Indebted to Fair Trade? Coffee and crisis in Nicaragua

This paper explores the following general question: Why are Fair Trade coffee farmers in Nicaragua burdened by debt? Nearly five years from “the end” of the coffee crisis, peasant farming households committed to Fair Trade standards continue to struggle with a legacy of indebtedness caused by years of low farm-gate prices and declining productivity between 2000 and 2004. Through ethnographic observation and interviews with peasant farmers in Nicaragua, I explore how farmers experience a simple reproduction squeeze that hinders them from “bootstrapping” their own economic development. I argue that the effort to raise the Fair Trade minimum price and premium for coffee through Fair Trade Labelling Organizations International (FLO) in 2008 demonstrated a good first step toward improving farm-gate prices, however, these gains must be understood in the context of long-term indebtedness as well as rising production costs and household consumption costs.