ARTICLE

Fair Trade Coffee and Human Rights in Guatemala

Sarah Lyon

Received: 23 June 2006 / Accepted: 15 February 2007 / Published online: 26 June 2007

� Springer Science+Business Media B.V. 2007

Abstract This paper explores how the fair trade coffee market translates con-

sumer action and shopping habits into the promotion of human rights in distant

locales. This process does not occur through direct producer–consumer contact.

Instead, it is channeled through two interrelated avenues. First, the fair trade cer-

tification system which requires producer groups to be democratic, transparent, and

accountable and second, the relationships between producers and coffee roasters and

importers, who, in this specific commodity chain, act as conduits for consumer

actions and intentions. These two facets of the fair trade consumer market promote

and protect the secure organizational space that is necessary for producer initiated

community development. This freedom to identify and fulfill economic and social

development goals through cooperation also reaffirms existing cultural traditions of

service and mutual aid among producers. These key components of human rights

compliance are critically important in countries such as Guatemala with its history

of violent repression, structural inequality, and cultural discrimination against

indigenous populations and community organizers. The analysis emerges from

ongoing ethnographic research on a group of indigenous, fair trade coffee producers

in Guatemala and their relationships with outside buyers and certifiers.

Keywords Fair trade � Consumption � Coffee � Human rights

The anthropologist Roseberry (1996) named coffee the ‘‘beverage of postmodern-

ism,’’ not to suggest that coffee exists in a unique relationship with capitalism, but

that it provides a window through which we can view a range of relationships and

social transformations. This includes the critical links between the consumption

S. Lyon (&)

Department of Anthropology, University of Kentucky, 202 Lafferty Hall, Lexington, KY 40506-

0024, USA

e-mail: Sarah.lyon@uky.edu

123

J Consum Policy (2007) 30:241–261

DOI 10.1007/s10603-007-9040-7

habits of Northern consumers and the promotion of human rights within countries

which consistently threaten individual freedoms. Fair trade is a form of alternative

trade that seeks to improve the position of disempowered producers through trade as

a means of development. The movement, which promotes labeling and certification

as a site of political and economic consumer action, rejects the narrow view of Third

World citizens as victims and instead emphasizes the role that consumption plays

for their economic empowerment and well-being (Micheletti 2003). Fair trade is

also celebrated as a counter hegemonic social movement that contests the

conventional agro-food system and its exploitative relations of production (Murray

and Raynolds 2000). The fair trade coffee commodity chain interweaves individual

consumer choices and political, economic, and social processes informed by the

cultural values and livelihoods of participating consumers, producers, and roasters.

This paper explores how the fair trade coffee market translates consumer action

and shopping habits into the promotion of human rights in distant locales. This

process does not occur through direct producer–consumer contact. Instead, it is

channeled through two distinct avenues. First, the certification system which

requires producer groups to be democratic, transparent, and accountable and second,

the relationships between producers and coffee roasters, who, in this specific

commodity chain, act as conduits for consumer actions and intentions. These two

facets of the fair trade coffee market, both dependent on consumer support, promote

and protect the secure organizational space that is necessary for cooperation and

producer initiated community development. This freedom to identify and fulfill

economic and social development goals through cooperation also reaffirms existing

cultural traditions of community service and mutual aid within the research site. The

freedom to organize and respect for cultural practices are key components of human

rights compliance and are critically important in countries such as Guatemala with

its history of violent repression, structural inequality, and cultural discrimination

against indigenous populations and community organizers.

The analysis is based on ongoing ethnographic research on a group of

indigenous, fair trade coffee producers in Guatemala and their relationships with

outside buyers and certifiers. In 1977 as tensions mounted across Guatemala’s

western highlands, a small group of Tz’utujil Maya smallholders met in the shade of

a ceiba tree located in the center of their village on the shores of Lake Atitlan. That

day they initiated an agricultural cooperative that would successfully weather the

instability and repression plaguing the region in the early 1980s at the height of the

civil war. The cooperative grew to 116 members and began exporting fair trade and

organic certified coffee in 1991. In recent years, the group has maintained a multi-

year secure market contract with fair trade coffee roasters in the United States.

Consumer action and the growing demand for fair trade products can lend

political legitimacy and security to rural producer associations and their organiza-

tional activities, effectively enabling them to bypass national political and economic

constraints and access international consumer market and advocacy spheres.

Coupled with the safe organizational space that fair trade consumer markets foster

through international networks linking previously disenfranchised and vulnerable

smallholders to powerful consumer advocacy groups, fair trade consumption plays

an important role in the realization of human rights by ensuring the group’s freedom

242 J Consum Policy (2007) 30:241–261

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to initiate community development projects. In support of this argument, the paper

discusses successful community development projects initiated by the fair trade

coffee cooperative in the areas of environmental conservation, infrastructural

improvements, and emergency relief.

Unlike other forms of local participation in the global economy (migration,

service jobs in the tourist industry, drug trafficking, etc.), which often present

alternatives to community based livelihoods, participation in the fair trade coffee

market embeds members more deeply in local economic and social spheres since it

is contingent upon individual membership within the democratically organized

cooperative. In essence, cooperative members’ success in the global marketplace

requires an allegiance to the group itself. The continued importance of service to

both the community and the cooperative helps ensure that those who participate

remain invested in the local social structure and its continued cohesion in the future.

This cooperative structure reaffirms existing cultural traditions of service and

mutual aid common to many Mesoamerican Maya communities. After discussing

cooperative service, the paper presents an in-depth analysis of the cooperative’s

struggle over outstanding member debts to demonstrate the importance of

cooperation and democratic decision-making processes which are both reinforced

by fair trade and the consumer action which supports it.

