Why Illycaffe Doesn't Sell Fair Trade Coffee

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The Fair Trade movement is beloved by socially conscious coffee connoisseurs, and for good reason--certification guarantees fair wages and labor conditions for farmers (coffee is purchased directly from growers for high prices); investments in community development; and sustainable farming practices. But Andrea Illy, CEO of illycaffè, doesn't use Fair Trade coffee beans in his business, despite a purported commitment to sustainability. Why not?

"Fair Trade certification is a system which is based on the grower being certified at his costs. He has to make the investment at his cost, his profit," Illy explains. "At the end of the day, the grower is the weakest part of the chain."

Enter Illy's University of Coffee, a training school for growers, trade professionals, and members of the public. Since opening in 2000, the university has trained over 50,000 people at branches in Italy, the U.S., the U.K., Brazil, and elsewhere. Many of the courses are pricey, but everything is free for growers--a marked difference from the Fair Trade certification program (according to the 2006 certification fee schedule, coffee producers pay $2,500 to $10,000 to cover inspection and certification costs).

According to Illy, growers who are put through the University of Coffee program come out with above-market growing standards--Brazil's training center features a nine-month program that includes "one week per month, 360 hours of lectures, 360 degrees in the world of coffee."

Illy buys between 10 and 30% of University of Coffee-trained growers' yield at a premium price, but doesn't require that growers enter into an exclusive contract. "We take the responsibility for the grower. That's why we have a team of agronomists, why we train growers, why we ask growers to certify different criteria at no cost. We pay the burden," Illy says.

Fair Trade isn't going anywhere, of course--not with coffee giant Starbucks pushing the certification. But Illy is confident in his brand's tactics. "We pursue environmental sustainability through the concept of respect," he says.

Ariel Schwartz can be reached on Twitter or by email.

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2 Comments

  • Swag Valance

    Alas, Fair Trade has been controversial within the industry since its inception in 1990 as to whether it ultimately helps over doing nothing at all. Good intentions and situationally workable ideas aren't always sufficient to produce proper results.

    Fortunately, after years of misinformation, public opinion is finally becoming educated enough to realize that Fair Trade does not hold a monopoly on ethically sourced coffee -- let alone is it an imperfect system for an imperfect problem of world poverty and global trade. But the fact that Illy is questioned why it doesn't sell Fair Trade coffee, however, suggests a step back into the misinformation dark ages.

  • Katie

    There are many views on the best approach to poverty alleviation in coffee-growing communities. And, while we applaud IIlycafe's commitment to farmers through various quality trainings, we believe that this approach is not all-encompassing. This article provides a great opportunity to correct some common misconceptions of Fair Trade. First, let's start with the facts:

    Fair Trade is growing. In addition to significant purchases from Starbucks, other leading brands like Ben & Jerry's, Honest Tea and Green & Blacks and Green Mountain Coffee have recently made commitments to dramatically increase Fair Trade Certified product offerings. These brands are joined by more than 800 brands in the United States that look to Fair Trade certification as a way to create positive change in struggling farming communities throughout the world. And it works.

    Last year, nearly $50 million dollars in additional income was returned to farmer and producer organizations in Asia, Africa and Latin America. On top of that, nearly $14 million in social premium payments was given to the communities to invest in much-needed development projects - from wells for clean water to schools, roads and medical clinics. Some organizations also invested the premium in organic certification or quality improvement - upgrades that will increase the value of their products and result income that covers the cost of sustainable production.

    Fair Trade empowers farmers to lift themselves out of poverty through trade, not aid. We believe this to be a more sustainable approach to international development, and we hear over and over from farmers who appreciate the additional income that Fair Trade brings, but also appreciate the satisfaction of being seen as empowered businesspeople that are supporting their families based on income that has been fairly earned. Last year, when I visited a Fair Trade coffee cooperative in Rwanda, I was told over and over again that the access to U.S. buyers that the farmers have gained through the Fair Trade system has been invaluable. Now that there are buyers for their coffee, they have hope for the future and motivation to continue to improve the quality of their beans.

    This mentality explains the reason for charging a fee to producer organizations to become Fair Trade Certified: paying for certification is just one part of doing business on an international level (there are much higher fees associated with organic certification). Farmers actually requested the fee-based system to help support and speed up the certification process. By co-funding the system, we’re able to certify and include more farmers each year.

    Fair Trade certification is an investment made my hundreds organizations around the world that yields high returns. Because the fee is paid by the organization, which consists on hundreds or even thousands of members, the cost to the individual farmers is nominal, especially when compared to the significant improvements seen in Fair Trade Certified communities. In cases where a community cannot afford the cost of certification, there are grants available through Fairtrade Labelling Organizations International as well as through many Fair Trade buyers. Additionally, fees paid by Traders also support certification costs so the farmers aren’t bearing the full burden of certification.

    I cannot argue with the benefits that come from Illy's University of Coffee - it is extremely empowering for coffee farmers to learn how to produce better quality coffee. However, this type of support for farmers is not nearly as all-encompassing as the Fair Trade model which provides a premium price, an added social premium for community development, standards and incentives for environmental conservation and access to direct relationships with international coffee buyers.