Trickle Down Economics: Can Fair Trade Coffee Save Mexico’s Poorest State?

Standing alongside a dirt road in the steep hills outside of Ocosingo, a town in Chiapas, in southern Mexico, Diego Méndez Gómez, a skinny 13-year-old coffee farmer pointed down at the colonial town center, a bumpy 40-minute truck ride away. “I used to go to school there,” he explained. Now he helps his father tend livestock, grow vegetables, and cultivate coffee. He left school a year ago, at age 12.

On the hillside above, a man walked a donkey up the incline, past a patch of corn plants and a few small wooden houses with corrugated steel roofs. It’s Manuel Gómez Guzmán, a 35-year-old butcher who works in the colonial city of San Cristobal but travels to visit his parents outside Ocosingo. “We live from coffee,” he explained.

Every year Gomez’s parents grow about 450 pounds of coffee, a yield that earns them a few hundred dollars of cash income. “I come to help them harvest and then go back [to San Cristobal],” Gomez explained. Behind him, an array of light tan beans sat under the hot sun on a tarp on the dusty road. “The beans take about four days to dry out,” Gómez explained.

Chiapas, Mexico, is coffee country, supplier of premium beans to boutique coffee brands and major international companies such as Starbucks and Nestle. But Chiapas is, too, home to many of the poorest towns in Mexico, despite concentrated efforts to invest following fair trade and sustainable production guidelines.

Alberto González, a 39-year-old former professional soccer player who now works as a gym teacher in Ocosingo, describes the area bluntly as “a marginalized zone.” “There’s no industry there,” he explained, adding that he estimates less than half his students finish school. “They think it’s better to earn a living from coffee,” he noted.

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In 1994 the state of Chiapas gained global attention after masked Zapatista rebels attacked police and army targets in Ocosingo and other parts of the state. Although the government has invested heavily in social programs in Chiapas over the last two decades, the poverty and inequality in the isolated corners of the state are persistent.

According to Mexico’s National Council for the Evaluation of Social Development Policies, more than three quarters of Chiapas’ population, a figure equivalent to nearly 3.5 million residents, classify as poor. One of the biggest challenges in Chiapas is the high level of dispersion of the population. Mexico’s last official census counted more than 20,000 towns in Chiapas, with an average population of fewer than 250 residents each.

Over the last 20 years, Mexico’s economic development strategy has focused mainly on industrial cities in the north. While Chiapas benefited from federal social spending initiatives, the state has not been placed at the center of the national policy agenda. In the 1980s and early 1990s, Mexico’s longtime ruling party, the Partido Revolucionario Institucional, shifted away from state-led agrarian development policies, dismantling price supports and subsidies, and opening the Mexican economy to trade via NAFTA and other agreements.

Now, small town residents in the hills of Chiapas collect social transfer payments from the government as well as cash from coffee exporters.

In Tuxtla Gutiérrez, Chiapas’ modern capital, locally-grown coffee is on display at the city’s Starbucks store. The package features a graphic of a woman wearing traditional woven clothing, and is marked in Spanish explaining that “Shade Grown Mexico Coffee, cultivated in the dense forest of the El Triunfo Biosphere- in Chiapas … is for a us a source of pride.”

Alisha Damodaran, a Starbucks brand representative, explained, “Farmers in the Chiapas region have been an important part of our journey in Mexico. We recognize our success is linked to the success of the farmers and suppliers who grow and produce our products.”

“Helping farmers thrive helps ensure the long-term sustainability of our business,” she added.

Chiapas coffee has become an important offering for major brewing companies such as Starbucks and Green Mountain and it remains a vitally important economic driver for many of the state’s rural residents.

While the bean trade provides an essential source of income, coffee is not a magical elixir that has the power to singlehandedly transform Chiapas’ underdeveloped communities. Still, fair trade coffee can be one component of a larger “ecosystem” of programs that include government-sponsored infrastructure development projects, NGO-sponsored educational outreach endeavors, and privately funded micro finance initiatives.

“Before Fair Trade, farmers were on their own, especially in regions like Chiapas where farmers are isolated and lack a network that can help them level the playing field,” Mary Jo Cook, Chief Impact Officer at Fair Trade USA, an Oakland California-based NGO said.

By establishing a price floor, contracts with Fair Trade certification help reduce the negative effects of downswings in the notoriously volatile international market for coffee beans. It can also help provide farmers gain credibility with lenders, helping them gain access to micro loans. Most importantly, Fair Trade coffee is helping to connect small-time farmers with international buyers who are willing to pay a fair price.

Fair trade coffee also helps more revenues trickle back to producer communities with less profits filtered out by enterprising middlemen.

Especially as Chiapas coffee earns name brand recognition in Starbucks and boutique coffee shops in hip neighborhoods in Mexico City and even farther abroad, small time farmers are gaining more opportunities to sell their products.

Although interest in fair trade premium coffee is growing, the road ahead will still be difficult for Chiapas’ cafeteros.

Lindsey Bolger, vice president of sourcing at Green Mountain Coffee Roasters who visited Chiapas three years ago, explained, “In Chiapas there’s a generation of knowledge about best practices [but] getting young people to stay [on the farms] is a real challenge.”

At minimum, Fair Trade practices are helping small time producers remain hopeful about the possibilities of passing on their business to the next generation.

As the bright sun beat down on the coffee beans piled up on the verdant hillside above Ocosingo, Miguel Méndez Gómez, Diego’s father, approached and put his hand on the teenager’s shoulder. He pointed up toward the top of the hill to a small house made from weathered, untreated slats of wood.

“When he turns 18 he’ll build a house up there next to mine,” he said.