This story takes place in Rwanda, where in 1994 neighbour turned on neighbour and within three months nearly a million people were dead. Today, Rwanda remains Africa's most densely populated country, its people chiefly poor farmers rarely growing more than they need to feed and clothe themselves: 60 per cent of the population live on less than 55p a day. It seemed a good place to ask whether paying a bit extra in a Western supermarket for your coffee can make a real difference to lives like these.

Take Claire Kampeta, a demure 30-year-old, the chief taster of the Abahuzamugambi Bakawa coffee co-operative. I met her and her colleagues at work, in the coffee-testing station at Kizi in the gentle hill country of southern Rwanda, solemnly sampling glasses of coffee with a series of whipcrack slurping noises. When I first heard them I jumped.

The slurp is rude, frankly, and your mother would tell you off for it, but it's crucial to the process of 'cupping' a coffee sample. Claire explains that as much air as possible must be sucked in to circulate with the sip of coffee, unveiling its flavours and its body. This done, Claire starts to fill in a form, marking off sweetness, acidity, flavour, finish and so on, awarding points and making notes. These are complex. The descriptions she must use, according to guidelines on a Speciality Coffee Association of America poster on the cupping station's wall, range from the sort-of-obvious, like 'silky', 'buttery' or 'citrus' through to the abstruse: 'wet wool', 'tallowy', 'leather-like', 'gamey' and 'maple-syrup'.

Claire calls it the 'coffee language'. It was the hardest thing she and a dozen other young Rwandan coffee graders had to learn. Jeremy Torz, of the British company Union Coffee Roasters, helped with the training - all part of an attempt to give local coffee-growers more control of production and thus a greater share of the 'value chain' that ends with the £2 cup of coffee in your local cappuccino spot. It wasn't easy. Some of the references a top coffee-grader uses meant nothing. Jeremy brought samples from England to explain some of the tastes - dark chocolate, milk chocolate, pistachios, hazelnuts, almonds and so on.

Now, says Jeremy, 30-year-old Claire can taste as accurately as he does. At today's sampling he ranks the coffee from the Maraba co-op just above the Musasa, which is grown a little to the south: Claire rates another. To me, the 10 samples all taste pretty much the same, but my slurping is a puny thing. Besides, Claire says that to have a good coffee-cupper's palate you must not smoke, drink beer or eat the startling local chilli sauce, piri-piri - which pretty much rules me out as a coffee-taster.

'I love coffee,' says Claire - and she's not talking about her lust for a latte. 'I'm really excited by my profession. It gives me a sense of having a value.'

Claire is Rwanda's only qualified female chief cupper. She is key to the team in the small village of Kizi that has established, since 2003, Maraba Bourbon coffee as the country's first speciality coffee, the first Rwandan coffee to appear as such on Western supermarket shelves. This has restarted the local economy, and, without exaggeration, changed Claire's life - as it has that of over a thousand coffee farmers and their families in the hills around Kizi.

For a start, the improved quality and Fairtrade certification has raised the price the farmers get for their coffee berries by about 30 per cent - and made that income something regular they can rely on and plan against. As a result Kizi is thriving. The mud-walled huts in the street either side of the co-op's offices house restaurants, bars and an amazing number of hairdressers. There's even an internet cafe. I asked Charlotte Mushimiyimana, the teacher at the newly built primary school that the co-op has helped fund, what the greatest difference the new income had made to the villages. She thought for a moment and said - 'Shoes. The children have shoes.'

Just five years ago, the people here were, like most rural Rwandans, among the poorest in the world. Kizi was a ghost village, a straggle of roofless, scorched buildings on a hill - a memory of the genocidal madness that tore Rwanda apart. Back then Claire was 18. Ask her about that time and the confident technician in a smart suit disappears. She trembles and her eyes lower to the table as in a monotone as she talks about the 'events', the months in 1994 that she spent hiding in the forest while her father sold everything they had - the cows, the furniture, his bicycle - to bribe the militia men not to kill Claire or her mother, Catherine.

