The

Unfair Trade of Coffee in East Timor (DRAFT VERSION 1)

Katrina Langford timorlink@hotmail.com Coffee is East Timors largest export commodity after oil and gas, and provides the main source of income for about a quarter of the Timorese population. Fairtrade coffee from East Timor is sold around the world, and many people believe that by buying this coffee they are helping Timorese farmers get a better price and raise themselves and their families out of poverty. The reality in many areas is actually that farmers that produce the Fairtrade coffee are not paid any more per kg of coffee than other farmers. In some areas (not many though) the Fairtrade farmers are paid a great deal less than other farmers. There is much debate around Fairtrade and fair trade, and this debate has the potential to cloud the most important facts: (1) In the best case scenario, timorese coffee farmers are currently getting about $5.50 per day per farming family. Some families are much worse off than this. Most coffee farmers are disempowered, and are controlled by and dependent upon those that control the coffee market in East Timor (2) The supply chain from farmer to international consumer is large, with the coffee being resold 5 or 6 times in a typical supply chain to Australian consumers. Markups are made at each stage of the supply chain. A starting price of $1.50 to $2.50 per kg of green beans in Timor ends up with a retail price of between $30 and $50 in Australia. (3) A number of organizations (none of which have Fairtrade accreditation, but are trading fairly) are actively working to improve the livelihoods of Timorese coffee farmers by paying them fairer prices and helping farmers process their coffee further, adding value at the village level, some even going to the level of roasting and packaging in-country. There is the potential to increase this in-country value adding, with coffee roasted and packaged in Timor for export to Australia, this could add up to $5 of profit per kg of coffee, a large percentage of which could be passed back to the farmers.1 1 I was aided immensely in these calculations by Professor Brett Inder, who is the head of the Department of Econometrics and Business Statistics at Monash University. Professer Inder, as well as many other coffee experts I have talked to, know that value adding in-country is possible, profitable for all involved, and not very difficult to achieve. It has been done in other countries with great success. I am indebted to Professor Inder and Dr Helen Hill for the time they have both taken to help me understand some of the complexities of the coffee situation in East Timor. Many others such as Maite at the Fair Trade Network Timor have also helped greatly with links and contacts which have helped me piece the puzzle together. This document is still very much a draft, and all errors within it are my own. If anyone has any comments or if have got anything wrong or missed anything, I am very open to suggestions. 1

Summary of main points

I have summarized the main points of my findings below for those that dont have time to read a whole article. I look at each of these points in more detail in the sections below. - Fairtrade and fair trade (or trade that is fair) are two different things. Fairtrade (which has the green, blue and black circular logo) is an accreditation set up by FLO (Fairtrade Labelling Organization) which guarantees a number of things with the main aim of empowering farmers and increasing their incomes. This is not to be confused with fair trade, which refers to the idea of trading fairly. There are many organizations which work in fair trade, each with their own rules guidelines, and some with their own fair trade labeling. To distinguish the two, I refer to fairtrade as accredited by FLO as Fairtrade, and the concept of trading fairly as fair trade. To date in East Timor, there has been both Fairtrade coffee, and fair trade coffee. (see section 1) - The concept of Fairtrade is widely misunderstood, with people thinking that something labeled as Fairtrade guarantees that farmers are getting a better price for their produce. This is not necessarily the case, and has not been the case for Fairtrade coffee in East Timor. Fairtrade certification guarantees that the cooperative gets a base price per kilo of coffee, not the farmer. If the cooperative is functioning as a true cooperative, this should be passed on to the farmer as much as possible, but this has not happened in the case of Fairtrade coffee in East Timor. Farmers producing Fairtrade coffee in East Timor are still living below the poverty line (see section 2 and 3) - Based on information I have been able to gather, current prices for coffee cherries range from 20 cents to 50 cents per kilo (both Fairtrade and otherwise). Taking the top reported price, and assuming that all farmers are farming their land at maximum capacity, the average coffee farming family with 2 ha of land is earning around $2000 per year, which is $5.50 per day per family (this then needs to be divided by number of family members to determine how much per person). This is a best case scenario, as many farmers do not farm at maximum capacity, and many do not receive 50 cents per kg of coffee cherry. Some families receive half or less of this amount. Many Timorese coffee farmers (both those that sell Fairtrade and other coffee) are living below the international poverty line. (see section 3) - There are a number of steps in the coffee production process, from coffee cherry to roasted packaged final product. I give an overview of this in section 4.

