BY JENNIFER ALSEVER Full Article at Fortune Magazine
Atlanta coffee company Thrive brewed up strong results in 2015. Demand from corporate customers, including Chick-fil-A, percolated, putting Thrive on pace to generate $20 million in revenue for the year. But the four-year-old roaster doesn’t reap all the rewards. It shares half its sales with the guys at the bottom of the supply chain: the farmers who raise and harvest its beans.
When Michael Jones and Kenneth Lander started Thrive in 2011, they couldn’t understand why often-impoverished coffee farmers had to assume all the risks of planting and raising beans. Volatile commodity prices made their revenues uncertain; weather disasters routinely decimated their crops. (One reason the two were extra sympathetic: Jones’s father-in-law is a Jamaican coffee farmer, and Lander, a retired attorney, had purchased his own coffee farm in Costa Rica.) Says Lander of the traditional arrangement: “It was an injustice.”
Thrive is the latest roaster in the $26 billion specialty coffee market, the realm of higher-quality beans identified by where they were grown, to participate in what could be called fair trade 2.0. The initial version, which continues to grow as a percentage of bean sales—from 1.5% a decade ago to 6.0% last year—established minimum prices, about 15¢ a pound more than the commodity rate. Growers who meet certain labor and environmental standards are certified as fair trade. Buyers also pay an additional 20¢ a pound for community development—schools or roads—along with 30¢ per pound more if the coffee is organic.
For specialty-grade coffee, hand sorting is the last step in the dry milling process. To prepare this coffee for export, mill workers, typically women, skillfully and tediously pick out any discolored or ‘off’ coffee beans that could potentially take away from the quality of the coffee. From here the coffee will be bagged and stored until it is sold and shipped.Courtesy of Thrive
Fair Trade USA has delivered $350 million in extra income and assistance to 1.2 million farmers worldwide in its 17 years. The certification has expanded to categories such as textiles and fruit. Says Paul Rice, CEO of Fair Trade USA: “It’s enabling amazing changes.”
But fair trade hasn’t been enough to lift most coffee farmers out of poverty—critics charge that roasters enjoy a much larger share of the fair-trade premium than the growers—much less allow them to invest and improve their growing techniques.
A new generation of roasters is committing more money to partner with farmers. Companies like Intelligentsia and Stumptown Coffee (both newly acquired by Peet’s) and Counter Culture are touting “direct trade,” a phrase that connotes a less formal approach to teaming with growers with a particular emphasis on high quality.
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