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Published 03 August 2012 05:34, Updated 09 August 2012 05:02
Distinction ... coffee millionaire Philip Di Bella says there is a difference between child slavery and creating conditions in which children can develop skills. Photo: Glenn Hunt
Coffee millionaire Phillip Di Bella wants to make his view very clear. He doesn’t support child slavery and exploitation but he does support child labour in the way in which he defines it. “I believe in children working on farms,” he says.
The Brisbane-based entrepreneur who has built one of Australia’s fastest-growing coffee businesses and propelled himself into the BRW Young Rich list knows he is courting controversy as he speaks.
He believes, however, that it is a chance to challenge the accepted stance that coffee roasters should avoid farms that use children under 15 as labourers.
He says it isn’t a black and white issue and that in developing nations those children bring in a legitimate source of revenue for their families.
He says that in countries such as Mexico, Peru and Colombia, communities benefit from employing children from the age of 12 who would otherwise be exposed to the drug trade.
Most farms – 95 per cent of them – employ adults. “And they’ll only work children that are 15 or over,” he says.
“However, some farms – in countries like Mexico, Peru and Colombia – will allow kids from 12 to 15 during school holidays and then when school’s on, before or after school. They must be paid and the parents get the money.”
He estimates that on average, less than 1 per cent of the workforce on these farms would be children under the legal age.
“These farms don’t get any particular benefit from employing kids,” he says. “Rather it’s part of a social support program to allow kids to develop.”
Di Bella started sourcing beans from farms that use child labour two years ago when he decided to cut out his brokers, ARC and Coffee & Nut Trading, and buy directly from farmers.
It makes business sense to ditch the broker, he says, as it means he avoids hefty broker fees, which allows him to save up to 30 per cent on coffee purchased. He claims it also gives him greater control over the variety of coffee beans he can source and thereby allows him to produce better quality coffee.
“Dealing with a broker is like going to a buffet everyday,” he says. “Having your own company is like having a private chef. I sit down and say, this is what I’m looking for – like for our 10-year anniversary blend, I want deep chocolate, I want cherry, I want coconut and my Crop to Cup manager Moshe [Tawil] says, OK, I’ll go to this and that region to get it.”
Crop to Cup is the name of Di Bella’s green bean purchasing program. He markets it as a program where the company works with coffee-growing communities to improve their “livelihood and quality of life”.
Under the program, he deals directly with 40 farmers from 15 coffee regions in Papua New Guinea, India, Africa and South America. In the past financial year, he says, he bought and imported about 55 containers of coffee worth about $6.6 million.
His position attracts fierce criticism from others in the industry. Jasper coffee director Wells Trenfield is perhaps the most vehement critic of direct trade. He says those who go direct, rather than using brokers that abide by a regulatory system such as Fairtrade (see “About Fairtrade”), are simply lining their own pockets.
“The price of a cup of coffee now should be $7.80,” he says. “The industry fails to come to terms with the slavery used in production and trading so that roasters and consumers can buy cheap coffee.”
Coffee is the world’s second most traded commodity after oil and the battle to win the consumer with the best coffee is intensifying. Worldwide, more than 2.3 billion cups of coffee are consumed daily and Australian consumption is on the rise. IBISWorld estimates that revenue in the local industry (including cafes and coffee shops) will increase from $4.95 billion in 2011-12 to $6.15 billion in 2016-17.
In that context, Di Bella is a medium-sized player but his mission is to be known as producing Australia’s best-quality coffee. Changing the way he sources it, however, has thrown up big ethical questions.
Under his program, children under the legal working age of 15 (as determined by the laws of the International Labour Organisation) are allowed to work on farms under certain conditions.
He says he visits one farm a year on average and Tawil, who has a relationship going back decades with some farmers, says he visits about 10 farms a year to monitor what’s going on.
Di Bella says Crop to Cup is also teaching farmers and their children new skills – such as roasting the beans – which benefits them in the long term.
He accepts that, obviously, he cannot know what’s going on in every farm all the time or exactly how much each child is paid on an hourly basis but says that by dealing directly, he has more control than dealing through a broker.
“You hope to have an influence and control what you can control,” he says. “It’s not in [the farmer’s] best interest to lie to me. If I find out, they miss out on trading with me.”
UNICEF is not convinced and intends to investigate Di Bella’s claims. UNICEF Australia chief executive Norman Gillespie says that while the organisation recognises that millions of children work to help their families in ways that are neither harmful nor exploitative, “millions more are put to work in ways that drain childhood of all joy and crush the right to normal physical and mental development”.
He says the assertions made by Di Bella Coffee will be “fully investigated to ensure that there is no breach of the rights of children and that children are being given the opportunity for appropriate development”.
The bottom line is this arrangement saves Di Bella money – he says a total of $1.5 million a year – by not having to pay broker fees. He claims that the 40 farmers he works with also make an extra $1.5 million a year as they are paid a higher price by him than the market offers. Competing coffee roasters are dubious that the farmers get any savings, however.
He says his farmers personally tell him they are better off. “They have guaranteed sales only subject to quality and not prices,” he says. “I always pay a higher price than the market price for coffee direct to the farmer.”
He is not the only coffee producer going direct. Italian-owned coffee company Illy has been going direct to the farm for about 15 years. And like Di Bella, the company claims it’s about sourcing better quality coffee.
Illy has been in business a long time – almost 80 years – and has connections with farmers, says the man in charge of Illy’s Australian operations, John Frisco.
“It’s not all about money,” he says. “If you want quality, why not buy direct from the farmers – live with them and teach them. The Illy family have their buyers. They have an office in São Paulo [in Brazil]. They go to the farms ... and they help them to produce good-quality coffee.”
Frisco believes more coffee roasters will realise the benefits of direct trade in years to come. “Is this a trend?” he asks. “Yes, companies want to have a point of difference; they want to be better. The consumer is looking for the excitement of the palate.”
But not all coffee roasters are in agreement. While Di Bella may help one or two farmers learn better skills, Trenfield says, it doesn’t result in beneficial community programs such as those offered through programs such as Fairtrade.
“When [Di Bella] works with two farmers, are those farmers able to spend that little bit of extra money to make changes to build roads and schools?” Trenfield says. “It doesn’t happen. That’s the massive difference with Fairtrade. Fairtrade changes lives for thousands and even millions of growers.”
Regardless of whether a coffee roaster goes direct or not, the reality is that there are variables outside their control when they deal with developing nations.
It’s hard to determine exactly how much each farmer gets paid as it differs from country to country and farm to farm. But the price we pay as consumers often doesn’t do justice to the person who picked the coffee beans in our cup.