At best estimates, Fairtrade coffee farmers are getting 50 cents per kilo of cherry (at lowest estimates are 30 cents per kilo). 50 cents per kilo of cherry is roughly equal to $2.50 per kilo of green bean. In Australia, people pay between $30 and $50 per kilo of Fairtrade coffee. How do we Get from $2.50 to between $30 and $50? Most of the money on coffee is made by the middle men in the supply chain. Changes in this supply chain could result in huge benefits for farmers in East Timor. I track a typical coffee supply chain from East Timor to Australia in section 5, and look at some changes to this supply chain that could. Greatly benefit timorese famers in section 9. There is a common myth that Timorese farmers cannot be paid more for their coffee because the quality is not good enough and there are high processing costs. This is simply not true. While there are certainly costs associated with processing coffee, this low quality coffee that Timorese farmers produce is sold as high quality, organic coffee outside of East Timor. From what I can calculate based on available data, the cost of processing is a fraction (about one fifth I think) of the profit made per kg of this same coffee. (see section 6) Some people seem to believe that farmers that have produced Fairtrade coffee in East Timor to date are not able to receive any more per kg of coffee because this money is used to provide free health clinics for coffee farming families throughout the country. While there are indeed free health clinics, these (or other initiatives that benefit the community) are a requirement of the Fairtrade system. Fairtrade registered cooperatives are paid a premium per kg of coffee (this is an amount of money on top of the base price per kg of coffee), which must be used for these community initiatives. CCT (the only cooperative which has had Fairtrade accreditation in East Timor) has received something around $3.5 million dollars per year to fund these clinics. (see section 7) There are some organizations which are actually trading fairly with Timorese farmers, working together with farmers in real cooperatives and trading with them in a much fairer manner. Japanese and Korean NGOs seem to be leaders in this area. I look briefly at these organizations in section 8. If changes were made to the coffee supply chain, cutting out middlemen and their markups and adding value to the product in country, this could result in very large benefits for Timorese farmers. I look at some possible changes that could be made in the Timor- Australia supply chain and the projected benefits for Timorese farmers in section 9.

1. Brief overview of Fairtrade and Fair Trade

Trading fairly, or trading in a way that advantages rather than disadvantages farmers, is not a new idea. People started working together to create more direct links between consumers and producers, cutting out middlemen in the supply chain and ensuring that farmers in developing countries got a better deal for their product. The first organization to formalize this idea into a Fairtrade label was the Max Havelaar institute in Holland in 1988. The Fairtrade Labelling Organization, or FLO ( http://www.fairtrade.net ) was established in 1997. It established worldwide accreditation as well as a set of fair trading standards, ( http://www.fairtrade.org.uk/what_is_fairtrade/history.aspx ). When talking about trading fairly, it is important to distinguish Fairtrade (the label which indicates that a product meets the fair trading standards set by FLO), and fair trade- trading which we deem to be fair. Ironically, as we will see in the case of East Timor, products with Fairtrade certification has not resulted in trade that is fair, and there are many organizations without Fairtrade certification which are in fact trading fairly. The international Fairtrade system was united until 2011, when America resigned from this system, and set up its own fairtrade certification mark, Fair Trade USA ( http://www.fairtradeusa.org ). The catch phrase (or innovation strategy as they call it) is Fair Trade For All. According to FLO, the entire international Fairtrade system regrets Fair Trade USAs decision to pursue its own approach rather than continue working within the international system. ( http://www.fairtrade.net/overview-fairtrade-usa.html ). The main ideological difference between FLO and Fair Trade USA seems to be that Fair Trade USA believes that mainstreaming of Fair trade products needs to go much further. Some advocates of fair trade argue that mainstreaming undermines the core fair trade principals [and that] for most mainstream retailers offering fair trade goodsthe commitment to fair trade is just window dressing. (Elliot, 2012:abstract and page 1) The sentiment that Fair Trade USA certification is not something which is ultimately beneficial for farmers is echoed in other areas also, with groups such as Coop Coffee stating on their website that they categorically reject the theory promoted by Fair Trade for All that by working with large scale plantations and with trans-national corporations the volume of transactions will trickle down and translate into greater economic impact for marginalized farmers and farm workers. ( http://coopcoffees.com/committees/fair-trade-task- force/navigating-fair-trade/coop-coffees-position-on-fair-trade ). Fairtrade certification (in theory) ensures that a number of criteria are met, which cover a base price that should be paid for products, a premium which is paid on top of that which must be used for social and community development which benefits the farmers, and also sets other standards related to development, labour, enviroment, etc. The basic principals of the fair trade

movement and Fairtrade certification emphasize the role of smallholder producers and the empowerment of these producers (Elliot, 2012:1).

