Coffee farmers at Guatemala's small Chanmagua cooperative opened their land and growing methods to stiff scrutiny last year, in the hope an environment friendly seal would bring them higher prices.

The fifteen farmers who entered the programme let inspectors see their accounts, raised wages for contract workers and cut down on fertilisers and pesticides so their coffee could be labeled environmentally and socially responsible.

But after all the hard work the farmers, who grow high grade coffee on mountains close to the border with Honduras, say they are disappointed with the small premiums over market price fetched by the coffee.

The problem was the high expectations, said Cesar Peralta, who manages the group of some 150 farmers, most sporting the thick mustaches and cowboy hats common to the region.

Thousands of farmers in Central America have had their coffee certified as organic, fair trade or environment friendly in the hope of better prices, but many complain the extra work and cost to meet the labeling requirements is not rewarded sufficiently.

The producers were convinced the certification would mean much higher prices than usual. There wasn't a lot of good information, Peralta said.


The trend toward making coffee seen as socially or environmentally responsible was boosted in the early part of this decade when world coffee prices collapsed, pushing many farmers into bankruptcy or deep debt. Many of those left saw specialist labels as a way to boost income.

Now, a slew of organisations offer an array of labels, all with differing requirements, paperwork, and fees. Many farmers find it hard to know which to chose, and whether their investment will be rewarded with better coffee prices.

Inspections by international certifiers can cost around $2,000 to $3,000 (1,000 pounds to 1,600 pounds), with some charging annual renewal fees, although these charges can be divided between growers organised in cooperatives.

The fair trade seal aims to improve the living conditions of poor coffee farmers by locking a guaranteed baseline price of $1.26 a pound, or $1.41 for organic coffee, plus a $0.05 premium, or $0.15 for organic beans, if the market price goes above that baseline.

The difference was significant during the 2000 2004 coffee crisis when prices floundered around 60 cents a pound.

But market prices for coffee reached multiyear highs in New York and London a few months ago, and prices are now more than double the 30-year low hit in 2001.

That shrinks the premium farmers earn above the market, leading some last year to default on contracts and sell to middle men offering faster cash.

Fair-trade advocates say the system protects the farmers in the face of volatility.

The power of the fair trade model is the farmers are guaranteed these prices in good times and bad, said Nicole Chettero, spokeswoman for U.S certifier TransFair.

But although demand for the organic, fair trade and even bird friendly niches has hit the mainstream, supply still far outstrips demand. (Bird friendly coffee growing techniques involve ensuring that birds are not affected by pesticides, ruined water supplies or changes to their habitat.)

Fair-trade coffee is now available on college campuses and in supermarkets, and giants like Dunkin' Donuts include fair trade in their stores. Even so, the label is still attached to less than 2 percent of world coffee sales.

Only a third of all the fair trade certified coffee grown is bought by fair trade dealers, said Chettero, with the rest sold on the open market at lower prices.

The same oversupply extends to other labels, and explains why the Chanmagua cooperative certified just 15 members with the Rainforest Alliance seal.

To find a place to sell certified coffee from all the members would be much more complicated, said Peralta. There needs to be a much larger market.

But the benefits for Chanmagua, the first cooperative to certify with the Rainforest Alliance in Guatemala, are not always economic.

Peralta said the strict requirements for book-keeping and improved conditions for workers have made their organisation more professional and reinforced their commitment to protect the environment.

We don't promise a premium price across the board, said Chris Wille, the head of sustainable agriculture programmes for Rainforest Alliance in Costa Rica.

But farmers are reducing their costs by spending less on chemicals and increasing their productivity by treating their workers better. They see it as a way to turn their farms into nice, sustainable places to live and pass onto their children.