Research Methodology

Due to their transnational nature, the links between the consumption habits of

Northern consumers and the promotion of human rights within distant communities

are best studied through multi-sited research. While research on consumer intentions

and actions is critically important, it should be augmented with empirical studies of

the actual impact of consumer shopping on the intended beneficiaries. This analysis

emerges from ethnographic data gathered during 20 months of research in

Guatemala and the United States (September 2001–March 2003, June 2006) which

explored the complex relationship between four interrelated processes: (a) the

political–economic forces shaping the transnational fair trade and organic coffee

market, (b) producers’ livelihoods and production practices, (c) processes of identity

construction and self-representation, and (d) attempts to forge equitable trade

relationships between producers and consumers by making visible the social and

environmental conditions of coffee production.

The Guatemalan research reported on in this paper focused on the 116 members

and the administrators of the fair trade coffee cooperative located in a Tz’utujil

Maya community of approximately 5,000 people. The community is located on the

shores of Lake Atitlan, one of Guatemala’s most popular tourist attractions, and

while the majority of inhabitants sustain themselves and their families through

subsistence agriculture, horticultural farming, coffee production, and weaving, there

is also an emerging small-scale tourism industry. The research included ongoing

participant observation at community events, at the wet mill during the harvest

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(December–March), and at internal cooperative meetings and meetings with

external market participants, such as coffee importers, roasters, and certifiers.

Participant observation was also conducted during the visits made by agronomists

and certifiers to members’ coffee fields in order to observe production practices and

better understand certification requirements.

Data were gathered through semi-structured interviews with the majority of the

cooperative’s remaining 19 founding members and the collection of life histories

from 18 community elders in order to illustrate the community’s past and recent

transformations. Semi-structured interviews were conducted with 53 of the

cooperative’s 116 members and 30 employees of development agencies, coffee

importers, and roasters assisting the cooperative and coffee certifiers. Further data

were gathered during participant observation at the Guatemalan National Coffee

Association’s annual conference (2000, 2002) and visits to several fair trade coffee

cooperatives located in the Western Highlands (where informal interviews were

conducted with cooperative administrators and board members).

The Importance of Coffee in Guatemalan Societal Development

Coffee’s introduction to Latin America intensified existing transnational flows and

affected diverse individuals and landscapes (Ortiz 1999; Roseberry 1983; Roseberry

et al. 1995; Sick 1999; Stolcke 1988). By the late 1800s, coffee had become

Guatemala’s primary export, the foundation of wealth, the determinant of social

status, and the arbiter of political power among the economic and political elite. In

later years, coffee cultivation, and the exploitative political and social structures that

supported it, contributed to the unrest that resulted in the nation’s civil war and

continues to shape its political, economic, and cultural reality into the present (Paige

1997; Williams 1994).

Coffee production played the critical role in the transformation of Guatemala’s

division of labor into one more aligned with a capitalist mode of production (Smith

1978). The growing demand for coffee in the North demanded strenuous work in the

South. However, ‘‘the office workers taking their coffee breaks in the U.S. and

Europe gave scant thought to the black slaves or Mayan Indians who labored in the

coffee fields...to provide their drinks.’’ (Topik et al. 2006) The contemporary fair

trade coffee market attempts to rectify this by educating Northern consumers about

the conditions of production behind their daily cup of coffee. Guatemala’s high

quality coffee production required large numbers of laborers which were historically

provided for plantation owners through labor drafts which forced the indigenous

population to seasonally migrate to distant coffee fields. Despite their dependence

on indigenous labor, the coffee elite consistently maintained that the nation’s Maya

population presented a barrier to economic modernization and they took it for

granted that the Indian was lazy, stupid, dirty, and drunken (Handy 1984; Topik and

Clarence-Smith 2003b).

Despite coffee’s turbulent history within Guatemala, it became an increasingly

attractive agricultural commodity for smallholders because it is easy to store and

handle, its value has historically surpassed that of comparable agricultural products,

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it can be grown on steep slopes, and once neglected can be fairly easily rejuvenated

(Sick 1999). In the research site the introduction of coffee cultivation is referred to

as ‘‘the bomb’’ that exploded in the community, bringing the cash revenues that

enabled families to end their decades-long pattern of seasonal migration, build

cement block houses, and educate their children. Beginning in the late 1960s and

concurrent with coffee’s growing attraction for smallholders, the United States

Agency for International Development (USAID) mission to Guatemala and other

lenders began prioritizing rural development. In 1970 USAID approved a

$23 million rural development sector loan for the development of cooperatives

(Handy 1984, p. 240); the first time substantial development resources were

earmarked for indigenous highland communities. By the fall of 1975 nearly 20% of

Highland Maya participated in some form of cooperatives (Handy 1984, p. 240) and

after the 1976 earthquake and the influx of additional international lenders,

Guatemala boasted 510 cooperatives, 57% of them in the Highlands with more than

132,000 members (Brockett 1998, p. 112).

The researched coffee cooperative was founded with the encouragement and aid

of a micro-credit lending institution located in Santiago Atitlan and operated by the

Catholic development organization Caritas.1 In the late 1970s this organization

provided small, low-interest loans to Lake Atitlan residents for projects and the

purchase of agricultural inputs. Caritas was the first micro-credit program to provide

loans to residents of the researched community. The director, Don Diego, reportedly

urged a group of community members to form a cooperative in order to establish

their own revolving credit fund because at that time it was difficult for the

disenfranchised indigenous farmers to secure personal loans from banks. Over 70

community members attended the first meeting and in 1979 25 male community

members founded the cooperative, inscribing several younger brothers and wives in

order to reach the minimum membership of 30 required by INACOP, the National

Cooperative Registry.

