Is Fair Trade Coffee Really A Thing?

By : Lucy
October 30, 2021,

Coffee can be considered an important part of everyday life, it works as an energy boosting mechanism for people out there. Some people function on this unique drink. It is the significant part of our daily life that not many of us may pause to think about the elements and the process of growing the coffee beans that make this tasty beverage. 

Is Fair Trade Coffee Really A Thing? intro

For the reason that coffee is a huge consumed commodity, the development of fair trade coffee has made a noticeable change in the coffee market.

In this article, you will get to read about a bit of coffee trade, what fair trade coffee is, and the basic knowledge relating to fair trade coffee. 

The history of coffee

Coffee was recognised starting in the 9th century in an Ethiopian province, and this was where coffee originated. Pilgrims (Muslim pilgrim) and traders were the first to spead the coffee drink across the Middle East and North Africa. Interestingly at that time, the coffeehouses in these regions didn’t serve as normal café but rather served as political activities centers.  

The history of coffee

In the late 1600s, the first coffee spread of coffee plantations was in Sri Lanka, which was planted by the dutch, and this was when coffee spread to Europe. The history of coffee production was actually traced back to the colonial rule, which connected with an expansion of colonial rule and slavery. Then it became one of the valuable products in trade worldwide. 

The challenges to coffee farmers

Coffee consumption had doubled in number for the past 50 years, raising a new market for this commodity. In fact, though the coffee market expanded and the coffee trade was profitable, it tells a different story about the coffee farmer. The producer received only about 20% of the price sold at the retail store, and this price kept constantly falling down. According to research, coffee farmers received only between 1-3 percent of the retail price of a cup sold in the Western countries, in the North America, and only 2-6% of the price sold in the supermarket.

The challenges to coffee farmers

Price volatility and coffee farmers

The price volatility also affected coffee farmers. It has significant consequences on the livelihood of these farmers, especially making it difficult for them to predict their income. Between 1994-2004, the coffee price crashed from the oversupply, known as the coffee crisis. This was when coffee producers received only 1 to 3 percent of a cup of coffee sold in Europe. 

Climate change and coffee farming 

Moreover, climate change also complicates the growing of coffee. Thus, it causes risks for many farmers that rely on coffee sales. 

What is Fair Trade Coffee?

What is Fair Trade Coffee?

Whenever you want to buy coffee, you look for the Fair Trade stamp, which is a symbol of approval on the package. The title of Fair Trade stamp has made quite a difference to commodities. It is the same as coffee, they also receive fair trade certification. But how?

Just like for other commodities, the Fair Trade stamp certifies goods that meet the standardized criteria.This also helps encourage and ensure that the product is made with respect to environmental sustainability, and the producers are treated and compensated fairly. 

By joining the member-led co-operatives, coffee farmers can get Fair Trade certified. Currently, there are only 360 co-operatives that exist worldwide, mostly based in Latin America. 

The start of Fair Trade coffee

Fair Trade was started in the late 1980s as a solution to help the Mexican coffee farmers’ life struggling from the world coffee price collapse. Coffee was sold at the minimum price, about 309 cents in 2011. 

The start of Fair Trade coffee

International Coffee Agreement

In the 1960s, the market for coffee was actually in a balance between supply and demand resulting from the International Coffee Agreement (ICA) and agreements subsequently signed in 1962 to regulate global coffee trade

The global coffee trade was regulated through a system of quotas (for export) as well as buffer stocks. This system positively maintained stable prices for farmers. Then, ICA’s economy was suspended due to the abuse of the system and its incompatibility with policies regulating free market economic. Until 1989, the collapse of ICA caused coffee prices to plunge.

First Fair trade certification, first fair trade certified coffee  

After the International Coffee Agreement collapsed, new producer organizations appeared to intervene in the coffee market. The launch of Max Havelaar was the beginning of Fairtrade label launching, which was the initiative of Solidaridad. The first fairtrade coffee was actually from Mexico. It entered the Dutch supermarket in 1989 under the brand name Max Havelaar. 

The positive side of Fair Trade coffee

Fair trade was designed to support farmers receiving fair coffee prices, as well as reasonable market share to ensure a good livelihood for farm workers. Also, fairtrade minimum price can assure a stable price that sustains average costs of productions, especially sustainable productions for community development.

The positive side of Fair Trade coffee

Fair trade minimum price 

Fair trade coffee price ensures the quality of the coffee beans, even with the minimum price. The minimum price for fair trade products can maintain the livelihood of farmers and farming families’ life, safe working conditions (without exploitation or violation of human rights), as well as community development. 

Fair trade certified coffee cooperatives are at least $1.40 for a pound of Arabica coffee for Fair Trade minimum price sold on Fair trade terms. It would be $1.70 per pound for organic coffee. Certified organic coffee is more expensive, about 30 cents over the normal one (for organic certification). Moreover, it would add 20 cents more for a pound on organic coffee if it is a Fair trade premium. 

Fair trade minimum price 

The fair trade price is an incentive for farmers to increase their productivity in fair labor conditions, and overall coffee quality for consumers. It is a safety net for producers or farmers facing plunging prices. 

On a micro-level, coffee sales is important in generating income for small farmers whose livelihood relies wholly on the production. In macro-level, coffee producing countries can generate national income and help the country's economy. 

For instance, Honduras’s nearly a quarter export earnings come from the coffee production. Moreover, 15% of the labor market in Nicaragua is employed in coffee production. From this, maintaining good market access can help lift up both family income and the country’s economy, which is why the Fair Trade stamp is served. 

Better terms of trade built into the standard 

It is not just tools to support farmers, but it is building better trading terms into fairtrade standards. By this, companies and cooperatives need to adopt a number of policies such as sourcing plans, applying reasonable terms of payment, and facilitating access to pre-harvest financing. 