2. What has Fairtrade meant to date in East Timor for coffee farmers?

The Cooperative Caf Timor, or CCT (see a CCT profile at http://resources.oxfam.org.au/pages/preview.php?ref=442&alternative=- 1&ext=jpg&k=&search=&offset=0&order_by=relevance&sort=DESC&archive=0& page=1 ) has been the only organization to date with Fairtrade accreditation in East Timor. A discussion of Timor Fairtrade coffee practices over the last decade is therefore synonymous with a discussion about CCT practices. CCT no longer has this accreditation ( http://www.radioaustralia.net.au/international/radio/onairhighlights/fairtrade- defends-coffee-certification-system ). According to this ABC report, last year CCT was given a warning that its practices did not meet Fairtrade standards, and was given 6 months to make changes or lose its Fairtrade accreditation. CCT then decided not to take any of the corrective actions, and withdrew voluntarily from Fairtrade accreditation. I am assuming that CCT has sought or will seek Fair Trade accreditation with Fair Trade USA so as to continue selling fair trade coffee to Starbucks, which is a major buyer of CCT coffee. According to the FLO website, current fair-trade pricing in East Timor is $1.35 USD per pound for natural coffee beans, and $1.40 USD per pound of washed beans http://www.fairtrade.net/price-and-premium- info.html?no_cache=1&tx_zwo3pricing_pi1%5BproductType%5D=7&tx_zwo3pri cing_pi1%5Bcountry%5D=211&tx_zwo3pricing_pi1%5Bsubmit_button%5D=Go. Natural beans are beans that have been dried with the fruit on and then hulled after they have dried (dry process). Washed beans are beans where water has been used in the hulling process, and beans are dried after the pulp/fruit has been removed (wet process). We will look at the wet process figures, as CCT only uses the wet processing method. $1.40 USD per pound is equal to $3.09 USD per kilo. On top of this there is a fairtrade premium of 20 US cents per pound, which is 44 cents per kilo. So assuming we are looking at the current price for a kilo of washed beans (or green beans), the Fairtrade pricing would be $3.09 (base price) + .44 (premium) per kilo, a total of $3.53 per kilo. This is assuming that the coffee is not sold as organic coffee. If the coffee is organic (which it is in East Timor), there is an organic differential of 30 cents per pound = 66 cents per kilo. This would bring the base price up to $3.75 per kilo, and the base price plus premium up to $4.19 per kilo. These prices refer to coffee in its dried state, not the cherry state. The ratio of wet to dry beans is around 1:5. Five kilos of coffee cherries is therefore equivalent to 5

1 kilo of dried beans. So if we are looking only at the price that should be paid for the coffee (leaving the premium aside for the minute) this leaves us with the following base prices: $3.75 USD per kilo for dried beans OR 75 cents per kilo (USD) for coffee cherries One of the biggest misconceptions around what Fairtrade labeling actually means is that these figures refer to what the farmer receives. This can be seen on websites that promote Fairtrade products such as the Oxfam Australia website ( https://www.oxfam.org.au/explore/trade/fairtrade-coffee-campaign/frequently- asked-questions/ ) from which the following screenshot was taken. Directly under the heading How much do farmers earn from certified Fairtrade coffee? is the sentence A minimum price of AUD $3.80 is paid for the coffee. The reasonable assumption here is that the farmers get $3.80 AUD per kilo for coffee. The Fairtrade base price does not, however, refer to what the farmer must get, but what the cooperative must get. A cooperative is defined in the Oxford English Dictionary as a farm, business, or other organization which is owned and run jointly by its members, who share the profits and benefits. If the cooperatives are actually functioning as true cooperatives then the Fairtrade base price is passed on to the farmers. The problem in the case of East Timor and CCT is that CCT functions like a business rather than a cooperative, and has not to date passed these profits on to the farmers. Based on available data, CCT pays farmers between 30 and 50 cents per kilo of coffee cherry (which is the equivalent of between $1.50 and $2.50 per kilo of green beans). This is between 40% and 66% of the Fairtrade base price. I look at the amount Timorese coffee farmers receive in more details in the following section. The other issue major issue with CCT Fairtrade practices in Timor to date is that the requirement that farmers are empowered members of the cooperative seems not to have ever been met. A 2004 Oxfam report on Coffee in East Timor found that CCT were criticised by a number of stakeholders interviewed for not effectively involving producers (members of the co-operatives) in their operations, despite the fact that they have FLO Fair Trade certification. (Oxfam, 2004: 23).

