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It is popularly said that the existence of café Campesino was born from a wheelbarrow of dirt. This can be traced back to 1997 in Guatemala when one of the team members who had attended the Habitat for Humanity’s Global Village Program cast off a wheelbarrow filled with dirt on a coffee farm that belonged to a farmer. This action angered the owner of the farm who dismissed the whole team from working on the house that the team had been sent to build. As this issue was being resolved by the coordinator as to what would be done on the coffee bush, the rest of the team, seated under a shade, talked about the coffee plant that made the farmer react in such a way. In their talk, they discussed of how much coffee the little tree could produce, how much the farmer was paid and the number of families in the region that looked upon coffee farming as their main income source. It took a considerable amount of time of dialogue between the farmer and the Habitat coordinator that the farmer allowed the team to return to building on condition that never again should they dump any kind of dirt on the coffee farm (Campesino n.d).
Bill Harris, the café Campesino’s co-founder kept thinking about the coffee questions they discussed during this incident long after it happened. In the search for the answers, he dove on the internet, and that’s where he found shocking revelations about coffee farming and trading across the world. In his search, Bill discovered that the existing coffee trade practices were not presenting a good picture at all. His research indicated an appalling picture of how coffee farmers the world over were exploited. Despite the coffee business booming in the New York Stock exchange, the coffee farmers and producers languished in poverty due to poor pay for the prestigious product. In essence, the price of coffee on the New York Stock Exchange simply did not account for the economic burden that the coffee farmers bore in producing the product. Most Coffee farmers were small-scale farmers and were remunerated an approximate of 50 cents for each pound of coffee produced. Considering that most families depended on coffee farming for their existence, the pay did not make a fair or sustainable relationship. Bill thought of a solution that would bring fairness in the coffee trade that led to the birth and formation of café Campesino.
Bill’s idea was to create an interactive forum for both the coffee end-users (such as coffee roasters) and producers (such as farmers) that would encourage the development of mutually beneficial relationships. This mutually beneficial relationship would eventually lead to the establishment of fair trade. At the same time, coffee farmers were drifting away from the unfair coffee pricing and grouping themselves together to form cooperatives that introduce an alternative trading system, fight for fair pricing for the coffee they produced and save them from the exploitation from the existing supply chain (Campesino n.d).
When cafe Campesino was formed in 1998 as the first 100% fair trade, it had a role in establishing long-term relationships with the newly formed cooperatives and coffee roasters in the US. It planned to do this by procuring and importing the farmers’ green coffee, establishing a fair pricing system, and selling the coffee to roasters.
Café Campesino's First Fair Trade Coffee Transaction
After instituting his idea, Bill headed back to Guatemala in an attempt to establish a relationship with small-scale coffee farmers and secure sales for their coffee at reasonable prices, higher than those set in the New York’s coffee commodity market. Farmers who had already formed into small cooperatives bought Bill’s idea who now sought market from the forte roasters of coffee who posed as buyers. The name cafe Campesino is a translation of the Spanish translation phrase “coffee from a small farmer.” In March 1998, café Campesino managed to collect one full container of green coffee from farmers that weighed 40,000 pounds and started supplying it to specialty coffee roasters in most parts of eastern United States. This was the first real transaction that café Campesino since its formation as a fair trade (Campesino n.d).
This was a good sign of business between the coffee roasters and coffee farmers. Café Campesino continued to import coffee efficiently for about a year. This was made possible by the good organization of the small-scale farmers at ground level who formed into cooperatives. The farmers’ cooperative had a higher organizing capacity, and that meant high produce of coffee to be collected by café Campesino. The farmer’s cooperatives were expanding at a faster rate than that of café Campesino. At that rate, it was clear that cafe Campesino would need additional capital for expansion. This became a challenge to Bill and his small team. The lack of funds forces them to look for other alternatives that will help them expand their market to cater for the growing produce and supply of coffee. As a result, café Campesino had to approach other existing coffee companies that were value-driven values-driven and persuade them to form purchasing cooperatives, as farmers were doing at their level (Campesino n.d).
