Fairtrade raises coffee price minimum
Image: Cerrado Coffee Growers Federation
Earlier this year, Fairtrade International announced that to better help farmers meet current realities, it, along with Fairtrade America, would raise its minimum price for coffee.
Coffee farmers continue to face relentless challenges including mounting economic and climate pressures. Available data show that smallholder farmers produce 60 percent of the world’s coffee yet nearly half of them live in poverty and nearly 25 percent of them live in extreme poverty (less than USD $2.15/day). Furthermore, although coffee prices in 2022 were relatively high, profits ultimately failed to trickle down to the farmers themselves. Studies have shown that producers typically retain around one percent of the retail coffee price — for a USD $4 cup of specialty coffee that equals around $0.04 per cup.
The new Fairtrade prices, which were announced in March and implemented 1 August 2023 (for contracts signed by that date), increase the baseline price by 29 percent and 19 percent for Fairtrade-certified Arabica and Robusta, respectively. The new prices come after a cost-of-production study and consultation – including outreach to more than 600 producer organisations and 745 commercial partners – confirmed that farmers need to be paid more or they cannot continue to grow coffee.
“Paying farmers a fair price for their crops is the bare minimum to keep them farming,” Benjamin Kouame, chair of Fairtrade Africa shared of the new price model.
The Bonn, Germany-based social justice organisation said the increase will provide farmers with significant price risk management support in times of wild market fluctuation and adapt to their needs as they face inflation in their home countries and substantial additional costs due to climate change adaption. The new Fairtrade Minimum Price for washed Arabica beans – which represent more than 80 percent of all Fairtrade coffee sold – is USD $1.80 per pound, an increase of 40 cents over the previous price of $1.40 per pound. For natural Robusta, the price increases by 19 cents to $1.20 per pound. The additional value for organic Fairtrade coffee has been increased by a third, from 30 cents to 40 cents per pound. According to the non-profit organisation, more than half of Fairtrade coffee beans sold in 2021 were also organic certified.
“Despite the recent spikes in global coffee prices, coffee farmers are struggling with inflation, skyrocketing production costs, and crop loss due to the effects of climate change. Many coffee farmers are abandoning their farms in search of opportunities elsewhere and young people today in coffee-growing communities struggle to see a future in coffee,” Monika Firl, senior manager for coffee at Fairtrade International, said in a statement when the new minimum price was first announced. “The fact that farmers cannot make a living in coffee is a tragic commentary for the industry and a huge risk for the future of the global coffee sector as a whole.”
With its new minimum price, Firl said that Fairtrade is offering coffee farmers and their cooperatives a pricing safety net, “better adapted to the uncertain times we are living in, while leaving the door open for them to earn more when market prices are above the Fairtrade Minimum Price.” She added, “This is an essential tool that coffee farmers must be allowed to leverage in order to find renewed stability in their profession.”
Fairtrade’s global coffee network comprises nearly 900,000 certified coffee farmers in over 650 producer organisations spanning 31 countries. In addition to the Fairtrade Minimum Price, Fairtrade-certified farmers also receive a Premium – an additional sum of money that is collectively invested in projects to improve productivity, climate adaptation, quality, infrastructure, and basic community services identified as priorities by the farmers themselves and their organisations.
“The future of coffee is one where fair pricing is the norm. It is not acceptable for coffee farmers to continue to subsidise the multi-billion dollar coffee industry, while also taking on the hard work of sustainable transition,” emphasised Firl.
- Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
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