3. What are the Farmers Actually getting?

Based on available data, farmers who have been selling Fairtrade coffee to CCT have been getting between 30 and 50 cents per kilo of coffee cherries. The lower end of the spectrum, 30 cents, seems to be paid to farmers who sell their coffee to middlemen who then onsell the coffee to CCT, a practice which should not happen under the Fairtrade system ( http://www.radioaustralia.net.au/international/radio/onairhighlights/fairtrade- defends-coffee-certification-system ). I have also had other recent reports of CCT buying directly from farmers at around 35 cents. Prices of 50 cents per kilo has been found by some joint research done in Ermera by Monash University, Southern Cross university and UNTL. This research paper will be launched on July 17th 2013 at a workshop to be held at UNTL, Dili. Details of this will be posted on etan prior to the date. Prices of 40 cents per kilo have been reported in other areas by organizations such as KSI (Kdadalak Sulimutuk Institute). KSI is a Timorese NGO that was founded in 2000. http://knuaksi.wordpress.com/about/ They have produced a great resource called mobilekafe in conjunction with Catalpa http://www.catalpa.io/about-catalpa/ and supported by Oxfam and Trocaire. This gives coffee pricing information which farmers can access from their mobile phone http://www.mobilekafe.info/en/?sort=vendor The current price on their website for coffee purchased by CCT (and most other buyers) as of 22 May 2013 in the Poetete and Ponilala Sucos of Ermera is 40 cents per kilo of coffee cherries (see screen shot below, taken from ( http://www.mobilekafe.info/en/?sort=vendor ).

 This shows the price paid by CCT between 21 June 2012 and 05 June 2013 as being 40 cents per kilo of coffee cherry. This amount was also paid by ATT and Timor Global. CCT does not purchase parchment (coffee at the stage of being dried and the cherry/flesh removed- see chart in section 4), but the prices paid by ATT and Timor Global in Poetete and Ponilala can be seen below (taken from http://www.mobilekafe.info/en/?sort=vendor ).

These prices are the higher end of the spectrum. In my limited research to date, I have been told that the going price for parchment in one particular sub-district of Viqueque is between $20 and $25 per 25 kg sack of parchment. This is $1 per kilo or less (equivalent to 20 cents or less for coffee cherries). So what does this translate to per year for farming families? What income do they earn from farming coffee? Lets do the maths on this. The figures per farming family will obviously vary, but to be objective I will calculate based on highest known price, highest estimated potential yield per hectare of coffee, and average size of farm land per farmer. Small producers in East Timor harvest an average of 1-2 hectares each, which is about 90% of their total cash income (Oxfam 2003a). In 2003, Amaral found that average yields per hectare were around 150-200 kg of green beans per hectare, but that there was the potential for double this if improved farming techniques were used (Amaral, 2003). 8

 So lets say an average famer farms 2 hectares at maximum yield, and is paid the top price for the coffee cherries: 2 ha x 400 kg x $2.50 (per kilo of green beans equivalent to 5 kg of cherries) = 2 x 400 x 2.50 = $ 2000 per year This is $5.50 per day per farming family (divide this by number of family members for income per person per day). This is the best case scenario. This figure will drop for the many farmers who receive less than 50 cents per kilo, and farmers who are not producing coffee at the maximum yield. Regardless of Fairtrade or any other considerations, this is the bottom line. The average small scale Timorese coffee farmers are currently getting $5.50 per day per family. Or less. They are living below the poverty line. I dont believe that any reasonable person would call this fair.

4. Brief overview of the coffee production process

I have talked about coffee cherries, parchment and green beans in the sections above, and below is an overview of the coffee production process. There are a number of steps in this process, from coffee cherry to roasted packaged final product. This is outlined in the table below. I have been overly simplistic here, and good descriptions of the coffee production process can be found easily online. COFFEE CHERRIES PARCHMENT GREEN BEANS ROASTED COFFEE GROUND COFFEE Coffee is picked from the coffee plant in the form of the coffee cherry. These cherries are red when ripe. There are two forms of processing to get coffee to parchment stage, wet processing and dry processing. Wet processing is more time intensive, needs more equipment, but produces a better quality product. Five kg of coffee cherry produces around 1 kg of parchment. Parchment coffee is dried and has had the fruit or cherry stripped from the bean. Parchment needs to be milled to take this thin outer skin off prior to roasting. Green beans are ready for roasting. Much coffee is exported in this form. Coffee can be roasted in a number of different ways, and can be roasted specifically to cater to the tastes of different markets. Roasted coffee can be sold wholesale, or packaged and sold. It is generally sold in 250 g or 1 kg packs. This is an optional process, if retailers want to sell the coffee as a ready to drink product.

