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Free Trade and Organic Coffee
Free Trade and Organic Coffee

Free Trade and Organic Coffee

Coffee became Nicaragua’s principle crop in the 1870’s, holding that position until 1992 despite the increased production of other crops, such as rum, tobacco, and cotton. Currently coffee accounts for 30% of Nicaragua’s agricultural exports. The culture of coffee has greatly impacted the Nicaraguan economy and environment, supporting over 48,000 families who own and operate small farms. In the late 1990’s, for example, coffee annually contributed $140 million to Nicaragua’s economy resulting in 280,000 permanent agricultural jobs. Coffee experts suggest the organic practices associated with shade grown coffee plantations produces some of the most flavorful coffee while supporting fair trade practices improves the financial well-being of the coffee farmers.

Location, Location, Location

Although Nicaragua’s first coffee cherries were planted on the Pacific’s plain mesa, most coffee is grown in the three regions within Nicaragua’s Central northern mountains – the Segovias, Matagalpa, and Jinotega regions. Coffee from the Segovias (Estel, Madriz and Nueva Segovia) is known for its floral aromas, distinctive flavor, and bright acidity. The Matagalpa and Jinotega regions possess rich volcanic soils, a humid tropical forest climate, and lush vegetation, including a great variety of lichens, moss, ferns, and orchids. The outer regions of Matagalpa County border the BOSAWAS Natural Reserve, the largest land preservation initiative in Central America.

Shade Grown Coffee and Commerce in Nicaragua

Coffee farming supports the more than 45,000 families who own and operate small coffee farms, a major impact in a country of 6 million people with close to 50% unemployment. Ninety-five percent of Nicaragua’s coffee cultivation is considered “shade grown” where farmers cultivate shade coffee under the canopy of native and exotic trees. These trees combined with specific management practices help to sustain the ecosystem, impacting almost 267,000 acres of land, increasingly important in a country with high rates of deforestation, soil erosion, and water contamination. This is a far cry from the 76,000 acres of land used to produce coffee in 1891.

Coffee is produced in a variety of ways due to the commercialization chains, but, in general, farm size directly relates to the different forms of coffee production and commercialization. Medium, large, and agro-industrial coffee plantations are more likely to maintain a permanent labor force than are the smaller farms. These larger farms even occasionally export their own coffee while providing living quarters and food to farm worker families. Rural landless workers, however, continue to live in extreme poverty. During coffee harvest the larger plantations employ hundreds, sometimes thousands of coffee pickers.

Estimates suggest 95% of Nicaragua’s coffee farmers are micro and small-scale producers where the family is the main labor source. These households often produce corn and beans in addition to working on the farm. The small-scale farmers tend to employ day laborers during the coffee harvest. Many Nicaraguan small-scale farmers grow more than half of the food they eat, integrating bananas, oranges, mangos, and trees for firewood and construction within their coffee farms.

Equal Exchange and the Growth of Fair Trade Cooperatives

Co-ops in Northern Nicaragua date back to the 1920s when Augusto Cesar Sandino formed Nicaragua’s first co-op in Wiwil. By the early 1970s, however, only 11 cooperatives with an estimated 460 members were in existence in Nicaragua. The Nicaraguan revolution in 1979 and subsequent Sandinista government, which lasted from 1980 to 1990, significantly influenced many of the current cooperatives. During this time, cooperatives were given land that was redistributed to those who were once farm workers.

In the mid-1980s Equal Exchange pioneered a trade model that valued and empowered both farmers and consumers. During this time US family farms were being replaced by industrial-scale, corporate-run agribusiness that relied on toxic chemical fertilizers, herbicides, and pesticides. Consumer food coops that offered their members organic and locally produced food blossomed in popularity. At this same time, the US specialty coffee market was burgeoning as coffee lovers were eager to find and make the perfect cup of coffee at home. In response, the founders of Equal Exchange chose Nicaraguan coffee as their first product. In 1986 President Reagan imposed n embargo on all products from Nicaragua’s Sandinista government. Equal Exchange found a loophole and brought Nicaraguan coffee beans into the US with the assistance of the Dutch. These beans, however were promptly seized as soon as the Nicaraguan coffee arrived in Boston. The Us government then tried to stop Equal Exchange, resulting in several years of legal battles and congressional discussion. Eventually, Equal Exchange won out, and the trade co-op began to grow.

Progressive church-based organizations in Europe, linked to liberation theology-inspired co-ops in southern Mexico, drove the initial demand for Fair Trade/Organic coffee in the late 1980s. After the revolutionary party was voted out in 1990, many co-ops collapsed. Others began to unite and form secondary level organizations to secure land titles, later providing technical assistance and access to markets for their members. From 1993 to 2001, the total number of agricultural co-ops decreased by 40%, while co-op membership actually increased by more than 10%. As these co-ops began forming more direct connections to European Fair Trade and the US specialty roasters, they realized the need to unite even more to be able to focus on specialized commercialization practices and meet the increasing demands of the changing global coffee economy. These newer export-focused coops included specialized agricultural processing infrastructure, strong quality assurance programs, and highly trained professional staff, simultaneously strengthening their ability to support education, housing, and environmental projects among their members.

In addition to quality improvement, many of these co-ops have used their Fair Trade premiums to reinvest in their co-ops, creating social programs for their members. Several co-ops, for example, have built their own dry processing plants owned by the members. This enables the coffee farmers to better control for quality, to employ their members, and to cut down on production costs. Many co-ops have established educational scholarship programs for the members and their children. Others have used their Fair Trade premiums to create Women’s Savings and Loans Programs and to support income diversification projects including agro-ecotourism programs and beekeeping.

Impact of Fair Trade on Nicaraguan Farming Practices

Fair Trade, also referred to as Free Trade, not also helped improve trading conditions for coffee farmers – free trade also promotes sustainable coffee farming practices. Although Fair trade does not require organic production, it does encourage farmers to work toward organic practices when economically practical. For coffee to be sold as Fair Trade certified, coffee must be produced organically. Organic products are in high demand, but limited in supply due to the stringent requirements of organic certification. Organic coffee represents between 4 and 5% of Nicaragua’s coffee exports, but comprises a large part of the coffee produced by small-scale farmers organized into Fair Trade co-ops. Receiving organic certification is a three-year long process, necessitating substantial commitment from the farmer. Eighty percent of the 48,000 coffee farms are micro-producers with less than 8.5 acres. Coffee farms that are larger than 8.5 acres produce more than 85% of the coffee harvest due to more intense management and the associated higher yields common to larger farms. Small scale farms have now transitioned to organic farming.


The next time you buy coffee, consider choosing Fair Trade Organic shade grown coffee from Nicaragua and support the coffee farmers and their community.

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