Café Campesino’s efforts mobilized some coffee roasters (including themselves) to meet and form Cooperative Coffees by the end of 1999. Cooperative Coffees was formed as a purchasing cooperative by seven coffee roasters in Atlanta. The customers of café Campesino were the founders of Cooperative Coffees who acted in unison and embraced the idea of eliminating intermediaries in the coffee trade. Together the established and owned Cooperative Coffees which they used to deal with small-scale farmers directly to import green grain coffee and in the campaign to promote fair trade. Now with twenty four members, the purchasing cooperative (Cooperative Coffees) reflects the coffee producing cooperatives and promotes farmers since it has an increased buying capability.
Over the years since its formation, most of café Campesino’s revenue was derived from the importation and sale of green coffee rather than roasted coffee sales. Furthermore, its growth to cooperative purchasing level was toughened by the lack of capital. However, the adjustment was realistic when the company sought partnerships with other coffee companies and part-time investors. By the year 2000, the company had developed its website and a customer base for wholesale. Besides pursuing partnerships with non-profit organizations and building up its retail and wholesale businesses across the US, the company also started hiring college graduates who would bring new ideas that would spur more growth (Campesino n.d).
The formation of Cooperative Coffees proved worthwhile as it efficiently and effectively controlled the coffee importation business something which spurred its growth and that of Cafe Campesino. Due to this growth, it was adequate for cafe Campesino to develop and become a legitimate coffee roaster. Since this was a huge task that needed an experienced person to carry out, Bill invited his brother Lee, a graduate of the New England Culinary School, a chef and co-founder of a prosperous café in Tallahassee. Lee joined café Campesino as a co-founder and a chief coffee roaster at café Campesino (Campesino n.d). Under Lee's leadership, cafe Campesino became a bonafide coffee roaster and abandoned its previous practice of toll roasting. Several changes had to be effected at café Campesino to accommodate its new capacity.
To become a roaster, they needed to expand and since they were just in their initial stages, they only refurbished an old Quonset hut that was located a few yards down street from Café Campesino’s office to a coffee roasting facility while Lee visited a roaster manufacturing company to learn how to use it in Florida and acquire a new coffee roaster for the company. Lee’s experience with oriented machinery, and working around heat and oven made the roasting job less of a challenge. He gave most of his time to learning and understanding the details of the roasting process and manipulation of the final taste of coffee. He spent most his time practicing to roast as many batches of coffee as he could through the roaster to determine the countrcoffees’ countries of origin of the coffees, their freshness, timing, and moisture affected the range of flavors and nuances of the final product (Campesino n.d).
Lee’s efforts of careful tuning of the roasting process finally paid. Over time, the customer and peers of Cafe Campesino's coffee acknowledged it as being of high quality and an unbeatable variety of flavors. These compliments and tributes earned café Campesino a solid and loyal customer base who appreciated the company’s brews with absolute love. Café Campesino was elevated to another league courtesy of the high quality of their coffee beans and Lee's fastidious experience and effort. Moreover, since they were the lone fair trade coffee roaster in Georgia, café Campesino was a history maker.
Why Fair Trade?
Café Campesino adopted the fair and direct trade model due to its consciousness and transparency at all levels which can be traced back to its formation. It created an alternative mutual economic relationship between the consumers (Global North) and producers (global south) of coffee in America. Café Campesino strongly believed in the transformative potential of fair trade to the small coffee farmers who were exploited by the pricing systems that was never concerned of the efforts they put into producing the coffee.
By purchasing coffee from farmers through fair trade cooperatives, Café Campesino understands that farmers are going to benefit from fair prices that are worth their efforts in producing coffee and this helps the farmers get their families out of poverty, offering opportunities for communities to improve their infrastructure and a chance to educate their children. Through fair trade, café Campesino together with the farmer’s cooperatives has been able to turn the pricing system to its head and reverse the world economy that took advantage of market disparities and disregarded environmental needs of the coffee producers. Through fair trade, Café Campesino and other companies committed to making conscious strategic decisions that positively impact coffee farmers and the environment rather than merely focusing on the lowest cost (Campesino n.d).
As the World Fair Trade Organization stipulates, fair trade should be a tradeoff conglomerate centered on negotiation, reverence of trading partners and transparency and should be centered on equity. Since farmers in developing countries may not have fair access to as those in developed countries, fair trade acts an intermediary that offers them sustainable and fair opportunities to compete in the international market without being discriminated or exploited. Café Campesino ensures that its actions positively impact the farmers' social, economic, and environmental lives.