Catherine is a Tutsi, a member of the ethnic minority targeted by the Hutu militias. So when Rwanda exploded into violence after the Hutu president's plane was shot down, Catherine, her brothers and sisters fled to take refuge in the Catholic church at Rugango, a mile or so from their home. Claire stayed at home, protected because her father, a teacher, was a Hutu. The Tutsi families that gathered in the church - 5,000 people in all - thought they had found a refuge. But in fact this was just part of the plan - all over the country people were made to gather in places where they could be more efficiently killed when the signal to 'Kill the cockroaches', came. That was on 21 April: the first the terrified people knew, Catherine told me, was when grenades were hurled in the church doors. As the people tried to escape they were cut down with machine-gunfire or knives. The priest did nothing to stop the killing - 'though when they offered him a machete, he refused it'.

Catherine knew the killers - they were her neighbours. In a pause in the slaughter she and six other women were pulled out from the crowd. Because they were married to Hutus they were allowed to leave, though five of them were killed subsequently. Catherine's four brothers and sisters, their wives and husbands, and their children - a total of 30 people - all died.

Catherine, one of just two survivors of the Rugango massacre, is still living in that time, you feel. Ill and frightened, she thanked us for visiting and making her feel less lonely. She is scared of her neighbours, of the people who still throw stones at her roof. 'I could forgive, but they don't want my forgiveness,' she says. A deep sigh turns into a rattling cough; Catherine is 68 and the pills she has been given for her heart condition have affected her chest.

'I live in fear,' she says, 'they will try to kill us even when we are dead.'

Everyone in Rwanda has a story about the time they call the 'jénoside'. In their way, they are all the same and yet all different. We drive high up into the hills, above the cupping laboratory and the coffee-washing station, into the coffee groves - the little trees parade on the slopes like olives do. In fact, the whole place is strangely Mediterranean: the patchwork of carefully terraced fields, the baked red of the earth and the pantiled roofs of farm houses, tall eucalyptus standing in for cypresses - you could think yourself in Tuscany. It is neat, un-African and disconcertingly peaceful.

Up here, on the saddle-backed hill of Kibuye, I met Gémima Mukashyaka, one of the staples of the co-op: it is her smiling face that looks at you from the bags of Union Coffee Roaster's Maraba Bourbon Rwanda coffee that you can find on the shelves of Waitrose, Tesco and Sainsbury's.

Gémima has 400 prime coffee trees on the Kibuye hill, trees her father planted before she was born. Before the co-operative began, she was picking her berries, then washing and drying them in the traditional way, on the track outside her house. The price for this low-quality coffee was pathetic - in 1998 she got just £25 for the produce of her 400 trees - in 2003 it was £55. In 2006 her crop, a poor one because of bad weather, earned her 125,000 Rwandan francs - about £125 - and she got a further salary of 30,000 francs for her work in the coffee-washing station. That made a total income of £150 in a year, which doesn't sound like much - but this is a country where a farm labourer earns about 30p a day. The money means that her children can go to school, that she can afford a visit to the clinic when they are sick.

In a few days in Rwanda, one gets shamefully accustomed to the horror stories. Gémima's is as awful as most. 'Three hundred and fifty Tutsis lived on this hilltop. Three hundred died,' she says, matter-of-factly. 'My parents lived just up there - my whole family died except me and my little sister.'

We were talking in the sparse front room of her mud-floored hut. There's no adornment except a pair of smart shoes hung on a nail, and an old Marie Claire cover tacked to the wall. Cate Blanchett's thin face looks down at us as, head lowered, Gémima tells us what happened back in 1994.

'When the war broke out, I was far away at my godmother's house. We had to hide in the forest and there a young Hutu man said he would marry me to stop me being killed. I didn't want it, I was too young to marry, but my godmother said it would save my life.

'After the war I heard that my little sister was in the camp at Murambi [a hill-top college a few kilometres to the south of Kibuye where the bodies of 50,000 dead are now preserved in one of Rwanda's many memorial sites] so I left my husband, though I was pregnant, and went to find her. She was only 13: she and my family had all been at the dispensary in Butare. They were told they would be safe there but they all died, except her. Five boys and two girls, from 27 years old to nine. My father, François, was 90. How could he run away?'