The remarkable growth in agricultural cooperatives across Guatemala coincided

with the increasing violence of the nation’s erupting civil war. Between 1950 and

the mid-1980s the Guatemalan population grew from 2.8 to 8.5 million and per

capital access to land steadily declined (McCreery 2003). While recent studies do

not portray the coffee fields as breeding grounds for revolutionaries (Topik and

Clarence-Smith 2003a), the unequal distribution of land and the legacy of racism

fostered by the nation’s coffee economy did fuel the swelling ranks of guerrilla

combatants. Individuals who participated in successful community projects and

organizations, such as the researched cooperative, consistently faced accusations

that they were engaging in subversive or guerrilla activities (Sanford 2003). Villages

with autonomous local organizations were specifically targeted by government

military forces. For example, between 1976 and 1978 in the department of El

Quiche (near the department of Solola where the cooperative is located) 168

cooperative and village leaders were murdered (Handy 1984, p. 244).

1 Caritas Internationalis is a confederation of relief, development, and social service organizations

operated by the Catholic church.

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In the aftermath of the civil war the extent of the human rights abuses was

exposed. In 1999 the Report of the Commission for Historical Clarification

published evidence of massacres in 626 villages and placed the number murdered

during the Civil War at close to 200,000 (CEH 1999). Among the victims, 83%

were Maya, and 93% of the human rights violations were attributed to the army

(CEH 1999; Sanford 2003). While the researched cooperative successfully

weathered the civil war, the organization’s community store was robbed by soldiers

and the agricultural monitor was imprisoned at the military base in nearby Santiago

Atitlan for several days after he was denounced as a guerrilla. As a result of the war,

the village and surrounding communities were plagued by ongoing fear and mistrust

which partially constrained community organizing and development efforts.

Several interrelated forces contributed to the eventual end of the civil war in

1997. First, the URNG acknowledged their defeat at the hands of the military

regime and leaders gradually adopted a strategy of gaining a share of the power

through the sanctioned political process (Jonas 2000). Second, the United Nations

intervened as a result of the increasing international pressure fostered by

organizations in exile and the popular support resulting from Rigoberta Menchu’s

1994 Nobel Peace Prize. Guatemala was seen as a test case for the international

community and throughout the prolonged peace process, there was a deliberate

attempt to avoid competition between the United Nations and international financial

institutions. Instead a concerted effort was made to establish a division of labor

between them (Jonas 2000).

Of critical importance was the shifting attitude of the nation’s coffee elite who

previously supported authoritarian rule. They eventually came to see the pariah

status of the country as a liability for their business dealings and pressured the

government to end the civil war and restore economic and political stability (Jonas

2000; Warren 1998). While the Peace Accords, fostered by the combination of

global economic and human rights interests, failed to restructure the Guatemalan

state, they officially provided political spaces for public debate where civil society

theoretically can make demands for development and democratization (Green

1999). However, the ongoing violence plaguing the country and residual fear of

government reprisal, especially prevalent in rural areas, serves to curtail grassroots

mobilization and community generated development projects.

Paths for the Promotion of Human Rights

While it is true that the fair trade coffee market translates consumer action and

shopping habits into the promotion of human rights in distant locales, this process

does not occur through direct producer–consumer contact. Instead, it is channeled

through two distinct avenues. First, the fair trade certification system which requires

producer groups to be democratic, transparent, and accountable and second, the

relationships between producers and coffee roasters (and sometimes importers),

who, in this specific commodity chain, act as proxies for consumer action and

intentions.

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Certification Standards

There are four requirements importers must meet in order to use the fair trade label.

First, they must buy their coffee directly from certified small coffee farmers.

Second, they must offer these farmers long-term contracts that extend at least

beyond one annual harvest. Third, they must pay a price premium of $1.26 per

pound and an additional $.15 per pound premium for dual certified organic/fair trade

coffee. Finally, they must offer the farmer organizations pre-financing covering at

least 60% of the annual contract (FLO 2005).

Similarly, there are three requirements for participating coffee producers. First,

they must be small family farmers. Second, they must be organized into

independent, democratic associations. And, third, they must pursue recently

elaborated ecological goals (FLO 2005). The certification standards state that in

order to be ‘‘an instrument for the social and economic development of the

members’’ the organization must ‘‘have a democratic structure and transparent

administration which enables effective control by the members and its Board over

the management, including the decisions about how the benefits are shared.’’ (FLO

2005)2 This requirement effectively promotes the formation of a secure organiza-

tional space that is necessary for community initiated development. This freedom to

identify and fulfill economic and social development goals through cooperation also

reaffirms existing cultural traditions of community service and mutual aid. This will

be elaborated upon below.

Coffee Roasters as Consumer Proxies

Coffee roasters serve as a proxy for consumer intentions and actions by forming the

linchpin of the fair trade coffee commodity chain and linking consumers and

producers together in a more equitable trade partnership. In order for consumers to

have the opportunity to choose to support human rights and development through

their shopping habits, coffee roasters must first seek out fair trade coffee producers,

offer them pre-financing and a multi-year contract, and work closely with them to

improve the quality of their coffee. Not all fair trade coffee roasters are equally

committed to these tasks nor is the producer–roaster relationship universally

positive. However, there are multiple studies demonstrating that many fair trade

groups receive extensive assistance from their Northern coffee roasters and that this

assistance helps them produce a higher quality product and secure their long-term

market access which in turn bolsters their community development efforts.

Fair trade’s close alliance with coffee roasters, retailers, and consumers and its

focus on supporting smallholder access to new markets facilitates a wider

distribution of benefits to small producers (Taylor 2004). In multiple studies,

market access is identified as a key producer benefit (Moore 2004; Paul 2005;

2 Specifically, FLO regulations state (a) there must be no discrimination regarding membership and

participation, (b) there must be a general assembly with voting rights for all members and an elected

board, (c) the staff must answer through the board to the general assembly, and (d) there must be one

general assembly a year during which annual reports and accounts are approved (FLO 2005, p. 4).

