Coffee is the third most consumed beverage worldwide, following water and tea. Americans alone consume over 400 million cups each day, making it a more than $40 billion industry in the United States. But have you ever thought about where that money goes? If you’re buying conventional coffee, more than likely it’s ending up in the hands of corporations and shareholders not in the hands of the people who actually produce the coffee. Peace Coffee, a small fair trade coffee company in Minneapolis, is out to change that.
How long has Peace Coffee been around?
What was the impetus of a nonprofit starting a fair trade coffee company?
The real driving force behind Peace Coffee was providing better wages to farmers by paying a higher price for beans. When we started doing it, you could count the number of folks in the country on your hand that were doing fair trade coffee, that were paying above market prices for their beans. No one knew what fair trade was.
IATP has always been huge supporters of family farms, not only internationally but also domestically and locally. In 1995, they were meeting with a group of farmers from Mexico right when NAFTA had just gone through. These farmers felt like they were being taken advantage of and that there were no real options for them. IATP had spent time in Europe working with farmer groups who introduced them to the concept of fair trade, which is basically a system of paying the true cost of a product taking into consideration the environmental and social costs.
Two months after this meeting where they were discussing how to help out in a more meaningful way, two containers of coffee showed up in Minnesota. Two containers of coffee is over $200,000 worth of beans. Initially IATP thought they would just find buyers for the green beans, maybe other coffee roasters, but then they realized maybe there was something to be said for starting a company that could be mission-based, around fair trade, and show that it could be profitable.
And IATP was in the coffee business?
Yes! We started small, with just a few selections, but over the last 14 years, we’ve grown out of the basement where we got our start and are a business in our own right. In 2010, we purchased from 16 farmer co-ops around the world, some of whom we’ve been buying from almost since the beginning.
What is the actual difference between a fair trade wage and a non fair trade wage?
Well, it’s a little bit complicated. In coffee, the majority of farmers generally own their land, so they are working towards a price per pound that is fair, stable, and covers the price of production. An individual coffee farmer may have land, but their land isn’t large which means that they don’t have the infrastructure or means to export directly. Instead, these farmers form cooperatives to pool their coffee together and export it directly, cutting out middle men and giving farmers ability to negotiate better prices, and keep more of the price of that coffee in the hands of the people who grew it.
How does a coop decide what price to sell the coffee for?
Like all businesses, each co-op has their own process by which they determine the prices they’ll sell their coffee for. Due to a historical lack of market price information and general lack of market access, coffee farmers in many places have long been price takers, forced to take the price offered for their coffee since they didn’t know what it was worth and had few options to turn it into cash.
While fair trade rules set out minimum prices to be paid for coffee, since 2005, we’ve set ourselves higher minimums based on our conversations with coffee farmers and have steadily increased those minimums over time based on what we’re hearing from farmers about the increasing costs of production.
We also pay more for higher quality coffee of course, and some of the work that our coffee team does at origin is focused on providing coffee farmers cupping training so they can taste and evaluate their own coffee. That knowledge gives them a better understanding of what their coffee’s really worth, and also gives them the tools to continue to improve the quality of their coffee.
How do you maintain those relationships with the farmers?
Peace Coffee has a unique way of buying most of our coffees—unlike most roasters, we own a share in our own importing business, called Cooperative Coffees, along with 20-some likeminded roasters throughout the U.S. and Canada.
The co-op pays for a producer-relations person who travels nonstop through the year and meets with the farmers generally before the harvest time. Farmers will know about their yields ahead of time and they’ll let us know because as we grow, obviously our purchases grow. Then we’ll know if we have to find additional farmer groups from a specific origin. For example Guatemala is our most popular coffee. We can’t just find one coop that we buy all of our coffee from, nor would we want to, because farmers also have to be smart about how they run their business. We always encourage the farmer coops to diversify their buyers. Because if something happened and Coop Coffee couldn’t buy all their coffee and they didn’t have any other buyers they’d be in trouble.
Where do you sell most of your coffee?
70% of our business is in the state of Minnesota. The heaviest poundage of coffee is getting biked throughout the Twin Cities, using two full time bikers and two full-time biodiesel van drivers. The van drivers mostly cover the suburbs and the bikers go to the local co-ops, cafes, and all the offices, churches, etc., who drink Peace Coffee in Minneapolis and St. Paul. We do ship out of state, to people who have moved away from the Twin Cities, or people that have read about us and believe in our mission. We’ve always asked people to seek out a local roaster. We’re big believers in people supporting what is close to them but for a long time you couldn’t find fair trade organic coffee in a lot of places.
We’ve been doing the biking since we started. There wasn’t a lot of work to do at first- when you’re starting a business, you don’t have a lot of customers. The first employees decided to get out and bike the coffee, now it’s the most sought after job in the company. It’s pretty unique to what we do. We can haul up to 600 pounds of coffee per bike. Our van drivers are pretty passionate about studying alternative fuel vehicles and I wouldn’t be surprised if down the road we have some other unique transportation, whether it be converted electric vehicle or something funky. Alternate fuel is something we’re passionate about.
How involved are you with the community in the Twin Cities?
We do hundreds of donations per year. We have a staff person that is always working to make sure groups have coffee for their meetings or community events. We’ve always said coffee brings people together, so it’s only natural that if you’re trying to foster some sort of community initiative, coffee should be there – especially if it’s early in the morning.
Do you use any special packaging or any other energy efficiency measures?
We love the building that we’re in, the Phillips Eco-Enterprise Center! It’s got all sorts of environmentally friendly features like geothermal heating in the office area, a giant solar array on the roof, and skylights in the warehouse area.
We did a lot of work around our packaging—it’s something that’s really still a work in progress for us to find a package that meets our expectations as far as preserving freshness on the shelf in a grocery store and really lives up to our environmental hopes. At present, the most green way you can get your coffee is to buy it in bulk from your local grocery store and use your own container or one of our compostable paper bags.
In terms of the coffee you’ll see on some shelves and the packages we use to send to around the country, the bags are petroleum-based, plastic bags. We have to protect the product because any time coffee is exposed to oxygen, it starts to lose freshness. We are very serious about the quality of our coffee and we worked with Eureka Recycling to find another option but have yet to find something we’re satisfied with.
When we put in the second roaster we also looked at different options in terms of energy efficiency and we chose one that is super fuel-efficient and has lots of extra pollution prevention technology.
We’ve never wanted to be the company that was chasing after business or stealing accounts. It just didn’t feel like who we were. So we’ve always spent a reasonable portion of our budget on ‘marketing’ but a lot of that was spent on giving away free coffee at events, supporting the Red Ribbon Ride, or doing the run for clean energy. We just did things that we felt were in line with our company – supporting social justice issues. We advertise in local publications, whether it be the City Pages or a lot of the neighborhood papers. And in terms of national publications, we’ve advertising in Mother Jones and Utne Reader and have been for many years because we believe there’s a place for good journalism.
Do you use social media at all?
We have a blog. We do Facebook and Twitter. We have a Flickr page which we put photos from trips. We have a YouTube channel and a Flip camera. We just got some footage back from a staff member’s trip to Brazil. When we were building the new coffee shop, Twitter was a really great way to keep in touch and update people.
If you’d like to learn more about Peace Coffee, or maybe want to try some out yourself, visit the Peace Coffee website or blog. You can also find them on Facebook and Twitter. Keep tuned in the coming weeks as we revisit Peace Coffee and hear about how they used green building principles to design and build their first coffee shop.