DCSIMG

Just how much does that early morning slug of caffeine cost?

THE first thing most of us do upon arriving in the office is to administer a large dose of caffeine into our shell-shocked systems.

Coffee, in its many welcoming forms, is a lifesaver for countless stressed and tired workers across the world. In the UK, we drink more of the stuff at work than at home and a world without coffee is, for many, a thought not worth contemplating.

But despite coffee’s central role in our working day, not many of us give a second thought as to where it comes from or how it is produced.

Penny Newman, the managing director of Cafdirect, the first and largest Fairtrade coffee supplier in the UK, is on a mission to change that. She also claims Fairtrade companies offer the coffee industry its only real hope for the future.

"Nobody has truly realised the enormity of the problem facing 125 million coffee growers around the world," she says.

"We were the first Fairtrade company to be set up and we now work with one million farmers and their families in a total of ten countries in Africa, Latin America and Sri Lanka."

She adds that if low prices continue, the future for growers will be "very, very frightening".

Coffee is traded on the New York and London stock markets as a global commodity. The nature of the business means that traders can drive the hardest of bargains on the prices they pay.

Coffee prices have been languishing in the doldrums of late. A pound of Arabica beans can be snapped up for about 50 cents - 80 per cent less than five years ago.

For the 125 million coffee growers around the world that is very bad news indeed. Many are now being paid less than they need to ensure their economic survival, and if the situation doesn’t improve, whole tracts of plantations will cease to be viable.

That is not just terrible for the growers, it means Western consumers will also pay the price with coffee quality declining as the pips are squeezed from the global industry.

Cafdirect is currently sponsoring the Aurora Nova programme of events at St Stephen’s Church as part of the Edinburgh Festival Fringe, and has commissioned a special show performed in a lift to promote its instant brand, called 5065.

"5065 is the height (in feet) at which the beans for our instant coffee is grown. It’s the altitude which the best coffee comes from," explains Newman."

Cafdirect buys its coffee straight from the grower co-operatives. The company pays growers a minimum of $1.26 per pound of coffee, and guarantees to pay 10 per cent above market levels, should prices rebound.

Newman says: "We are paying the best prices to producers, and have a programme of ploughing some of our profits into tailor-made business programmes for producer co-operatives.

She adds that these programmes enable growers to reduce their risk and manage capital much more effectively. The knowledge and expertise which Cafdirect provides to co-operatives leads to sustainable development for coffee-growing communities and boosts bean quality.

"Ten years ago, the question of Fairtrade coffee quality might have been a difficult one to answer. Nowadays that is not the case."

Newman joined Cafdirect from Bodyshop, where she worked at a strategic level for six years.

"Bodyshop gave me a good education in realising there was a different way to trade and a different way of going about business," she says.

As managing director of Cafdirect, which she joined in 1998, she is in charge of a firm with a turnover of 11 million with ambitions to double its revenues within three years.

Cafdirect is the sixth largest coffee brand in the UK, and is sold in all major supermarkets. It first appeared outside natural food shops, then Safeway trialled its products in Scotland, before rolling them out across the UK.

Fairtrade is still a relatively small part of the UK coffee market - with about a 2 per cent share - but its impact on growers and their businesses is significant.

Although Fairtrade coffee is about 10-15 per cent more expensive than its rivals, the company says the real cost to the consumer is about 1p per cup.

Cafdirect also sells its products to high-street coffee giants, including Costa, which Newman says is "passionate" about Fairtrade coffee.

She argues that consumers are becoming increasingly discerning, and are now realising that they have the power to change the behaviour of corporate giants.

"People want to know where their food is coming from, and not only that, but whether producers are getting a fair price."

Even Starbucks, for so long the scourge of anti-globalisation protesters, is starting to see the light. Newman points out that the giant US chain now offers Fairtrade coffee to customers for one day a month at its UK outlets.

Cafdirect is jointly owned by four organisations - Oxfam, Trade Craft, Twin Trading and Edinburgh-based Equal Exchange.

Despite its development roots, it is very much a money making business in a cold-hearted capitalist world.

The company made a profit of just over 500,000 last year, with the bulk ploughed back into sustainable development projects. It is also about to launch in Ireland later this month, and is looking at opportunities for expansion in Europe and the US.

Newman says: "We can produce shareholder value ... and we would succeed if listed on the stock market. We recorded 20 per cent growth this year."

She points out that the ethical index is already functioning and has received a great deal of interest.

"It may by underperforming at the moment, but who knows what it will do in the long-term. Look at Enron - people are saying hold on, they want a different way of measuring companies."

Traditional coffee companies are not seen as rivals to be worked against. Cafdirect actually encourages its co-operatives to meet with other buyers and to export their beans to other destinations.

Newman is enthusiastic that the Cafdirect model is one the whole industry can learn from. "We want to act as a catalyst to show how it can be done," she says.

 
 
 

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