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Shreck 2002). As opposed to traditional development efforts, fair trade buyers are

able to assist specific groups rather than offer blanket aid (LeClair 2002). Because it

is tailored to individual needs, this assistance can be especially effective in

improving coffee quality and enhancing flavor characteristics. Additionally, the

desire to maintain long-term relationships with buyers can provide an incentive for

cooperatives to improve their product quality by investing in infrastructural and

production improvements. These direct trade relationships allow fair trade

producers to bypass the often exploitative local buyers and enable groups to

bargain more effectively with large buyers such as Starbucks or Wal-Mart (Taylor

2002). Furthermore, the market information they obtain through fair trade contracts

may make producers more confident in dealing with non-fair trade buyers as well

(Ronchi 2002).

The researched cooperative is visited on a monthly basis by representatives from

its long-term coffee roasters who are located in the northeastern United States.

Through this steady contact, cooperative members hone their communication skills,

enhance their business practices, and learn valuable information about quality and

certification demands. The fair trade model offers the cooperative a competitive

advantage by actively fostering ongoing close contact with their buyers and

enabling them to learn international standards for price, quality, and the delivery of

export products. This finding is supported by Bacon’s (2005) research on fair trade

coffee producers in Nicaragua which indicates that when demands for quality are

coupled with producer education, buyers can effectively instill a pride in

craftsmanship and a motivation toward improvement.

The close working relationship that some fair trade coffee roasters maintain with

producers is not entirely altruistic. These relationships can help secure roasters’

long-term access to superior coffee while improving the quality of the product they

are already buying. The frequent visits provide opportunities to gather information

about groups and take photos of members which are both used for marketing

purposes.3 Fair trade consumption in the North is predicated upon consumers’

access to information regarding the conditions of production and increasingly the

social circumstances and cultural traditions of producers themselves (Lyon 2006a).

This gathering and sharing of information strengthens the ‘‘modes of connectivity’’

(Whatmore and Thorne 1997) linking Southern producers and Northern consumers.

Roasters use descriptions of these relationships and their commitment to the

producers they buy from as a signal to consumers of their commitment to equitable

trade, human rights, and development in producer communities. At the same time,

this marketing practice raises the international profile of cooperatives and provides

them with allies which could potentially prove useful in the future if their human

rights were threatened. As a result, the roasters can serve as a conduit for consumer

action that can open up a window of opportunity for a policy process including all

concerned stakeholders and the development of alternative agendas and arenas for

information exchange (Micheletti 2003).

3 For examples of this marketing see www.gmcr.com or www.justcoffee.net.

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Fair Trade Shopping and Community Development

Despite coffee’s problematic history in Guatemala, the growing fair trade market

provides a critical opening for the promotion of human rights and economic,

social, and political development. This is achieved through consumer support for

fair trade certification and its corollaries: fair prices, environmental conservation,

and equitable trade relationships. In purchasing fair trade coffee, consumers

support higher prices and small producers’ organizational efforts which in turn

help groups to engage in self-initiated and sustained community development

projects.

While the support of producer organizations is critical, cooperative-initiated

development efforts could not be sustained without the higher and more stable

prices that fair trade coffee producers earn as a result of consumer shopping. The

guaranteed price is a critical component of fair trade certification, especially for

commodities with volatile markets such as coffee. In recent years, international

coffee prices have declined to a hundred year low when adjusted for inflation

(Lewin et al. 2004). At the height of this crisis, during the 2001–2002 coffee

harvest, the cooperative was paid US$1.41 per pound ($1.26 guaranteed fair trade

price with a $.15 premium; price is before taxes and the cooperative’s operating

costs were deducted). At the time, this price was double that paid to non-members

by local middlemen. This higher price would be impossible without Northern

consumers who are willing to purchase fair trade certified coffee, even when the sale

price is higher than that of conventional varieties. The higher income enabled

members to continue repaying their debts, maintain their standard of living, retain

their landholdings, and pay for their children’s education during a period in which

many non-members were forced to sell their land and withdraw their children from

school. However, many cooperative members feel that the fair trade price, while

higher than that for conventional coffee, remains inadequate (Lyon 2006b).

While not every community member belongs to the researched fair trade coffee

cooperative, the organizational activities of the group benefit non-members through

the local multiplier effects of the extra income earned through fair trade consumer

markets. The wider community also benefits from development projects initiated by

the cooperative and funded with fair trade coffee market proceeds in the areas of

environmental conservation, infrastructural improvements, and emergency relief.

For example, the cooperative played a leading role in the municipal government’s

2002 successful effort to organize a weekly trash collection effort in the community.

The cooperative is also engaged in an ongoing reforestation project in which

seedlings are donated to cooperative members and their extended family members

to plant in the agricultural plots surrounding the community. In addition to these

environmental conservation programs, the cooperative worked with the National

Coffee Association to initiate a pilot coffee tourism project which attracts additional

visitors to the community and will potentially increase the income of both members

(through tour sales) and non-members who will have an expanded market for their

artisan crafts and service sector, including newly built (and locally owned) hotels,

restaurants, and internet cafes.

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Above it was argued that fair trade marketing materials raise the international

profile of cooperatives among consumers and provide them with allies who could

potentially prove useful in times of need. An example of this in practice is the

leading role the cooperative played in securing emergency relief funds and

assistance in the wake of hurricane Stan’s October 2005 devastation.4 After the

devastation, the cooperative immediately contacted its North American coffee

roaster who sent financial assistance and a group of employees who worked with

members to rebuild several homes for displaced families. These efforts were funded

by the roasters’ profits earned largely through fair trade coffee sales.

