I asked Okta, who is planning to develop and sell coffee and chocolate products at su-re.co, if we could have a workshop on trade. For the past few weeks we have had the 30-minute-workshop on Fridays. She asked me to talk about fair trade there, so I told her a bit about what I think. I've written about Fairtrade before here. Fairtrade coffee shop may say, "We pay the farmer up to three times more than normal", but the reality is that a full cup of coffee that costs $2.6 sells for $3, and the farmer gets about 6 cents out of the difference, and the other 54 cents goes to where??. It is not clear where the remaining 54 cents will go. If you think of it as paying three times as much, it's fair from the farmer's perspective. Is it fair from the consumer's point of view that paying 60 cents more to pay only 6 cents more to the farmer for the same product?
I also started selling coffee to give about 25% of the proceeds to biogas and climate change schools. Crowdfunding allowed me to raise money that way and install a biogas unit. However, because the crowdfunding allowed us to get a higher price for the coffee than usual, we could use 25% of the proceeds to help the farmers. However, if we wanted to continue selling the coffee, we would have to sell it at a lower price in Bali. If we wanted to continue selling it abroad, we would have to spend a lot of money on transport and formal export procedures. So when we were using 25% of our sales for biogas, we were losing money every time we sold coffee.
The coffee business is very competitive and if you give up 25% of your sales, you don't have a business. It would have been great not to know. We vary our contribution to biogas and climate change schools between 5% and 20%, depending on the product. Fairtrade also started with good intentions, but because coffee sells well, before long, there could be an increase in the selling price and a difference in the money given to the farmers.
The following is an example of our farmer business that is 0-3-1 step ahead in the way we have described before.
In the future, we hope that farmers will be able to run their own coffee and energy businesses. However, many of our farmers have little or no education beyond primary school. We feel that running a business that requires them to do everything from marketing to accounting on their own would be too much of a hurdle. I think what we are doing is somewhere between what I wrote in my previous blog about Fairtrade. Fairtrade is now considered good but dubious, and the farmers' own coffee business is three steps ahead of Fairtrade. We distribute biogas equipment to farmers and run climate change schools and this is one step ahead strategy. After the workshop, we need to finance this a bit better.