Gémima is now a widow. She took another husband but he was killed in 1996, fighting in the Rwandan army in the Congo. Her two children by him, healthy and friendly, play around her and she gives a sombre smile as she strokes the youngest.

'I'm OK. I have my coffee. My sister goes to college, my children eat. If they didn't go to school, maybe they'd end up as we did. It doesn't really matter about the future: the important thing is now.'

We walk down the ridge along the dirt track, so Gémima can introduce us to some of her neighbours, also members of the coffee co-op. The first house we stop at has an elderly Hutu couple in it; I try to hide my astonishment as they greet Gémima, the Tutsi widow who lost her family to Hutus, as a good friend. The old man, Valère Gisa, searches the hut's shadows to find a container of home-made sorghum beer to welcome the visitors. He's a jolly soul who wears a dusty trilby; when Valère hears that Steve Macatonia, who is with us, is the head roaster of Union Coffee, the chief foreign buyers of his coffee beans, he gives him a loud round of applause and looks ready to kiss him. His wife Léocardia beams.

Valère is not keen to talk about the war - the family fled the hill for a refugee camp run by the French military, he says, so they saw very little. He'd rather talk about coffee. He has 404 trees - he shows us them, their branches getting heavy with the green berries that will turn red and ripen in February. He would like to plant new ones. 'England must buy more!' he says. 'The price is still too low. You can have all the coffee you want! I'll grow it. More money means I could hire more help: look at my wife, she's too old to carry sacks of fertiliser around.'

I had to tell Valère that his coffee sells on the English supermarket shelves for about 2,400 Rwandan francs for a 227g bag. It would take a coffee-picker eight days to earn enough to buy one. Valère stops chuckling. 'I must write that down,' he says, and finding a battered notebook under the bed, he does.

But says he's very pleased with the co-operative. 'It has helped with everything, the money for school fees, the kids. I'm 100 per cent for it. I can keep my money in the bank, there's more security because my coffee's not lying around to dry, so people can't steal it. The co-op is ...' he struggles for the right metaphor ... 'like a mother with enough milk to feed all her children.' He says to Steve - 'You sell it! We'll grow it!'

It seems remarkable enough, given the history, that Gémima can sit down and drink with Mr and Mrs Gisa. But the next coffee-farming neighbour she takes us to has an even more extraordinary story. Béatrice Mukamana beckons us into her tiny hut, her 10-year-old son Jean-Paul wide-eyed at the sight of visitors. She, too, is a widow: her husband Isaac died in prison two years ago. He was one of the 130,000 men jailed for their complicity in the genocide. In the paddy fields on the plain below Kibuye we saw them, files of convicts all incongruously clad in pink pyjamas, working on the irrigation ditches: mass murderers doing community service.

Isaac, we discover, manned the roadblocks set up in April 1994 to segregate Tutsis. Could he have killed Gémima's parents? No - they were murdered in the nearby town of Butare, sheltering with many others in a dispensary. But a little way up the hill, just by where our car is parked, there's a deep hole beside the track. It gapes dark like an abandoned well. This was where the roadblock stood that April - later the corpses of four villagers were retrieved from the pit.

When we've finished talking to Béatrice - who's hoping to use the extra money her coffee crop should get this year to repair her leaky roof - we go a few yards into the plantation so Suki Dhanda can photograph the family. Jean-Paul puts on his shiny new denim jacket, and his sister her new sweatshirt. A crowd follows, giggling, to watch Suki at work - eventually the whole village seems to have gathered, and the crush seems likely to send the smallest tots tumbling down the hill.

