Fairtrade increases coffee price as farmers face economic pressures
By Food in Canada StaffBusiness Operations Beverages Ingredients & Additives coffee Editor pick Fairtrade supply chain sustainability
Fairtrade raises its minimum price for coffee in an effort to strengthen protections for coffee farmers around the world amid the intensifying impacts of climate change and growing global economic volatility.
The new Fairtrade prices, which come into effect for contracts signed as of August 1, 2023, will increase the baseline price by 19 per cent and 29 per cent for Fairtrade certified Robusta and Arabica coffee, respectively. This 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 per cent of all Fairtrade coffee sold, is $1.80/lb, an increase of 40 cents. For natural Robusta, the price will increase by 19 cents to $1.20/lb. The additional value for organic Fairtrade coffee has been increased by a third, from 30 to 40 cents/lb. 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. 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,” said Monika Firl, senior manager for coffee at Fairtrade International. “With the new Fairtrade minimum price, Fairtrade is offering coffee farmers and their co-operatives 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. This is an essential tool that coffee farmers must be allowed to leverage in order to find renewed stability in their profession.”
According to available data, smallholder farmers produce 60 per cent of the world’s coffee, yet nearly half of them live in poverty. Although coffee prices in 2022 were relatively high, profits failed to trickle down to the farmers themselves. Studies have shown that producers typically retain around one per cent of the retail coffee price.
Fairtrade periodically reviews the minimum price’s relevance in direct and open consultations with the farmers themselves through their producer organizations. The Fairtrade Standards Committee, which evaluates minimum price revisions, comprises three producer representatives, one trade union (worker) representative, three national Fairtrade organization representatives, and one trader representative.
To achieve the new minimum price, Fairtrade conducted a cost of production analysis as well as a three-month consultation process with key stakeholders. More than 540 participants – 86 per cent of whom were farmers – from 40 countries provided critical inputs that resulted in the new price.
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