Americans drink a LOT of coffee—more than 400 million cups each day. Meanwhile more and more people across the globe are drinking coffee as consumption grows in China, India, and beyond. This has led to the development of a vast commodity market worth $200 billion each year—one that will at least double by 2050, according to World Coffee Research. So, it may come as a surprise that amidst this prosperity, coffee farmers are facing a crisis that threatens their basic livelihoods.
The coffee pricing crisis
Coffee as a commodity is traded on the New York Stock Exchange where it is known as the ‘C Price’. The C Price serves as a reference point for producers and buyers looking to negotiate, since other factors (such as quality and geographic origin) can drive the final price either up or down. At the end of the day, the C Price is vital for tens of millions of producers looking to make ends meet. Over the last few years, the C Price has gone down, down, down—dropping more than 50 percent from around $2 per pound of coffee in 2014 to less than $1 per pound in late August 2018. This has led to a major crisis for small scale coffee producers. At this price, they are unable to cover even the most basic costs associated with coffee production. Putting it another way, coffee at $1 means producers lose money with every sale, communities go hungry, and farms are abandoned as farmers seek alternative means of income.
How Fair Trade supports coffee farmers
Fair Trade USA is equipped to support coffee farmers facing these challenges. When we opened our doors 20 years ago, there was a similar pricing crisis facing coffee farmers. In fact, it is a major reason we exist today. There was a need for farmers to connect with buyers and consumers who valued their hard work and were willing to pay a little extra for products that promoted sustainability rather than suffering. Our model, which was created in partnership with farmer organizations, advocates, and the industry, supports coffee producers facing low markets in two main ways, the Fair Trade Minimum Price and Community Development Funds.
Fair Trade Minimum Price
When producers sell their coffee on Fair Trade terms they receive at minimum $1.40 per pound for their coffee. For organic coffees this rises to $1.70 per pound to account for extra labor costs. Producers can earn well above this minimum price based on quality and other factors, this price floor was intended for moments specifically like this when the commercial market fails them.
Community Development Funds
On top of the minimum price (conventional or organic), Fair Trade producer groups receive $0.20 per pound to invest into their communities and production as they see fit. This allows producers the flexibility to make decisions tailored to the needs of their specific situations. It also supports investments in quality that help groups negotiate above the standard market price. Our own research shows that around 50 percent of all investments are focused on productivity and quality improvement projects.
Together the Fair Trade Minimum Price and Community Development Funds are supporting tens of millions of dollars in additional income each year for coffee farming communities. When the market dips to crisis levels, these additional funds are a literal lifeline for these farmers and their families. To boost the impact of the model at this critical moment, we as an organization are launching two major initiatives, a commitment to the Sustainable Coffee Challenge and our #JustOneCup challenge.
Sustainable Coffee Challenge Commitment
Recently, the coffee industry has come together to launch an ambitious initiative called the Sustainable Coffee Challenge with the goal of making coffee the world’s first 100 percent sustainable commodity. As part of this growing movement, Fair Trade USA is joining with Sustainable Coffee Challenge to bring together industry actors to increase the availability of Fair Trade products, boost purchases of Fair Trade Certified coffee, and support education programs. Between now and early 2019, we will engage brands, retailers, roasters, consumer rights groups, and more to ensure farmers are able to find buyers for their sustainably-produced coffees.
For National Coffee Day on September 29, 2018, we are encouraging everyone to celebrate the impact that #JustOneCup of Fair Trade Certified coffee can have for hardworking farmers and their communities. Learn more by visiting FairTradeCertified.org/JustOneCup, where you’ll find exclusive promos on Fair Trade coffee, Fair Trade mugs, and more. One cup at a time we can together work to create a world of difference… imagine the potential impact of those 400 million cups of coffee Americans drink each day!
These initiatives, building off the strengths of the Fair Trade model, aim to support farmers core to our mission and ensure that you have the coffee you need to make your day possible.
How you can support
As an advocate…
- Educate yourself. Start with a short Coffee 101 from our friends at Fair Trade Campaigns and learn more about what led to the coffee pricing crisis.
- Request Fair Trade. At your local coffee shop, grocery store, office, university…you name it! Companies and brands are listening. In fact, often times they are waiting for consumer encouragement to take steps toward Fair Trade. We even have a comment card you can use as a template.
- Join our community. Real, positive change begins and ends with strong communities. Amplify your impact and ours simply by following along and voicing your support on social media. Fair Trade Campaigns also offers resources to engage your community.
As a coffee industry professional…
- Get on board for the Fair Trade USA Joint Commitment. Commitments can take many shapes and sizes. Each one counts and will support change. Get in touch with your Fair Trade USA representative or contact us to learn more.
- Purchase Fair Trade Certified coffee. Work with your roaster or importer to find more Fair Trade coffees. There’s over 1 billion pounds of certified volumes, so if you need a particular quality or origin then we can help you find it.
- Join our community. Leverage your social channels, newsletters, and employee trainings to spread the word through efforts like the #JustOneCup campaign.
Twenty years ago, Fair Trade USA was founded on the principle that good people on opposite sides of the world can together accomplish great things. Even in the face of another crisis we continue to believe in this idea and the power of consumers, producers, and industry to drive change. So please, join us as we build out the next chapter of Fair Trade and boost the impact of the system at a time when it could not be needed more.
Parker Townley is Senior Business Development Manager of Coffee at Fair Trade USA. He was recently published in Roast Magazine’s Daily Coffee News for his article, “Coffee’s Price Collapse: How Did We Get Here and What Can We Do?” —read it here.