Under the coffee trees, with all the village gathered, it was hard, very hard, to imagine the horrors that happened in this place only 12 years ago. Harder still to contemplate how any amount of time might heal those wounds. But in the sunlight and laughter on Kibuye hill you could believe that money might help: some economic stability, the certainty of food and clothing for your children, medicine when they're sick, education to teach them to understand the world and their neighbours - these things can make a difference. Poverty exacerbates hatred. Talking to Claire about her plans to do a business studies course and start a coffee company, watching Gémima smiling among the neighbours from whom she'd once fled in terror was good. There's hope, I thought, in the ripening coffee beans.

I went to Rwanda a bit of a sceptic about fair trade - or Fairtrade, as the most widely accepted of the various ethical trading labels has it. How much do such schemes really help the 25 million coffee farmers who, according to Oxfam, have not made a living wage since the coffee price collapsed in 2001? Is Fairtrade a distraction - selling liberals the feelgood illusion of helping the poor farmers while letting big business off the hook? Like Organica, it has certainly opened up a new way for the food industry and supermarkets to shift product to the concerned middle-classes, cutting themselves another massive premium off the top. Steve and Jeremy of Union Coffee Roasters, who took me to Rwanda, were very open about all their costs and prices but the one thing they couldn't reveal was what mark-up Tesco puts on Union coffee. But the economist Tim Harford has calculated that only 10 per cent of the premium you get charged for a cup of Fairtrade coffee in a coffee bar goes back to the farmer.

The fact that Nestlé, Kraft, Starbucks and others have begun to co-opt ethical trade to flog their brands can only fuel the cynicism. That they have accepted the principles of fair trade - a living wage, sustainability, environmental responsibility- are an illusion. The bulk of their business - over 99 per cent of Nestlé's - remains the selling of coffee bought at the market price. And though that has risen since the crash of 2001 - coffee traded at about 95 US cents a kilo on the New York and London commodity exchanges during 2006, against a low of 45 cents five years ago - it is still well below the 180 cents that even the cheapest coffee beans fetched in the mid-Nineties.

The cost of that decline is shown in a strangely beautiful new film, Black Gold. This traces the epic journey from Ethiopian coffee tree to Starbucks mug, and details with gripping clarity how the vagaries of the commodities market in New York and London lead directly to hungry children and empty schools in Ethiopia. The film, made by the brothers Nick and Marc Francis, examines the country where coffee was supposedly first drunk and shows how dangerously dependent it is on it now. Coffee makes up 90 per cent of Ethiopia's exports; 15 million people's lives hang on it - lives blighted by the price collapse. Black Gold was much praised in film festivals last year and should get a cinematic release in the UK in May.

Fairtrade labelling has helped some farmers in Ethiopia and elsewhere. It guarantees a minimum $1.26 a pound to producers' co-operatives (Union Coffee Roasters will pay around $1.65 to the Rwandan co-op for this February's crop) and it brings many other benefits, not least stability and the confidence in the market that enables farmers to plan ahead. While Fairtrade coffee sales have been rising unstoppably this decade - up by a third or more every year in the UK - it is still largely in the posh coffee sector, the bags of roasted beans and cafetière-ground at the expensive end of the supermarket shelf. The British drink far more fairly traded coffee than anyone else and sales hit £65.8 million here in 2005. But that was only five per cent of overall UK coffee consumption - a soupçon, in the global market - where Fairtrade accounts for less than one per cent of business.

The key fact in the coffee business is that at least 50 per cent of the global market is controlled by five companies: Nestlé, Kraft, Procter & Gamble, Sara Lee and the German giant Tchibo. Nestlé is said by Oxfam to make at least 25 per cent of its profit on its coffee brands - an extraordinarily high margin in the food and beverage industry. As coffee drinkers know well, the crash in coffee five years ago didn't bring down the price in the supermarkets - instead their profit margin increased.

But Fairtrade has many critics. From the aid agency side, it's pointed out that it only rewards quality coffee-growers - and making coffee farmers of the poorest countries capable of meeting the needs of the premium coffee market takes a huge initial outlay in terms of development aid spending on training and quality improvement. Whether you can get that money depends pretty much on where you live - the United States has largely funded the work in Rwanda, but is less keen to open its purse for some of the Latin American countries, or for the country that was briefly the world's second-largest producer, Vietnam. Even if you can grow better coffee, the Fairtrade market, for the moment, is limited. A cogent article in the Economist recently suggested that Fairtrade may make non-fair-trade farmers poorer - it disguises the fact that coffee is cheap because there's too much of it being produced, and encourages more farmers to enter the market, thus lowering the price of basic coffee even further.