In addition to their support of community development projects, the cooperative

has capitalized upon the organizational capacity and administrative skills it has built

through participation in the international fair trade market to increase its political

presence within the national coffee sector. The group regularly sends board

members and staff to attend the National Coffee Association’s annual conference in

Guatemala City and in past years has sent administrative staff to the Specialty

Coffee Association of America’s annual meetings in the United States. The

cooperative also regularly hosts and advises groups of smallholders who have an

interest in developing a fair trade coffee cooperative. Recently, the cooperative

successfully applied for its coffee export license, enabling it to directly export to

roasters. The elimination of exporter and importer intermediaries increases the

group’s profits while fostering a stronger relationship between the cooperative and

its roaster (and through the roaster, consumers).

The United Nation’s Declaration on the Right to Development defines the right to

development as an inalienable human right and asserts that human beings have an

individual and collective responsibility for development.5 In purchasing fair trade

coffee, consumers support the rights of small producers to collectively take

responsibility for their own community development and the promotion of a locally

appropriate political, social, and economic order in which to initiate projects.

Democratic Participation and Cooperative Service

Service within the fair trade coffee cooperative in the form of positions on the board

of directors is voluntary and unremunerated although participation can be costly in

terms of time. Tenure is rotated annually or semi-annually which serves to more

equitably distribute the prestige and decision-making power associated with board

service across the organization’s membership. Cooperative service also brings

practical and tangible rewards to members such as the formation and maintenance

of networks of reciprocity, respect, and trust which serve to unite non-kin

community members. Furthermore, through the local resolution of internal

differences (Cohen 1999; Greenberg 1985), cooperatives with a strong board of

4 The municipal government estimates that over Q31 million (US$4 million) in agricultural crops were

lost during landslides and more than 2000 residents were displaced after 259 homes were destroyed

(Diagnostico de la Situacion ante el Desastre del 5 de Octubre del 2005. Municipalidad de San Juan La

laguna, Departamento Solota, Guatemala, C.A).5 www.unhchr.ch/html/menu3/b/74.htm (accessed 12/5/06).

250 J Consum Policy (2007) 30:241–261

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directors are better able to maintain their autonomy within the global market and

resist external control at the hands of development organizations, managerial staff,

or buyers. This internal strength helps to make the fair trade relationship between

producers, roasters, and consumers more equitable.

Of the 53 surveyed cooperative members, 77% have served on the cooperative’s

16 member board of directors at least once over the course of their cooperative

membership (average length of membership is 14 years). On average they have

fulfilled two terms of service, each lasting either 1 or 2 years. Only seven of the 116

cooperative members are female. To date, none of these women have served on the

board of directors. However, in 2004 the cooperative initiated two new income-

generating programs: a coffee tour and a women’s weaving project. One female

member, a cooperative founder, serves on the 16 member board of directors which

administers the coffee tour and the weaving project is run entirely by female

members and the wives of male cooperative members. In this regard, the

cooperative is making some effort to increase the participation rates of women

and enhance the group’s gender equity. This is a key component of universal human

rights and one that is not adequately addressed through fair trade consumer markets

as will be discussed below.

The ethos of service and mutual aid remains a highly potent symbolic component

of cooperative membership, one that helps to mitigate tensions among members.

During general assemblies, disagreements were often resolved when an observer

emphatically stood up to declare, ‘‘Either we cooperate or we’re nothing!’’ In

interviews, members frequently reiterated the importance of mutual aid explaining

for example that ‘‘the cooperative helps you at the same time that you have to help

it.’’ Cooperative members also employ culturally distinct negotiation styles in

general assemblies which occur at least once a year but generally more frequently.

For example, before making decisions those in attendance take turns voicing their

opinions regarding the matter at hand. After thorough discussion, decisions are

made through public voting procedures. This practice helps to diffuse tensions or

allegations of injustice within the group as it ensures opinions are heard in an open

forum. While the cooperative has transformed into an associative corporation which

successfully negotiates international coffee consumer markets, members collec-

tively ensure that the group remains a mutual aid society.6 As a democratic

association rooted in local practices of mutual aid, the cooperative contributes to

community self-determination by translating world market integration into indig-

enous practices. Through this process local understandings of morality are

reinforced or adapted (Cohen 1999) and traditions of horizontal cooperation and

reciprocity are reproduced (Fox 1996).

The strength of a producer association’s internal organization, its group identity,

and its leadership skills have been identified as critical components of fair trade

success. In turn, the security of fair trade prices and consumer markets enhances a

cooperative’s general financial and organizational stability (Raynolds et al. 2004).

Because certification standards require a certain standard of accountability and

6 This argument was first made by an anthropologist studying a similar group in southern Mexico (Nigh

1997).

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external monitoring, successful organizations must work toward transparent

planning and active member participation in administration and internal control.

Policies that facilitate these processes may have the added benefit of increasing

member commitment to the organization.

The cooperative efforts supported by fair trade consumer markets are a key

component of successful community development efforts (Bray 1995; Healy 2001;

Zorn 2004). While many contemporary Guatemalans see democratic organizations

as essential to confronting poverty and precarious economic circumstances, due to

the fact that during the war any social organization not under army control was

criminalized, fear remains a significant obstacle to rural organization (REMHI

1999). Consumer support for fair trade, and as a result democratic associations,

fosters safe opportunities for members to work together and reproduce long-term

traditions of horizontal cooperation, reciprocity, and mutual aid in the pursuit of

local community development. Impact studies indicate that this organizational

capacity building can be translated into enhanced external civic engagement. For

example, Taylor (2002) found that many Mexican fair trade cooperatives are

involved in national coffee, credit, and small business associations, and Ronchi

(2002) demonstrated that the producer organization allows fair trade farmers to

voice their opinions collectively, thereby increasing their power at the national

government level (Nicholls and Opal 2005).