The main reason that café Campesino became a fair trade company is to help the small coffee farmers who were previously exploited to have better pay for their coffee and become environmentally responsible by sustainably cultivating their lands. Small farmers would not resort to deforestation to plant more coffee bushes when they are paid fairly. Instead, they would use the opportunity to improve their communities. Through fair trade, small coffee farmers achieve financial stability and economic independence. It also eliminates intermediaries who exploited the producers and enables small farmers to form cooperatives which empower them. Through the cooperatives farmers can access credit, opportunities to improve their farming techniques, and marketing and technical support. Cooperatives help farmers to improve the communities by building social amenities such as schools, hospitals, housing, infrastructure all of which improve the living standards of farmers, and their families. This way, the farmers do not have to worry about basic needs (Campesino n.d).
Complex Problem Facing Café Campesino
Café Campesino started out as the first and sole fair trade company in the whole of Georgia in America to solve one of the most itching problems most small coffee farmers faced in the hands of the self-centered middlemen. This meant that the solution that café Campesino offered would be met with complete admiration from the farmers who were already grouping to form cooperatives that would offer them fair and sustainable price system for the coffee they worked so hard to produce and which was their main source of income. Since its first transaction of importing a container of green grain coffee from small farmers and their cooperatives, the farmers were able to produce more coffee than café Campesino would buy from them singlehandedly (Campesino n.d). This became a challenge to Bill and his small team. Something had to be done to cope with the rising situation. To be able to do this, café Campesino needed additional capital which they lacked. Bill and his team had to look beyond their limits and seek partnership with other value-driven coffee companies in the regions.
The company’s continued growth meant an expansion of its sales, marketing, and public relations functions. Bill and his brother Lee invited their long-time friend, Tripp Pomeroy, with vast knowledge in transnational consulting and trade administration to partner with them and take up the role of the sales and marketing executive in café Campesino. Café Campesino also had a challenge of establishing a strong market base of the coffee roasters who would buy the increased production from the farmers. Bill had to persuade the coffee roasters who bought their coffee to form a purchasing corporative that would have a larger buying capacity and that which will establish fair and sustainable pricing system for the mutual benefit of farmers and buyers. Bill managed to pool a total of seven coffee companies who agreed to form purchasing corporative known as Corporative Coffees. By pushing for this partnerships, café Campesino was able to increase the economies of scale of the coffee they were importing from farmers from one container to several of them at once (Campesino n.d).
The global coffee trade and market experienced substantial changes in the supply side over the past few years. These changes have markedly influenced coffee production and export on a global scale. There has also been a recurring price crisis in the coffee market which has greatly been attributed to changes in the global coffee market structure. This phenomenon has been aggravating the problem for American producers, suppliers, and roasters alike. The price shifts were mainly caused by shifts in coffee production by major world producers including Brazilian producers. However, there have been consequent modifications by suppliers of coffee to respond to variation in price and a gradual increase in the production of coffee in other regions such as Guatemala and Nicaragua among others.
Although there has been an improve production of coffee by the small farmers and their cooperatives, the growth of the market café Campesino has been experiencing from its increasing customer base of the roasters and other coffee companies were growing at a much faster rate. This means that the supply of green grain coffee from the farmers does not match the market demand café Campesino is receiving. To track down this new and multifaceted challenge café Campesino is facing, we will revisit the processes that the farmers followed to improve their production (Campesino n.d).
The small farmers in Guatemala first embraced the idea of forming corporations that would save them from the torment of unfair prices established in the New York Stock Exchange, which did not care about the environmental conditions of the producers. The small farmers greatly benefited from their corporations in so many ways including easy access to credit facilities, technical help with coffee farming and more importantly improved infrastructure and mechanization. Consequently, the cost of production of coffee in Guatemala declined since farmers adopted new coffee farming technologies and specifically mechanized harvesting. Also, new plantings in by the farmers increased the production leading to a substantial coffee surplus.
The global coffee surplus occurred between 2000 and 2001, causing a worldwide decline in the prices coffee to their lowest levels in 30 years. As all this happened, the small coffee farmers in Guatemala had not substantially improved their production to a steady level, and therefore, their supply could not meet the demand that café Campesino was required to supply to its customers. Coupled with the declined world coffee prices, café Campesino challenge became two-fold: inadequate supply from the producers and low global coffee prices. Since the price of coffee prices had fallen below the actual production cost, there arose financial and social constraints in the supply chain as they could not pay their farmers and laborers to their satisfaction levels (Campesino n.d).