Not everyone will agree with this. Campaign groups like Oxfam argue that coffee is cheap because the cartel of big food corporates control prices and refuse to pass a fair proportion of the money they make back to the producer. The Fairtrade movement says that spreading the word about conditions for coffee farmers and providing a way for consumers to do something about it will help bring about long-term reforms.

'We've always said that Fairtrade isn't the only answer, but the changes it makes for some farmers show the way for governments to change the rules for all farmers,' says Ian Bretman, of the UK's Fairtrade Foundation.

Trans-governmental agreements on fixing coffee prices to benefit producers is a goal that campaigners have been seeking for a long time - with no result. So does anyone have a better answer than fair trade? 'I don't think the fact that the coffee price is going up and down is of that much relevance,' says Black Gold's co-director, Nick Francis. 'It's the system, not the price. The farmers are not part of the mechanism of pricing what they are growing. So whatever the price does, they will still end up losers.' In the three years of making and marketing the film, the Francis brothers are now convinced that fair-trade systems are not enough. Fundamental changes are needed to lift the farmers out of poverty. 'We need to see coffee-producing countries becoming coffee-selling companies,' says Nick. 'They need to compete effectively, rather than relying on the generosity of conscience-struck consumers.'

All the campaigners agree that farmers need to get more of coffee's 'value chain': Fairtrade UK estimates that a coffee farmer gets about 5p of the value of a £1.75 jar of coffee sold here, and Oxfam - which is a part owner of the Cafédirect fair-trade brand - says that producer countries get less than 10 per cent of the final value of their coffee. But do you change this through campaigning for big-picture, macro-economic adjustments, or by harnessing the power of consumers? Oxfam and other groups campaigning on global trade rules have been calling for some years for a return to an international price-stabilising mechanism for coffee, run by producer countries rather as Opec fixes oil prices. But that call seems to have fallen on deaf ears - a meeting of the International Coffee Organisation this summer, on which campaigners had pinned high hopes, came up with nothing new.

Clearly, as Nick Francis and others suggest, if you roasted and bottled coffees in the producing countries, you could make a real difference, creating jobs and boosting economies. Union Coffee Roaster's Jeremy Torz uses wine as an analogy: even budget varieties are sold chiefly on their origins. Improve quality, establish your brand and the income rises. Union and other ethical buyers have provably helped that happen.

But of course most of the world doesn't buy coffee by domain name or appellation controlée. It buys the coffee of many countries, blended and instantly soluble, and it does so by brand. Most of the value in coffee at point of sale comes from the name on the label, not from the bean or even the processing - hence the row last year when Ethiopia discovered Starbucks was trying to patent the name of two of the country's most famous coffee varieties. The answer is, some campaigners say, an African, or South American-owned Nescafé.

I asked Jonathan Horrell, head of corporate affairs at Kraft - owners of Maxwell House and Kenco - why the company couldn't do more to return value to coffee growers. Station its processing factories in the developing world, say? Kraft, he said, was 'neither for or against' such an idea, but coffees in blends come from many countries and factories have to be strategically placed. Kraft, he confirmed, has no factory in a significant coffee-producing nation. What it does have to offer its critics is the 'Kenco Sustainable Development' brand.

'Clearly,' says Horrell, 'we have a direct, long-term business interest in coffee farms being economically and environmentally stable - and that includes farmers earning a living wage.' Sustainable Development instant coffee was launched in 2005 and it pays a premium price to grower-farmers in Brazil, Colombia and El Salvador certified by the Rainforest Alliance environmental group. 'It's not a fair-trade system, it's a way of making what we felt was a more meaningful contribution to the wellbeing of large numbers of coffee farmers and their environment in a sustainable way.' The scheme, according to Rainforest Alliance figures, has benefited 150,000 people and saved 75,000 acres of rainforest.

