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COMMENT: Coffee - moving towards fairer trade

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In a landmark agreement, four major companies involved in coffee production, including the Swiss giant Nestle, have agreed to a code of conduct that should guarantee minimum wages and acceptable working conditions for third world producers and employees, as well as a strict adherence to environmental guidelines. While the accord is a welcome step towards ethical coffee production in the developing world, altruism may not be the sole motivation for the move.

The Common Code for the Coffee Community (CCCC) is good news for the 25m workers employed in the coffee industry in the developing world. The CCCC will ensure that employees of large coffee companies have decent working conditions, benefit from a minimum wage and are allowed to join a trade union, thereby benefiting from the protection that this affords them. Although they are the immediate beneficiaries of this welcome development, it is by no means certain that the motivations behind the agreement are solely altruistic.

As the success of Fairtrade products have shown, many consumers prefer to buy products that have been ethically produced, and are often prepared to pay a premium for the peace of mind that this affords them.

Several supermarket chains, such as the Co-op chain in the UK, now stock Fairtrade products in response to this trend. Indeed the Co-op uses only Fairtrade products for its own label coffee and chocolate. In this climate, it obviously makes sense for coffee companies to align themselves with this consumer-led trend.

In the longer term, however, the CCCC will not ensure fair trade per se, only fairer trade. This agreement does nothing to address the ongoing fall in coffee prices caused by excessive production of coffee beans. It will deliver fairer wages, but not necessarily their long-term sustainability. This is nevertheless a clear improvement, however, and proof that consumer demands can make even large companies change their practices for the better.


Sectors: Soft drinks

Companies: Nestle

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