Democracy in Action: Reducing Member Debt

Many fair trade producer organizations use loans from external institutions to

establish micro-lending programs to help members improve their production quality

and quantity, thereby strengthening the organization’s market potential. However,

these loans must be carefully managed by both the cooperative and the members

who borrow in order to be effective tools for community development. This

management often poses a challenge to producer organizations and their members,

including the researched cooperative. The in-depth examination of internal debt

handling below is presented as a case study of producer-led, democratic community

development efforts. Unlike programs managed by outside lenders, community

initiated and administered micro-lending programs can pose distinct challenges,

including the potential for interpersonal conflict. However, the case below

demonstrates that the process of democratic decision-making and collective

management can strengthen organizations through a reaffirmation of cooperative

principles and mutual aid.

De Janvry and Sadoulet (2000) argue that access to credit is minimal among the

rural poor in Latin America and that this lowers the ‘‘income generating capacity of

the meager asset endowments that the poor possess.’’ (p. 396) However,

participation in fair trade markets can enhance the legitimacy of producer

organizations, thereby granting them access to credit institutions and international

lenders (Raynolds et al. 2004), a key benefit for small producers who were often

historically excluded from formal lending institutions.

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Beginning in 1989 the researched cooperative received several long-term loans

through the USAID Small Coffee Farmer Improvement Program. These loans

enabled the cooperative to establish an internal micro-lending program, which

has proven critical to the group’s ongoing success. In fact, 54% of interviewed

cooperative members named access to credit as the primary benefit of

cooperative membership, compared to the 40% who named higher prices.

Members apply for both short and long-term loans that they pay back with their

annual coffee profits.

Varangis et al. (2003) report problems with loan repayments among coffee

producers in all Central American countries and the debts held by cooperatives and

their members have been demonstrated to significantly reduce the income

generating potential of fair trade markets (Utting-Chamorro 2005). There have

been several allegations of mismanagement and lacking transparency made against

producer groups across the region. The problems associated with internal micro-

lending programs established with external credit assistance may result from

inefficient and poor management within groups. Mendoza and Bastiaensen (2003)

argue that fair trade certification encourages a cooperative structure dependent on an

expensive top-heavy entrepreneurial hierarchy with a large administrative staff and

consequently a higher overhead. Taylor (2004) argues that problems with the

cooperative structure and democratic decision-making shouldn’t be viewed as

weaknesses specific to fair trade, however, and Murray et al. (2003) point out that

fair trade could potentially address this weakness through heightened transparency

requirements. The research discussed below lends support to both positions:

although there were allegations of loan mismanagement, cooperative members

collectively addressed the problem through transparent decision-making processes.

However it is likely that Mendoza and Bastiaensen’s argument is more applicable to

larger groups and second-tier organizations linking numerous small producer

cooperatives.

Many members of the researched cooperative find it difficult to repay their

personal loans, in turn making it difficult for the group to repay its collective bank

loans. An analysis of the cooperative’s micro-lending program revealed seven

principal factors contributing to high rates of insolvency among members:

• Harvest is December–March, however members must wait until June or July for

full payment.

• High interest rates: 85% of surveyed members reported the rate was exorbitant.

• Allegations of loan mismanagement by administration and borrowers.

• Poor harvests due to hurricanes Mitch (1998) and Stan (2005).

• Loans used for unproductive purposes (such as education or medical bills).

• Loans are larger than capacity to repay.

• Members borrow from multiple lending institutions, exceeding repayment

capacity.

Large, unpaid loans lower a group’s profits and members’ income. In addition to

lowering profits, large numbers of defaulted loans can weaken the group’s

organizational capacity and hamper its market success. This can also encumber the

group’s morale and sense of unity as solvent members begin to feel they are being

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taken advantage of and indebted members begin to feel the group’s management is

unresponsive to their needs. Additionally, members deeply in debt to their

association may actually begin to have a vested interest in the group’s failure

because it would potentially erase their own debts.

Over the course of the research period (December 2001–February 2003),

discussions among cooperative members regarding insolvency increased in

frequency and the group’s collective deliberations on the ongoing problem provided

a unique lens through which to view democratic participation and decision-making

in action. The group debated the relative strengths and weaknesses of two strategic

approaches to debt reduction: an attempt to socially pressure insolvent members to

repay their debts through public calls for individual responsibility or a legal

enforcement of cooperative lending procedures which would result in the

repossession of insolvent members’ properties.

According to the statutes of the cooperative, the manager is responsible for

determining the amount of credit available to individual members. This caused a

great deal of conflict between the management and unhappy members and

contributed to allegations of mismanagement. These allegations extended to

members of the board of directors as well. For example, one member told me,

‘‘What I see is that those in the board themselves are taking advantage. The

cooperative gives the members nothing. They take advantage. The manager gives

money to them and if a member comes (to ask for credit) they don’t accept him,

they don’t pay attention to him’’.

Another member maintained that there needs to be better control over each

consecutive board of directors in order to stop elected representatives from saying,

‘‘Oh I’m a compadre with him, I’m his cousin, I’m going to give him money.’’

Some interviewed members felt the credit system was unjustly administered,

while others contended that members with unpaid loans might feel ashamed or feel

that the management doesn’t understand their personal circumstances. When

confronted with these allegations of mismanagement during an interview, the

cooperative’s former manager readily defended himself and his difficult position,

stating,

‘‘If the member is insolvent he asks for more. They spread many bad things in

the cooperative about the management. Only the people who are heavily in

debt come in and ask for more loans and when we can’t give them money they

say bad things to the board of directors about the management. People who

bring in all of their coffee and pay off their loans, well they don’t complain

about anything. You didn’t hear them crying out in the [general] assembly did

you?’’