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5. How do we get from 20-50 cents to $30 -$50 per kilo for East Timor Coffee in Australia?
Timorese coffee that is sold as cherries for 20- 50 cents ends up being sold in countries like Australia for $30- $50 per kilo. The table below looks at what I have found out about the supply chain from East Timor to Australia to date. I look at how this supply chain could be improved to greatly benefit Timorese farmers in section 9.
FARMERS sell to Fairtrade cooperative (CCT) or to other buyer Cooperative processes cherries to green bean stage. cooperative sells to wholesaler COFFEE CHERRIES PRICE RANGE 20 cents to 50 cents per kilo (equivalent to between $1 and $2.50 parchment) Coffee leaves Dili port at around $4 per kilo (Fairtrade rate).

Notes Only CCT has had Fairtrade accreditation There are two main wholesalers in Australia, Bennetts in Victoria, and Cofico in NSW.

GREEN BEANS

wholesaler imports beans to Australia Wholesaler sells beans to roaster. Roaster roasts, packages, and sometimes grinds coffee. Roaster sells to retailer

ROASTED COFFEE (GROUND AND UNGROUND)

Details are sketchy, but cost per kilo is around $4 to $6 for non Fairtrade, and around $7 to $10 for Fairtrade coffee. Roaster sells coffee for around $3.50 per 250g (non Fairtrade), and around $10 per pack (Fairtrade). This is equivalent to between $14 and $40 per kilo. Coffee retails in Australia for between $8 and $12 per 250 g packet (which equals between $32 and $48 per kilo)

Retailer sells to public FINAL PACKAGED PRODUCT

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6. A Myth dispelled- Timorese Farmers cannot be paid more per kilo because the quality of their coffee is not good enough
One of the major myths around the amount of money paid to farmers for their coffee, a myth which is used to justify why these farmers cant be paid more, is that the cost of processing the cherries into green beans is so high that this isnt feasible to pay farmers more. Lets do the maths on that. According to a 2009 report by some tradewinds directors who took a trip to East Timor, CCT employs up to 700 casuals in the factory to do a final sort and grade over the harvest season from April to September. They are piece workers on a minimum of US$3.50 a day. Workers in this factory can reportedly earn up to $10 per day if they work quickly enough. (The link to this report is http://www.tradewinds.org.au/newsletters/Trip_to_East_Timor_Final.pdf It seems to have gone a bit funny on the website, but I can send a copy to anyone who would like to see it). This same report also states that CCT employs a total of 2500 people in the harvest season (April until September). It is reasonable to assume that the processing of the coffee from cherry to green bean (ready for export) is covered by these 2500 employees. Lets do the maths on this as well. As far as I am aware, staff wages are the largest cost for any business, so calculating the amount spent on wages goes along way to calculating the production costs of that business. So, If 2500 people are employed in harvest season of April- September, this is 2500 people employed for a total of 120 working days, and the workers earn an average of $6.75 per day (workers in the factory earn between $3.50 and $10 per day, and Im extrapolating this out to the remainder of the workforce and taking the average). In 2009 that was $6.75 per day for 2500 workers for 120 days per year. A total of $2.025 million dollars per year. Based on information collected in this same report, in 2009 CCT was exporting an average of 16,000 tonnes per year. This is 16 million kilograms. If CCT sold timor coffee at the Fairtrade price of $3.09 per kilo (which was the Fairtrade minimum organic price in 2009), and paid farmers $2 per kilo (this is an average reported price in 2013, it was around 75 cents per kilo in 2001, so it is possible that the price was somewhere in between these two figures in 2009- but lets go with the highest figures for the sake of being objective), this leaves the difference of $1.10 per kilo. $1.10 per kilo for 16 million kg is 17.6 million USD. If around 2 million dollars was paid to workers in that year for processing, this still leaves 15 million dollars per year profit. Even taking off another couple of million dollars for transport, equipment, and other costs, it is clear that there was a large profit made that could have been passed on to the farmers, but wasnt.

