Fairtrade's Coffee Price Boost for August 2023: Tackling Poverty!

Jul 27, 2023 • Amélie Bigras

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The global coffee industry is known for its complexities and challenges, especially concerning the livelihoods of coffee farmers who often find themselves struggling against volatile market forces, environmental threats, and social inequalities. However, in response to the widespread poverty gripping the coffee sector, Fairtrade International has embarked on a unique approach to address these issues. By raising its minimum prices for certified arabica and robusta coffee, Fairtrade International aims to create a more sustainable and equitable future for coffee farmers and their communities.

Fairtrade International's Response to Poverty in the Coffee Sector

Fairtrade International is taking a different approach by raising its minimum prices for certified arabica and robusta coffee in response to widespread poverty in the global coffee sector. The new Fairtrade minimum price for washed arabica coffee, representing more than 80% of the coffee sold, is set at $1.80 per pound, marking an increase of 40 cents over the current price.

The Fairtrade price for natural robusta is also rising, increasing by 19 cents to $1.20 per pound. Additionally, the guaranteed premium for coffee sold as both Fairtrade and USDA Organic (FTO) is rising from 30 cents to 40 cents per pound.

Fairtrade stamp

The New Fairtrade Prices

The new Fairtrade prices are slated to come into effect for contracts on Aug. 1, 2023. Fairtrade last raised its prices in 2011, at a time when, like now, commodity coffee prices were relatively high. The previous increase moved washed arabica minimums from $1.25 to $1.40.

Coffee remains one of the most significant products certified under the Fairtrade scheme, which also provides guaranteed premiums to producers assigned to community-level projects as determined by participating producers. According to Fairtrade, there are nearly 900,000 coffee farmers in more than 650 producer organizations spanning 31 countries with Fairtrade certification.

The Future of Coffee

In today’s announcement, Fairtrade stated that rapidly increasing production costs and pressures from climate change demand further action on global coffee prices.

“The future of coffee is one where fair pricing is the norm,” said Fairtrade International Senior Manager for Coffee, Monika Firl. “It is not acceptable for coffee farmers to continue to subsidize the multi-billion dollar coffee industry, while also taking on the hard work of sustainable transition.”

As these developments unfold, they will likely bring dramatic reverberations to the green coffee market, and we will provide numerous follow-up reports.

Weigh scale graphic with coffee farmers

The Role of the Fairtrade Price

Fairtrade prices are crucial in the global coffee market, particularly for small-scale farmers and cooperatives. It serves as a safety net for coffee producers, providing a minimum price that protects them from the volatility of the global coffee market.

The global coffee market is notoriously unstable, with prices fluctuating due to weather conditions, disease, political instability, and global supply and demand changes. These fluctuations can significantly impact coffee farmers, who often operate on thin margins and struggle to cover their production costs when prices fall.

The Fairtrade minimum price is designed to cover the costs of sustainable production for coffee farmers. It is set at a level that ensures farmers can afford life's essentials, such as food, education for their children, healthcare, and housing. This price acts as a safety net when market prices drop below a sustainable level, but when the market price is higher than the Fairtrade minimum price, farmers should receive the higher market price.

In addition to the minimum price, Fairtrade also provides a premium, which is an additional sum of money that goes into a communal fund for workers and farmers to use to improve their social, economic, and environmental conditions. This premium is intended to invest in business or community projects, such as improving infrastructure, healthcare, and education services, or to develop the business capacity of producers.

The Fairtrade pricing system, therefore, not only helps to ensure that farmers receive a fair and stable price for their coffee but also contributes to broader community development and sustainability initiatives. It's a model that aims to make trade more equitable and to empower small-scale farmers and workers in the global South.

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The Struggles of Coffee Farmers

Coffee farmers face an array of daunting challenges that threaten their livelihoods and the sustainability of the coffee industry. Economic struggles arise from the volatility of coffee prices, leaving farmers vulnerable to financial hardships. Many contend with unfair trade terms imposed by powerful multinational corporations, hindering their ability to secure fair compensation for their efforts. On the environmental front, climate change poses a significant threat, with shifting weather patterns and increasing occurrences of extreme events affecting coffee yields and quality. Pests and diseases, such as coffee leaf rust, further exacerbate the risks. Moreover, social challenges encompass limited access to essential services, long and laborious working conditions, and the prevalence of child labor. The generational shift away from coffee farming, coupled with sustainability issues arising from conventional practices, compounds the overall struggle faced by coffee farmers, necessitating comprehensive and sustainable solutions.

Economic Challenges

One of the primary struggles for coffee farmers is the volatility of coffee prices. The global coffee market is highly unpredictable, with prices fluctuating due to changes in supply and demand, political instability, and market speculation. Farmers often struggle to cover their production costs when prices fall, let alone make a profit. This can lead to periods of extreme financial hardship.

In addition, many coffee farmers are subject to the terms of trade set by powerful multinational corporations. These farmers often lack bargaining power and are forced to accept prices that do not reflect the true cost of production. This issue is exacerbated by many coffee farmers being in developing countries, while most coffee consumption occurs in developed nations.

Environmental Challenges

Environmental challenges also threaten coffee farming. Climate change is a significant concern, as temperature and rainfall patterns can affect coffee yields and quality. Increased instances of extreme weather events, such as droughts and floods, can devastate crops and leave farmers without a source of income.

Pests and diseases are another major issue. For example, coffee leaf rust, a fungal disease, has caused significant crop losses in several major coffee-producing regions. These threats are expected to intensify with climate change.

Social Challenges

Many coffee farmers live in rural areas and lack access to essential services such as healthcare and education. They often work long hours under challenging conditions, and child labor is a problem in some regions.

Furthermore, coffee farming is often seen as something other than an attractive profession by younger generations, who may choose to migrate to urban areas for better opportunities. This "generation gap" in coffee farming could lead to a shortage of farmers in the future.

Sustainability Challenges

Finally, achieving sustainability in coffee farming is a significant challenge. Conventional farming practices can lead to deforestation, soil degradation, and biodiversity loss. However, transitioning to more sustainable practices requires the knowledge, resources, and support many farmers need.

In summary, coffee farmers face a complex web of challenges that threaten their livelihoods and the future of the coffee industry. Addressing these issues requires a comprehensive approach that includes fair trade practices, climate change mitigation and adaptation strategies, investment in rural development, and support for sustainable farming practices.

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Conclusion

As Fairtrade International takes significant steps to address poverty in the coffee sector through fair pricing and community development, the potential reverberations in the global coffee market are likely to be significant. By supporting sustainable and equitable practices, Fairtrade International aims to pave the way for a more secure and prosperous future for coffee farmers worldwide. It is through these comprehensive approaches that we can work towards a coffee industry that not only thrives but also uplifts the lives of those whose hard work brings this beloved beverage to our cups.

Author

Amélie has a dual Bachelor of Biological Sciences and Literature. She wrote a Master's Thesis on the importance of blending scientific knowledge with the arts to create a healthier culture. She also has a Bachelor of Education and has been teaching Biology and Language Arts since 2016. She is happily addicted to coffee and constantly learning.

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