In their discussions of their own insolvency and that of others, members provided

contrasting definitions of what it means to be a good cooperative member. For

example, some interviewed members viewed credit as a contractual obligation

between the individual and the cooperative as an institution. They consequently did

not feel that individual insolvency was an affront to the other members. However,

others remained steadfast in their belief that cooperative members are mutually

responsible for one another’s debts and that the insolvent members were hurting not

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only their own prospects, but those of the cooperative itself. The fact that only 19%

of interviewed members favored heightened institutional control and rule enforce-

ment and only 8% believed the cooperative should take legal action demonstrates

members’ reluctance, on the whole, to police and discipline one another.

Interestingly, there was no significant difference between the solutions offered by

all interviewed members and the 23 members whose loan balance exceeded

US$1265.82 (Q10000) during the 2001–2002 harvest.

Cooperative members who believed that insolvent members should take personal

responsibility for repaying their loans (43% of interviewed members) stressed the

group’s founding principles of mutual aid and collective responsibility in their

discussions of the issue. For example, one member, who at the time worked two jobs

in addition to his agricultural labor, stated, ‘‘The cooperative isn’t the building, it’s

me. If I repay my debt, I am helping myself.’’ Other members acknowledged the

fact that the defaulted loans of others negatively impacted their own profits as

the cooperative was forced to siphon income from all members in order to service

the interest on the defaulted loans of a few. However, many of these individuals

were also reluctant to enforce cooperative regulations and repossess the property of

insolvent members. As one explained, ‘‘It’s difficult (to say) ‘Look you, get out of

your house, get out of there’...but where are they going to live?’’ In an attempt to set

an example, several years prior to the research period the cooperative repossessed

the land of a member who was deeply in debt. Although his brother, also a member,

bought the land, the whole experience was very demoralizing for both the punished

associate (who no longer participates in the cooperative) and the assembly in

general. A cooperative founder and former President said, ‘‘It was a shame to make

this decision but we had to do it. He always did the same thing and didn’t turn in

his coffee. He didn’t cover his debts and didn’t fulfill his promise to the

cooperative.’’

Solutions for member insolvency and debt repayment were regularly discussed

among cooperative members in informal venues, for example while pruning coffee

trees in a member’s parcela, and during general assemblies. After much debate and

through a process of democratic decision-making, the group collectively decided

against the legal enforcement of cooperative lending procedures and the potential

repossession of insolvent member properties. Instead, members and the board of

directors repeatedly stressed the need for individual responsibility during cooper-

ative meetings. This strategy became more viable after the board of directors and

administrative staff successfully solicited a low-interest bank loan which they used

to pay back the cooperative’s high-interest USAID loans and subsequently lower the

interest rate they charged cooperative members. The group’s secure international

market undoubtedly heightened their credibility in the lenders’ eyes and the

transparent fiscal policies the cooperative adopted in order to earn and maintain fair

trade certification proved their ability and willingness to responsibly manage an

additional loan. Fair trade therefore directly assisted them in this loan solicitation

and enabled the cooperative to continue its community development efforts and

maintain the social bonds uniting the membership, which past events indicated

would be critically threatened by the legal enforcement of lending procedures and

property repossession.

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The Limitations of Fair Trade Shopping for Human Rights

The Insufficient Involvement of Women

Fair trade has prioritized gender equality. In practice, however, this mandate is

underdeveloped and there is little empirical evidence to suggest that fair trade

benefits are equally distributed across both genders. Clearly this is problematic

because if fair trade markets are not wholly inclusive then they also neglect to

promote universal human rights. In order to comply with certification standards,

most producer groups have initiated projects and activities designed to address

gender issues but their effectiveness remains to be documented. In order to resolve

this problem, there needs to be a greater clarification of what gender issues fair trade

intends to address (Murray et al. 2003).

While fair trade publicity materials highlight the steps producer groups have

taken in order to foster women’s equality, impact studies demonstrate several

shortcomings (Lyon 2002; Mayoux 2001; Murray et al. 2006; Redfern and Snedker

2002; Ronchi 2002). A review of FLO certified producer profiles7 reveals that

women’s projects are largely focused on activities outside the agricultural export

sector such as health or subsistence farming. There are notable exceptions to this

tendency. For example, La Asociacion Maya de Pequenos Agricultores in Santa

Anita la Union, a Guatemalan coffee cooperative formed by ex-combatants,

reserves 50% of their elected board positions for female members.8 Similarly, the

SOPPEXCCA cooperative in Jinotega, Nicaragua, which is led by a woman, formed

an internal association of 85 female producers to produce coffee for Peet’s Coffees

‘‘Las Hermanas’’ blend which was featured in retail outlets across the United

States.9

There are indications that women’s involvement in fair trade agricultural

production can be a mixed blessing because it often increases their workload

(Mayoux 2001). Furthermore, despite women’s contributions, fair trade cash crops

and the income generated from them are generally controlled by male household

members (Redfern and Snedker 2002). Additionally, the ability to improve the

opportunities for women in producer associations may be conditioned by cultural

tradition. For example, research in Guatemala indicates that well-established, long-

standing cooperatives may not adequately answer the needs of female members.

However, newer cooperatives, by contrast, appear more willing to provide

opportunities for women to participate not only as producers, but also as

cooperative leaders and managers (Lyon 2002).10 In short, while fostering gender

equality has been a priority for fair trade, women’s current limited participation in

7 www.fairtrade.net (accessed 10/20/06).8 See footnote 7.9 www.ecologic.org (10/20/06).10 It is important to note that this is an anecdotal finding and further research needs to be conducted in

order to generalize the argument.

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producer associations may perpetuate rather than overcome the traditional gender

bias in Latin America’s agricultural sector (Murray et al. 2006).

