Fairtrade International is calling for the coffee industry to pay a fairer price to coffee farmers, estimating that today’s global market price of around US$1 (about $1.43) per pound is only half of what is needed for farmers to earn a living income.
According to Fairtrade’s Peter Kettler, speaking at the International Coffee Congress on Sustainability in Berlin, Germany on 5 June, coffee farmers are being forced to sell their crops below the cost of production, effectively subsidising the profits of a booming global coffee market. He says on top of climate change, market speculation, and other challenges, the low price of coffee is condemning farmers to poverty or forcing them to abandon coffee altogether.
“We urgently need the entire coffee sector, as well as coffee lovers, to face up to this crisis,” Peter says. “We can’t go on pretending that business as usual can continue.”
While many sustainability efforts focus on improving crop yield or quality, Peter says price has to be addressed first in order to keep farms viable, and ultimately, provide a living income for farmers.
Fairtrade’s preliminary estimates show that the export price for coffee would need to reach US$2 per pound – about double the current global market price – for a four-person farming household to earn a living income in northern Colombia, assuming a high but achievable level of productivity.
The price Fairtrade currently guarantees will be paid to certified coffee cooperatives is US$1.40 per pound, or US$1.70 for organic. Buyers also pay an additional Fairtrade Premium of 20 US cents per pound, of which cooperatives invest at least 25 per cent in productivity and quality initiatives, and the rest in other business or community projects. The Fairtrade Premium earned coffee producers more than US$94 million in 2017.
Peter is calling on coffee companies to step up and pay a fair price for their beans. He notes that, while the Fairtrade Minimum Price is about 40 per cent higher than the current market price, significantly raising the Fairtrade price without the rest of the sector coming along risks farmers losing Fairtrade sales and ending up in a worse position.
Speaking ahead of the coffee forum, Peter also highlighted the need for support to farmers to improve yields in a sustainable way, and for governments to encourage more sustainable practices, including changing their own procurement policies. Peter welcomed companies to work with Fairtrade to test different models, such as improving quality or voluntarily paying above the Fairtrade Minimum Price, to move closer to a living income for farmers in their supply chains.
“It’s the right thing to do in many ways,” Peter says. “Unless there’s a good business case for the farmers at the very beginning of the coffee supply chain, we all – including consumers – have to bear some responsibility for the decline of coffee.”