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7. The health clinics CCT has set up

I have had a few people contact me and remind me that CCT has been doing great things in the districts through the establishment of health clinics and other programs. The NCBA (National Cooperative Business Association) website also states that Using proceeds [emphasis is mine] from coffee sales, CCT established Clinic Caf Timor, a rural healthcare network of clinics and mobile health services to provide healthcare for marginalized people in the rural coffee growing regions who do not have access to government health services. Currently the system serves more than one sixth of Timor-Lestes population. ( http://www.ncba.coop/ncba/media/publications/news/1762-secretary- clinton-applauds-ncba-clusa-partner-cooperative-in-timor-leste ) This is a bit misleading, as the CCT has been required, for the last 10 years, as part of the Fairtrade certification, to spend the premium it receives on programs that benefit the community of farmers. The premium was 22 US cents per kilo in 2009, but was raised to 44 US cents per kilo in 2011. So in 2009, if CCT sold 16 million kg of coffee, it received a Fairtrade premium of around 3.5 million USD for that year. This premium is received every year under the Fairtrade system. There has also been criticism of these clinics from some coffee farmers in Timor. Laughton, in her PhD fieldwork, was told:

Theyll keep funding health clinics and educational facilities, even when farmers cant afford food. They give with their right hand while their left hand is exploiting. Its ridiculous. Theres no ethical consistency. Its the farmers coffee. Its a product of the community. Its not for private companies to decide how premiums should be spent. Given the choice, farmers would choose to collect their premium directly. That should be their right. Coffee collective representative
(Laughton, 2007:2)

8. Are any organizations or businesses paying a fairer price or trading in a fairer way?

In my research to date, I have (thankfully) come across some businesses and NGOs who are reportedly working together with Timorese farmers to improve prices, productivity, and add value. I look at these groups briefly below. I am certain this list is not exhaustive, and welcome any further additions to this list. If I have got the details wrong or misrepresented any of the organizations in any way I am very sorry, it was not my intention- Ill update any mistakes I find ASAP. Fair trade coffee is sold in Japan, sourced from some of the organizations listed below. The Japanese NGOs listed below reportedly pay the farmers $2.75, $3, and $3.50 per kg of coffee. Much higher rates than the reported Fairtrade CCT 13

rates of between $1.50 and $2.50 per kg. There was a report in the Japan times on the purchase of fair trade coffee from East Timor on June 14, 2012 ( http://www.japantimes.co.jp/news/2012/06/14/national/groups-supportive- of-east-timor-shift-focus-to-fair-trade-in-coffee/#.UbXTzL9FFN0 ). This article says that 200g packs of East Timor coffee was sold in Japan at between 600 and 900 Yen online. The exchange rate of Yen to Australian dollars at the time was 1 JPY = 0.01257 AUD, meaning that the coffee was sold at an equivalent of between $37.75 and $56.50 AUD per kg, a rate comparable to the rate that Timor coffee retails for in Australia. The prices that consumers pay for Fairtrade and fair trade2 Timor coffee in Australia and Japan are comparable, yet due to the supply chain and where the coffee is sourced, the Timorese farmers supplying the Japanese market (who sell via cooperatives to Japanese NGOs) can receive up to almost double that of the farmers selling to the Australian market (who sell via CCT).

PARCIC
PARCIC is a Japanese NGO that has worked together with coffee farmers in Timor since 2002. They have helped the farmers establish a cooperative (COCOMAU), provided training and equipment so that farmers can process the coffee to the green bean stage at the village level, and also pay $3.50 per kg of green beans, which they report as being around 1.5 times the price paid by other buyers in the same area. http://www.parcic.org/english/product/

PEACE WINDS JAPAN

Peace winds Japan is a Japanese NGO which has been working in East Timor since 2002. They have been buying and selling Timorese coffee using a fair trade system, as well as providing technical support for Timorese farmers ( http://peace-winds.org/en/activity.html ). Peace winds Japan reportedly pay $3 per kg of green beans, and I am fairly certain that Peace winds Japan work with/help support?? Caf Letefoho (see info about Caf Letefoho below). Need to confirm this with Peace winds Japan. Peace winds Japan works with two growers cooperatives in Ermera, Cafe Tatamailau Coffee Growers Cooperative in Letefoho (approx 460 households), and the Sacoco Coffee Growers Cooperative in Sacoco (approx 110 households). ( http://www.zensho.co.jp/en/responsibility/ft/easttimor.html ) A business in Japan, Zensho, purchases coffee from peace winds Japan, and pays fair trade prices as well as premiums on the coffee. One of the things that was done with these premiums was the purchase of a truck, enabling the collectives to collect coffee from growers living far away ( http://www.zensho.co.jp/en/responsibility/ft/easttimor.html ) 2 The former accredited by FLO, and the latter not. 14