The economics of this move are interesting. Kraft's deal promises a 10 per cent premium over the market price of coffee to the producer, adding about 10 cents a pound to the price in 2006 (still some 11 cents per pound less than the Fairtrade minimum of $1.26). Kraft bought 26 million pounds of coffee via Rainforest Alliance-trained and certified farmers - not all of it is used in the 'Sustainable Development' brand. The extra cost to Kraft was thus about US$2.6 million - real money, but a bargain, you might think, when you consider the pleasing PR that Kenco and Kraft has had as a result, especially given that Kraft's coffee business turns over nearly $5 billion annually.

Horrell acknowledges this. 'We're on a journey. This is only the beginning - but what we have achieved is to get a sustainable, environmentally friendly coffee brand up and running and introduce our consumers to the idea. We couldn't buy all our coffee like this - there isn't the certified production, yet.'

Nick Francis is sceptical. 'The big corporations have cottoned on. What they're doing is borrowing the language of ethical trading for their own purposes. You've got to ask whether what they're spending is for the long-term development of the producers or for a quick PR initiative. Nestlé now has one fair-trade coffee brand, it is only 0.02% of their overall coffee purchases - but they crow endlessly about their commitment to it. You've got to ask - when and how are farmers going to get a real slice of the $4 New York triple-shot frappuccino?'

So should we buy Fairtrade? What I saw in Kibuye and Kizi restored my faith - to an extent. Clearly, at local level, such schemes can make a real difference. And more important even than the hope offered to Claire, Gémima and the other brave women I met is the evidence that a seed has been planted here. Good ideas spread.

So effective is the Abahazumugambi Bakawa co-operative that produces Union's Rwanda Maraba Bourbon brand that, aided by an excellent US government-funded training project, other coffee growers in the country have been scrambling to form their own co-ops, build washing stations, improve the quality of their coffee and grab a little bit more of that value chain.

It is resoundingly clear that, even after five years of high-profile campaigns by the poverty NGOs about coffee, the only thing that has got the Big Five corporations remotely rattled is Fairtrade - that's why they are trying to get in on the act, even if the quantities are fatuously small. What we need to do is to make them buy all their coffee at a price that will provide a decent wage. Clearly the only way you and I have of pushing them is to buy Fairtrade ourselves.

Nick Francis says: 'I think it is not the final answer, but it is a beginning. It brings the words "fair" and "trade" into the minds of people who wouldn't get involved in the issue. They are having to look at other coffees and ask - if that one is fairly sourced coffee, what's this over here? Unfair? And what does that mean?' From such questions, revolutions begin.

Coffee in Rwanda: making a difference

Union Coffee Roasters will pay the Rwanda co-operative $1.65 a pound for the green Maraba coffee beans that will be harvested this month, 30 per cent above the Fairtrade minimum price. Importantly, they also stump up the price early, so farmers have the cash to help them get the crop in, and to pay the costs of shipping the beans to Mombasa in Kenya, whence they go by sea to the UK.

Union Coffee Roasters ethically sources premium-quality single- estate coffees from disadvantaged farmers around the world. The company establishes long-term relationships with producers and works with them to improve their coffee's quality in countries as diverse as Mexico, Ethiopia, Sumatra and Rwanda.

'We strongly believe the way our coffee is sourced, and the ethical relationships through which we have established, are inherently linked to the gourmet quality you experience in the final cup,' say the company's founders, Steven Macatonia and Jeremy Torz.

As with all their coffees, Rwanda Maraba Bourbon is hand-roasted by the company's Roastmaster to a distinctively sweet style.

Rwanda, and other coffees, are available in Waitrose, Sainsbury's and Tesco, priced £2.29 for 227g and from their website, www.unionroasters.com.

Rwanda Maraba Bourbon is being supported by Comic Relief this Fairtrade Fortnight. Comic Relief supports Fairtrade as a longterm solution for tackling poverty in Africa.