On a global scale, the total production of coffee exceeded by far the total consumption. The total global consumption of coffee is about 105 million bags while the total production hit a high of 115 million bags. Besides causing a drastic decline in the global prices, the overproduction initiated the buildup of portfolios in both the producer and consumer countries. Other factors also underscore the price crisis apart from over-supply, such as the operational demand fluctuations, and variations in supply of coffee of superior quality. These factors were at the bottom of café Campesino’s challenge of insufficient supply from the farmers and their corporative.
How Production and Export Volumes of Small Farmers are affected
When the global coffee price crisis set in, the low prices prompted the small coffee farmers and producers, who are less competitive due to their small size to cut down their production. However, since income from coffee farming was the main income source for most of the small farmers, they continued to produce in hopes that the market conditions will change and the prices will go back to normalcy. In fact, for most of the largest producers, production increased substantially between 1990 and 2001. However, there have been variations among countries. For instance, in Central America, Nicaragua led in registering the highest growths in both production and export volumes, with Guatemala and Honduras trailing closely behind. Some of the countries which registered a decline in production include El Salvador and Costa Rica (Campesino n.d).
Nevertheless, the overall production between 2000 and 2001 indicated a decline across all countries. This is attributed to the fact the traditional small coffee farmers did not tend to their crops as required and applied smaller quantities of agrochemicals or none at all due to low market prices for fear of incurring losses in the long run. This practice affects not only the volume of production but also the quality of coffee produced, thereby plummeting the prices further since market prices are attached to the quality of the coffee. Circumstantial evidence has it that prices are the major causes of the decline although part of it could be as a result of recent droughts and other climate-related conditions experienced in Central America.
Effects on Employment
When café Campesino was still an idea in Bill’s head, he had visited Guatemala for a house building project under Habitat for Humanity’s Global Village Program. It was then when he realized the importance of coffee farming to the rural residents in that part of the country especially when one of their staff dumped dirt in the owner’s coffee farm. It was the main and very significant employment source for people in the rural areas in Central America. It is noteworthy to note that the coffee sector employs nearly half of the rural labor force on average.
It then follows that the declining global coffee prices are having a damning effect on employment in the rural areas since the small farmers are not getting sustainable profits due to low production. This has caused unemployment levels to reach dire levels in Central America. For instance, there have declines in seasonal employment by at least a quarter and a more than half decline in permanent employment in the last two crop seasons. The prices crisis has caused the laying off of more than half of the permanent labor force. There has been a fall in wages as farms continue to receive inferior revenues returns from their coffee making a buildup of labor supply unemployment. In Guatemala alone, about $62 million of salary income has been lost due to unemployment while the total loss of income salary in the whole of Central America was $140 million (Campesino n.d).
The situation has been worsened by the fact that majority of coffee farmers and producers that café Campesino depends on for supply are smallholders living in remote rural areas, whose survival is hinged on their harvest. The income they get from their harvest is used to cater for their basic needs for example food, education for their children, and health care, and most likely they lack savings to use during hard times. Therefore, the social imbalances created in this sector is a recession in the rural economy and results in general instability. Coffee produced by the small scale farmers accounts for an insignificant portion of the aggregate production and therefore intensifies the challenge that café Campesino faces. For this reason, the company has to seek for new partnerships such as the larger farmers whose production is less likely to be affected by crises in the coffee sector. Luckily enough, Guatemala has the largest production among the average and big farmers where café Campesino can easily make contact with new partners.
Alternatives to fix Café Campesino’s Challenge of Low Supply from Farmers
Seeking Partnerships with other Farmers Unions, Purchasing Corporations and Coffee Companies
Fairtrade coffee is effective when it works with a partnership with all players in the coffee sector including smallholder producers and farmers, coffee buyers, cooperatives, no-government organizations and development agencies. It is through partnerships that coffee enthusiasts will be assured of high quality and ethically sourced brew. Furthermore, this partnership will ensure a win-win situation amongst all the players in the supply chain. It will ensure that the efforts of the small coffee farmers in the rural areas are acknowledged by earning a fair income from their work of producing the world’s most widely traded agricultural commodity. Partnerships also ensure that buyers can access to high-quality coffee beans in the coffee markets around the world. However, it would take considerable effort from all partners involved to achieve such win-win results (Campesino n.d).