CAF LETEFOHO (CAF BRISA SERENA) SUPPORTED BY PEACE WINDS JAPAN

Caf Letefoho coffee is produced and sold in East Timor in a number of supermarkets. ( https://www.facebook.com/pages/Caf- Letefoho/332902063496842?ref=stream ) They say on their facebook page that their main objective is to sell their coffee to people who are interested in drinking fair trade coffee, so that they can provide support to coffee farmers in Letefoho, to create a better future and sustainable economy. ( https://www.facebook.com/pages/Caf- Letefoho/332902063496842?id=332902063496842&sk=info )

ATT TIMOR (Alter Trade Timor)

ATT reportedly pays $2.75 per kilo of green beans, and has other programs within the coffee growing communities that greatly benefits farmers. I will need to find out more about ATT and include a more comprehensive look at ATTs programs. http://www.altertrade.co.jp/english/02/cof_e/cof_02_e.html

TRADEWINDS (Australia)
Based on some recent research which found that farmers who sold coffee to ATT were better off than other farmers in the same area, trade winds Australia is currently in the process of importing green beans bought from ATT to Australia. This will be an excellent alternative for groups in Australia wanting to sell fair trade Timorese coffee. http://www.tradewinds.org.au

WILD TIMOR COFFEE

Wild Timor Coffee is a small business set up by four Australian friends who were in East Timor together as peacekeepers. Wild Timor Coffee source their coffee from Maubisse and buy directly from farmers at a much higher price than all other buyers in the same area. They also give back to the community in other ways such as employment at the community level, equipment etc. They are a business, but an ethical business that works with the aim of making a difference for coffee farmers. They are also currently looking for ways to further value add in country so that farmers can receive an even higher rate for their coffee. http://www.wildtimorcoffee.com https://www.facebook.com/wildtimorcoffee?fref=ts

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YMCA KOREA
There is a video up on youtube, which seems to show a lot of the processing happening at the community level. Does anyone speak Korean and feel like doing an English translation? ( http://www.youtube.com/watch?v=vRQ-CLEUfc4 ) More research needed on this.

CAF CABLAKI DIAK

According to a member of the Australian Friends of Same friendship group, for the Boaventura festival a local Same producer was selling 40 gram of ground coffee (yes that small - makes about 4 cups (4 kopu) according to the label) packets of coffee with a picture of Dom Boa Ventura on the front, and with the title Kafe Familia Husi Distritu ManufahiKafe Uut Kwalifikadu -Todan mos 40gr. and on the back Cafe Cablaki Diak CCD Rua Kamilara Timor Leste Tel 7751441. But I don't know if this was exported or only sold in Timor, or whether they packed larger sizes too.

This certainly looks like another promising option, it seems like farmers are processing coffee to the roasted and packaged stage in the districts.

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9. Where to next? Adding value at the Timor end of the coffee chain.
Below is a possible alternative supply chain from Timor to Australia. The prices and processes were suggested by economic and coffee production experts. This is a feasible scenario if people had the willpower to make it happen. PRICE RANGE Notes FARMERS COFFEE Coffee not sold yet CHERRIES Farmers process coffee beans to green bean stage Farmers sell to GREEN Green beans sold at $4 Timorese NGO / BEANS per kg ethical business or retains green beans Timorese NGO / Estimated cost of ethical business / roasting and packaging- cooperative roast $1 per kg and package beans Coffee sold to ROASTED Coffee leaves Dili at $10 Coffee has made an ethical business or COFFEE per kg or more. additional $4- $5 per NGO in Australia (GROUND kilo profit at this stage, a AND large percentage of UNGROUND) which can be passed back to the farmers, either in the form of cash, or in the form of additional training and equipment. Ethical business or Coffee can be sold at NGO either sells current prices, between the product retail, $8 and $12 per 250 g or wholesale to packet (which equals other retailers between $32 and $48 per kilo) Retailer sells to FINAL Coffee retails in Friendship groups and public PACKAGED Australia for between $8 other organizations put PRODUCT and $12 per 250 g 100% of profits from packet (which equals sales back into between $32 and $48 communities in East per kilo) Timor 17

10. Conclusion

In the extremely short time I have been researching coffee in East Timor, I have already heard a number of reasons why it is not possible for the situation to change. This is simply not true. Those involved in buying or selling Timorese coffee that are truly interested in helping families raise themselves out of poverty should be looking at alternative methods. The last 10 years has not been anywhere near fair for the majority of Timorese coffee farmers. There are organizations who have proven that there is a fairer way to purchase coffee from Timorese farmers. We should all be doing everything we can to support their work, helping them to expand where possible, or emulating their practices in other areas to include as many coffee farming families as possible.

