just wage. The math just doesn't work.

Yet still, those $4 t-shirts caught my eye. And when I go to Starbucks those $4 coffees catch my eye for a whole different reason.

So we live in a land of extremes. Where we can buy so many things for far less than they should cost, and so many other things for far more than they should cost. But the question remains, does it matter whether we pay $4 or $40? Where does our money go? Who can tell me? As long as the world remains so separated, with the producer and the consumer so very far apart, with lines of corporations and stock holders in between, I have the sinking feeling that very little of what I spend actually returns to the producers, fair trade or not.


Rachel Strohm said...

This is a very good post. You capture some of the challenging & conflicting dimensions of globalized trade very well (especially the bit about used clothes at Goodwill being more expensive than new at Wal-Mart!). I'm glad you're still posting even after leaving the DRC!

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shona congo said...

Thanks Rachel!

Somehow I imagined I would have much more time for posting once I was in the US, but alas...who knows where that has gone.

Thanks for still tuning in.

Claire said...

Hi Dawn,

I truly enjoy reading your blog, because it gives some really interesting insights into present day DRC, especially the Eastern part.

I also think it's incredibly important to raise questions about the ethnics of our shopping and consuming habits. When you point out Jeans being sold at 10$, yes, that's one thing that I cannot understand. Here in Germany it's the same, there are so many cheap clothing stores and you wonder, how the hell can these things be produced without slave labour. We all know that profit margins for the companies are extremely high, so what about the people actually putting in their labour?

You also mention the fair trade issue and give coffee as an example. This is one product where I am quite conscious about my buying habits. I only buy either fair trade beans or beans from small trading companies. I can only assume that the latter ones offer better prices to their suppliers.

One of my favourite kinds of coffee is actually "Lake Kivu" from Rwanda; I guess it should be available in Gisenyi and even though it isn't labelled as fair trade, I hope that the farmers gain a little more than by selling their produce to large companies through auctions. Unfortunately I haven't been able to buy it in Europe.

One last thought about Starbucks: I try to avoid them since I simply don't like their coffee, plus I find it way too expensive. What's more ist that what Starbucks stands for in my opinion is the whole "Latte, Frappucchino, Iced, etc." stuff, which isn't actually about coffee - but this is another story!

Have a good weekend!

Emily Wilkes said...

That is interesting how Walmart can sell clothes cheaper than used clothing stores. What would be the draw to buying used clothes then? I buy used sometimes, and I often spend hours in the used clothing store looking for unique items I couldn't find anywhere else. I guess this relates to what you called "buying for the experience" because if I were trying to do the same thing at Walmart I could only find mass produced items.

shona congo said...

Yeah, you are right. You definitely find different stuff in a thrift shop than you find in a walmart. And the experience is different. I have to admit, the large brightly lit warehouse, with a million of each item, just kind of freaks me out. I mean talk about feeling like you are living in a mass produced world...

Podge said...

A great post and I am still going with the local coffee shop guy as my way of ensuring that my money is helping someone I can see and has tangible outcomes in so much as my local community is to benifit.

The question of clothiong etc is a curly one the way I see it in the western world all major retailers are in it for the dividends paid to shareholders regardless of the claims made and as such they are not good corporate and global citizens (due to the fact that in general we are financed focused as a whole in the first world) this however doesnt stop me from using them what it does do however is allows me to make what I feel is an educated choice when faced with an aleternative, in many ways I would be happier to buy a pair of jeans for 40 dollars if there was tangible benifit to the worker if I knew the things were made in a factory that wasn't a sweat shop of if the person selling me the jeans recived a decent hrly rate and health cover etc.

I may well be working in the DRC soon and have been in PNG for over 30 years so I know about the 3rd world thing first hand and whilst I would like to be part of a movement to encourage growth; until the big names start to be completely transparent and the share holders are happy to be paid 2/3 of current dividends to ensure the sweat shops, farmers and child labor is removed/ improved then I feel all the lables be they fair trade or green are nothing more than a way for profits to be increased and some senior exec in London, NY or Switzerland to allow themselves to sleep better knowing that shareholders will be happy; its an unfortunate fact that most would not knopw where on the map the products they sell are manufactured.

shona congo said...

I agree. I think there is a problem with the way corporations have come to drive our economy and our society, being that they do seem to pretty much exist to serve shareholders interest. And yet shareholder interest increasingly means short term profits, such that the extent to which the shareholders are concerned with the long-term well-being of the company is often dubious. It then becomes a pretty long jump to expect that shareholders, boards, and executives are going to make decisions on the basis of the larger good of society.

But to me this is disasterous. What happens when the most powerful forces in our society take no consideration for the common good?

Now, you've got me going... I will have to turn this into a post after all...

Podge said...

Well the onus is on the people that buy shares and have superanuation funds.

If your fairdinkum (truthful) in your beliefs (in a general population meaning not just you personally Shona) then as a voting owner of shares in some of these major players its your rite/ duty to work towards better rights and conditions for the employees in the developing world.

Lets be honest if Reebok, Nike, Billabong or diamond brokers were pressured by shareholders to improve such they would need to act or find their shares being offloaded and using the profits of said sales to buy a rival that is tarnsparent in their policy choices and places profits second to susatinability and satisfactory conditions I know I would rather have shares in a company that makes 20% less nett profit looking after the workers and community over the course of a year knowing that the practises are in place to ensure community development is a higher priority and in direct relation to that the longevity of the business and the community is assured of development and infastrucure as well as the long term delivery of my dividend which no matter how we frame it or wether we like it is why we buy shares its a fact of life we need money to live but the question should be do we need so much at the expense of the people that can least afford to be maligned???