Better terms of trade built into the standard 

The fairtrade standards require these things to build a long-term, equal exchange, mutually beneficial relations between producers and consumers, and allows farming families or producers to make strategic investment in the future. 

Fairtrade standards support women

Fair trade standards require women to have equal opportunities to be entrepreneurs and leaders within their cooperatives. 

Fairtrade standards support women

Environmental problem affects crop, but fairtrade support workers to adapt

Your morning cup of coffees may become a distant memory  without strong climate actions. Meaning that wild coffee could go extinct. How can fairtrade international help with this? The Fairtrade premium helps develop community projects by allowing cooperatives to invest in climate adaptation, for example, by planting drought or disease resistant bushes.  

The negative side of Fair Trade coffee

The main purpose of Fair Trade coffee is to provide more incentives as well as better life for coffee farmers. However, the new certification of big companies has changed the original spirit of the Fair Trade movement. This has demonstrated several negative sides of fair trade certification. 

The negative side of Fair Trade coffee

New criterions for fair trade coffee 

In 2011, the U.S. branch of Fairtrade International broke from the parent organization. With philosophical differences, the U.S. splinter group decided to only certify the big coffee plantations. They claim that the certification was the way to move forward. 

Critics on new fair trade criterions 

However, this new criteria has caused a lot of criticism. Critics say it abandons the small producers, and contradict the main purpose of the Fair Trade movement. Moreover, the critics say the big coffee plantations already obtain the most advantages in the marketplace. It supposed that Fair Trade was designed to find new markets to support small farmers. Oppositely, Fair Trade is changed to serve big corporations. 

Critics on new fair trade criterions 

The split of Fair Trade organizations   

Fair trade USA announced its intention to resign its membership in the umbrella organization Fairtrade Labelling Organizations International. On September 15, 2011, Fairtrade Labelling Organizations International and Fair trade USA released a joint statement that they have different perspectives in how to achieve Fair trade goals and objectives but with the same belief system.

The split of Fair Trade organizations   

After the split of the organization, several producer organizations introduced their own fairtrade standards and labels. This includes the Small Producer Symbol that Equal Exchange uses. 

Fair trade goods

Fair trade is a model that guarantees a stable minimum price. It can help the producers through hard times. Moreover, coffee producers who follow their standards can earn the additional amount in the Community Development Funds to spend on productivity and quality improvements. According to Fair trade, certified coffees of fair trade like these have generated more than $740 million for financial benefit specifically to small coffee producers since 1998. 

Fair trade goods

Fair trade coffee brands 

There are a lot of fair trade coffee brands on the market, and one of them is Starbucks, the world wide known brand. Besides, there are other types you can look up to as well. According to listings in Fair trade USA, we can find quite a lot of names such as Brooklyn Roasting, Cafe Altura, Café Vittoria, and Cru cafe, etc.

Fair trade coffee brands 

Starbucks is just another largest purchaser of Fairtrade-certified coffee worldwide in a way that respects the people and places that produce it. This company contributes to the community by supporting the responsibly-grown and ethically-sourced coffees. They have bought these coffees for 40 years already. 

Fair trade organic certification 

Normally the fairtrade organic certification can be made when the products made integrate biological, cultural, and mechanical practices that foster cycling of resources, conserve biodiversity, and promote ecological balance. Therefore, the use of synthetic fertilizers, irradiation, sewage sludge, and genetic engineering is not practiced. Additionally, organic food, normally meat and poultry, cannot contain any antibiotics. 

In the case of coffee, producers sell beans to the cooperatives, and through the process, cooperatives and farmers must meet the standard set by the organization. According to listings in Fair trade USA, there are several names of fair trade organic certification such as Central Market Organics, Ethical Bean, and Puro, etc. 

Is fair trade coffee better? 

So far, fair trade America understands how climate change negatively impacts on the farmers worldwide. Fair trade recently offers resources to support all coffee growers in confronting challenges caused by climate change. Due to natural phenomena such as irregular rainfall, farmers may receive less viable crops that leads to income loss. This makes it difficult for them to adapt their practices of traditional farming, and they are not able to invest in new technologies

Is fair trade coffee better? 

Fairtrade organizations were created to encourage the resilience of farming through training for adaptation. This program is designed to be self-sustaining with farmers who have been trained continuing to educate others farmers about the efficient and best farming methods under extreme weather impacts. 

On top of that, fair trade collaborates with farmers to minimize environmental impacts by restricting use of harmful chemicals, preserving protected forest, banning GMO seeds, and encouraging organic farming. On top of that, Starbucks has contributed to fund over $14 million in loans to Fairtrade cooperatives which is an ongoing commitment to help farmers strengthen the business. 

Should we buy only fair trade coffee?

In fact, Fair Trade certification costs money, and not every coffee farmer has the capital to participate in the certification process. 

Should we buy only fair trade coffee?

Many producers find increases in premiums based on quality, whether in direct trade or direct relationships with coffee roasters. Third party certification like this is less costly than the direct one. That said, consumers who buy fair trade certified coffee ensure at least a minimum amount of compensation in the supply chain.   

Takeaway

In brief, the aim of fair trade is to help small producers, farming families, and workers around the world for better living quality, and securely paid incomes in order for their business to grow. It also ensures quality beans and quality drinks for coffee drinkers. 

We can come to conclude that Fair Trade is not part of the purchase or buying protocol. It may affect small coffee business at some point, but it is not a generalization. People are rational with money, therefore they know which coffee business they prefer. 

References:

Check out: FairTrade Coffee Explainer Video By nsmithtv

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