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REFERENCES

Amaral, Fernando Edigio. 2003. Prospects for coffee development in East Timor. In Agriculture: New Directions for a New Nation East Timor (Timor- Leste) Edited by Helder da Costa, Colin Piggin, Cesar J da Cruz and James J Fox ACIAR Proceedings No. 113 (printed version published in 2003) Elliot, Kimberly. 2012. Is My Fair Trade Coffee Really Fair?: Trends and Challenges in Fair Trade Certification. CGD Policy Paper 017. Washington DC: Center for Global Development. Available at http://www.cgdev.org/content/publications/details/1426831 Laughton, Kerry. 2007. Social Responsibility in Timor Lestes Coffee Industry. Report for Friends of Same based on PhD research. Oxfam. 2003a. Overview of the Coffee Sector in East Timor: January 2003. Oxfam. 2004. Overview of the Coffee Sector in Timor Leste: Update November 2003 to February 2004.

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http://resources.oxfam.org.au/pages/preview.php?ref=442&alternative=- 1&ext=jpg&k=&search=&offset=0&order_by=relevance&sort=DESC&archive=0& page=1 Accessed 11 June 2013 http://www.radioaustralia.net.au/international/radio/onairhighlights/fairtrade- defends-coffee-certification-system Accessed 9 June 2013 http://www.fairtrade.net/price-and-premium- info.html?no_cache=1&tx_zwo3pricing_pi1%5BproductType%5D=7&tx_zwo3pri cing_pi1%5Bcountry%5D=211&tx_zwo3pricing_pi1%5Bsubmit_button%5D=Go Accessed 10 June 2013 https://www.oxfam.org.au/explore/trade/fairtrade-coffee-campaign/frequently- asked-questions/ Accessed 9 June 2013 http://www.radioaustralia.net.au/international/radio/onairhighlights/fairtrade- defends-coffee-certification-system Accessed 9 June 2013 http://knuaksi.wordpress.com/about/ Accessed 9 June 2013 http://www.catalpa.io/about-catalpa/ Accessed 9 June 2013 http://www.mobilekafe.info/en/?sort=vendor Accessed 9 June 2013 http://www.mobilekafe.info/en/?sort=vendor Accessed 9 June 2013 http://www.mobilekafe.info/en/?sort=vendor Accessed 9 June 2013 http://www.tradewinds.org.au/newsletters/Trip_to_East_Timor_Final.pdf Accessed 10 June 2013 http://www.ncba.coop/ncba/media/publications/news/1762-secretary- clinton-applauds-ncba-clusa-partner-cooperative-in-timor-leste Accessed 10 June 2013 http://www.japantimes.co.jp/news/2012/06/14/national/groups-supportive- of-east-timor-shift-focus-to-fair-trade-in-coffee/#.UbXTzL9FFN0 Accessed 11 June 2013 http://www.parcic.org/english/product/ Accessed 11 June 2013 http://peace-winds.org/en/activity.html Accessed 11 June 2013 http://www.zensho.co.jp/en/responsibility/ft/easttimor.html Accessed 10 June 2013 http://www.zensho.co.jp/en/responsibility/ft/easttimor.html Accessed 10 June 2013 20

https://www.facebook.com/pages/Caf- Letefoho/332902063496842?ref=stream Accessed 10 June 2013 https://www.facebook.com/pages/Caf- Letefoho/332902063496842?id=332902063496842&sk=info Accessed 10 June 2013 http://www.altertrade.co.jp/english/02/cof_e/cof_02_e.html Accessed 10 June 2013 http://www.tradewinds.org.au Accessed 10 June 2013 http://www.wildtimorcoffee.com https://www.facebook.com/wildtimorcoffee?fref=ts Accessed 11 June 2013 http://www.youtube.com/watch?v=vRQ-CLEUfc4 Accessed 11 June 2013

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