Producers’ Lack of Influence and Understanding of Fair Trade

Fair trade is predicated on the formation of equitable economic partnerships

between producers and consumers. Despite this mandate, research in diverse locales

indicates that producers understand fair trade in terms of market access (Tallontire

2000) or international aid (Shreck 2002) and not as an equitable trade relationship in

which they are actively participating. Other researchers maintain that fair trade

producer groups are ‘‘passive suppliers of product’’ dependent on higher order

groups (Utting-Chamorro 2005), that fair trade is an ‘‘intervention’’ rather than a

partnership, and that producers do not fully understand the market’s benefits (Paul

2005). More generally, research indicates that there is a lack of producer

participation in the development of the trading network’s strategy and that

producers have little control over the market itself.

The members of the researched coffee cooperative have sold fair trade certified

coffee to Northern markets for close to a decade. However, while several

interviewed cooperative members could articulately analyze the inequities they

faced in global agricultural commodity markets, only three out of 53 surveyed

members were familiar with the term fair trade. This lack of awareness regarding

the role they play in fair trade networks (Renard 2003) is symptomatic of the

international fair trade structure in which producers have limited decision-making

power and administrative control. At the same time, despite their lack of familiarity

with the term fair trade, 66% of surveyed members correctly identified the

cooperative’s (then) importer and roaster during interviews. This indicates that

while producers and consumers do not have direct and meaningful relationships,

roasters are successfully serving as conduits for consumer actions and intentions by

developing and maintaining constructive market relationships with producers.

However, in order to determine whether producers’ economistic understanding of

fair trade relationships weaken the market’s ability to promote human rights and

community development, further research needs to be conducted among a more

diverse group of participants.

In order to successfully foster equitable international trading partnerships,

producers must contribute to the formation of standards, certification requirements,

and agreed upon levels of just compensation as well as the establishment of future

collective goals (Blowfield 2004; Daviron and Ponte 2005). At the present time,

small producers have little influence within these realms. In response to recent

criticism, FLO has added four producer representatives to its 12 member board of

directors (FLO 2005). FLO also established a producer business unit in 2005 to

assist producer groups. In addition, the Latin American Coordinating Committee

of fair trade producer organizations was recently created to negotiate participation

and specific demands. However, in a global economy human social and economic

rights must extend beyond local, isolated spheres. Therefore, in order to be a true

vehicle for social justice fair trade markets need to further address this power

imbalance.

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Conclusions

In conclusion, fair trade coffee markets can effectively translate consumer action

and shopping habits into the promotion of human rights in distant locales. However

this process does not occur through direct producer–consumer contact. Instead, it is

channeled through two interrelated avenues: fair trade certification and the

relationships between producers and coffee roasters who serve as conduits for

consumer actions and intentions. These two facets of the fair trade consumer market

promote and protect the secure organizational space that is necessary for producer

initiated community development. This freedom to identify and fulfill economic and

social development goals through cooperation also reaffirms existing cultural

traditions of service and mutual aid among producers in the research site. The fair

trade coffee consumer market is demonstrably effective in these areas and is shown

to successfully promote human rights. This impact, while often overlooked by

researchers, is critically important in countries such as Guatemala with its history of

violent repression, structural inequality, and cultural discrimination against

indigenous populations and community organizers.

Despite these successes several limitations could be noted. These include

questionable levels of gender parity, producers’ economistic understanding of fair

trade relationships, and lack of producer participation in international decision-

making. Each of these limitations weakens the potential far-reaching impact of

consumer shopping habits. Taking the globalization of human rights seriously

means eliminating the radical distinction that exists between civil and political

rights on the one hand, and economic and social rights on the other. However, it is

increasingly clear that current forms of capitalist globalization cannot resolve the

contemporary crises of class polarization and ecological unsustainability (Sklair

2002). As a result, it is doubtful that they will promote universal human rights.

Therefore, political consumer movements such as fair trade will play an

increasingly important role in global struggles for justice and equality. With

concerted action, the market’s current limitations could be resolved over time.

While the above argument is based on one specific case study, it is highly

possible that the findings are applicable to a large number of fair trade producer

groups in similar circumstances, regardless of geographic location. The conclusions

indicate that human rights promotion emerges from producer cooperation and close

working relationships between producers and traders. Therefore, one could conclude

that when these two circumstances are not present, fair trade may be less effective in

translating consumer action into human rights promotion. For example, it remains to

be seen whether the increasing number of fair trade certified plantations and

factories (for commodities such as tea, juice, and bananas) will closely adhere to fair

trade’s founding principles and as a result reap similar benefits.

It is a strong indication of fair trade’s success, however, that the most frequently

voiced criticism relates to the relatively small market for fair trade products. The

market for fair trade coffee, currently the largest among certified commodities,

remains insufficient. While nearly 30% of the world’s small scale coffee producers

now supply the fair trade market (Conroy 2001), FLO estimates that the capacity of

producers worldwide who could meet certification standards is roughly seven times

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the current volume exported via fair trade channels (Murray et al. 2006). However,

fair trade sales are increasing steadily and the market has recently attracted the

attention of larger retailers such as the Wal-Mart owned Sam’s Club which now

imports fair trade certified coffee directly from the Brazilian roaster Bom Dia (Mui

2006). As a result, the future challenge may be to couple fair trade’s high standards

and commitment to trade equity and human rights compliance with continued

consumer market growth. It remains to be seen whether the entrance of retail giants

into fair trade coffee consumer markets will weaken the existing goal of human

rights promotion.

Acknowledgments This research was funded through grants from the Wenner-Gren Foundation,Fulbright-Hayes, the Emory Fund for Internationalization, and a University of Kentucky College of Artsand Sciences Summer Faculty Research Fellowship. I would like to thank Michele Micheletti andanonymous reviewers for their editorial suggestions.

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