Fairtrade Coffee Not Living Up to Label in Peru

Industry insiders have also told the Financial Times about non-certified coffee being marked and exported as Fairtrade, and of certified coffee being illegally planted in protected rain forests.

This casts doubt on the certification process used by Fairtrade and similar marks that require producers to pay the minimum wage. It also raises questions about the assurances certifiers give consumers about how premium-priced Fairtrade coffee is produced.

A board member of one Peruvian Fairtrade-certified coffee producer told the Financial Times: "No certifier can guarantee they will purchase 100% of a cooperative's production, so how can they guarantee that every bag will be produced according to their standards?"

Though certified coffee makes up less than 2% of the global coffee trade, it has become increasingly mainstream as large retailers such as Starbucks and McDonald's adopt it.

The Financial Times visited five Peruvian farms, all of which have Fairtrade certification.

Each farm hires 12 to 20 casual coffee pickers during the harvest season. All house and feed their workers, which allows them to deduct 30% from their wages.

After that reduction from the legal daily minimum wage for casual agricultural workers of 16 soles (about $5), farm owners are still obliged to pay at least 11.20 soles a day. In four of the five farms visited, pickers received 10 soles a day, while the other farm paid workers 12 soles a day.

Luuk Zonneveld, managing director of Fairtrade Labeling Organizations International, the Bonn-based body that sets fair trade standards, said the certification system "is not fool- and leakproof" but said the problem should be put in context.

"Poor farmers often struggle to pay their workers fairly," he said. "Why are casual laborers there at all? There are wider issues here. We need to ask why this goes on and what we can do to help."

A number of industry insiders said they had also witnessed fraud within the certification system that resulted in coffee from uncertified sources being exported as Fairtrade.

The Financial Times has also been told of Fairtrade coffee being planted in national forest land in the Peruvian jungle.

Using satellite mapping, a Canadian nongovernmental organization found that about one-fifth of all coffee production in one Fairtrade-certified association was illegally planted in protected virgin rain forests.