By seeking such partnerships, café Campesino will gain and exchange insights fellow partners and therefore will have high prospects of growth which will trickle down from the top partner to the partners on the ground. Partnerships will also minimize the complexity of establishing supply relationships with cooperatives and small producers to a higher level. Café Campesino will also be able to practice inclusive governance that will bring resilience and build capacities.
Planning and Implementation of Sustainable Diversification Initiatives
For café Campesino to achieve its development agenda, it must focus on the efforts to plan sustainable diversification as both short-term and long-term responses to crises. The company should direct their sustained efforts and seek support from non-governmental and government agencies. The company should plan and implement their diversification initiatives in a systematic process to deal with the constraints in the agricultural and business environment constraints and not as emergency responses. Apart from promoting diversification, this move will increase the company’s competitiveness and provide a safety net for small farmers in the rural years (Campesino n.d). Café Campesino could plan sustainable diversification initiatives such as;
Access to labor markets: Mobility of labor is of critical importance in fair trade coffee both within countries and between countries. Café Campesino should consider collaborating with immigration departments to lessen seasonal and permanent migration of the rural economy of farmers in the Central American countries. It should advocate for fewer obstacles to labor mobility, as well as access to improved financial services for coffee farmers.
Credit support: Café Campesino should plan support programs targeted to small farmers to be able to finance their farming activities for improved coffee production and cushioning them in times of crises. However, the company should rationalize such support to not interfere with the market-oriented underlying principle for diversifying.
Community organizations: Farmers should be encouraged to form or join groups based in their neighborhood that work together with producer organizations. With these groups, farmers could be connected to more markets.
Market research: Café Campesino should lead research-based studies to find new markets for coffee productions for local and international markets. It could collaborate with specialized organizations such as INCAE to conduct market researchers.
Technical assistance: Small farmers are in dire need of appropriate technical assistance in their farming practices since they lack access and financial abilities. This technical assistance packages will help them to address the environmental, sanitary, agronomic, and phytosanitary problems so they can improve the quality and production of coffee grown. This could be accomplished by partnering with governmental and non-governmental agencies. Local authorities may also fund the technical assistance practices offered through the active participation of the farmers (Campesino n.d).
Improve Competitiveness regarding Coffee Quality and Marketing
Café Campesino has a strategic advantage since it is headquartered in the Central American region which is a globally known region for it heavy coffee productions with vast growing zones with the suitable environmental and agroriculture and environmental conditions that are necessary to produce high grade gourmet coffee. Many areas such as Guatemala and Costa Rica have made considerable progress in taking advantage of these features to the benefit of small coffee farmers who are the majority in the region. In general, these coffee zones stand a better chance of producing top quality coffees and penetrating superior, forte coffee market segments. The implementation of quality improvement programs will improve quality of coffee right from production milling and roasting (Campesino n.d).
Café Campesino should have strategies to identify elements that are essential to promote quality such as comprehension and evaluation of coffee quality, basic glitches that may impact coffee quality, describing available options to overcome these glitches and executing public procedures that will assist in the approval of these changes.
For efficacy to be achieved, café Campesino will need to apply the quality improvement strategies comprehensively all the way through the entire coffee production and supply chain, i.e., from farming, harvest, and roasting. The company should also be keen on the following areas;
a) Pinpointing and sustaining the environmental regions with appropriate agricultural and environmental circumstances for better production.
b) Ensuring that quality coffee is produced, by planning and carrying out wide-ranging programs to manage coffee bean and minimize deficiencies.
c) Following effective marketing strategies that are concomitant to establishing new long-term market associations and partnerships, getting grand rewards for quality, and gain access to high income divisions of the market.
d) Exploit convenient advertising approaches such as sales, online marketing campaigns to promote local sales. Café Campesino should also implement marketing policies that focuses on farmers and distribute information regarding ecological benefits and coffee best practices associated with coffee.
Café Campesino should also improve its ability to deal with price shocks to improve its competitive advantage in Fairtrade coffee. The company should also implement risk management practices and instruments to reduce price ambiguity and protect farmers against price crises in future Café (Campesino n.d). This will improve access to credit facilities and allow for improved decisions on marketing.
Café Campesino Small Farmer Coffee. Retrieved from https://www.cafecampesino.com/
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