Coffee is one of the most popular and widely consumed beverages in the world. It is also one of the most traded commodities, with an estimated value of over $100 billion per year.
However, behind every cup of coffee lies a complex and often inequitable supply chain that involves millions of small-scale farmers, workers, traders, roasters, and retailers. Many of these actors face significant challenges such as low and volatile prices, unfair trade practices, environmental degradation, and social exclusion.
That is why fair trade and coffee have formed an essential partnership that aims to address these issues and create a more sustainable and ethical coffee industry.
Fair trade is a global movement that empowers producers and consumers to make choices that benefit people and the planet. Fair trade coffee is coffee that meets the rigorous standards of fair trade certification, which ensure that farmers and workers receive a fair price, decent working conditions, and community development funds.
Fair trade coffee also promotes environmental sustainability, gender equality, and democratic participation in producer organizations.
In this article, we will explore the various aspects of fair trade coffee, from its origins and principles to its impact and challenges. We will also discuss how consumers can support fair trade coffee and contribute to positive change in the coffee sector.
Understanding Fair Trade Coffee
The concept of fair trade emerged in the late 1940s and early 1950s as a response to the exploitation and marginalization of producers in the Global South by the dominant trade system. The idea was to create alternative trading relationships that would enable producers to access better markets, prices, and opportunities.
The first fair trade products were handicrafts made by artisans from various regions of Asia, Africa, and Latin America. These products were sold by religious and solidarity groups in Europe and North America through specialized shops called “world shops” or “fair trade shops”.
Coffee was one of the first agricultural products to join the fair trade movement in the 1980s. Coffee farmers in Mexico, Guatemala, Nicaragua, and other countries were facing a severe crisis due to the collapse of the International Coffee Agreement (ICA), which had regulated the global coffee market since 1962.
The ICA had established export quotas and minimum prices for coffee-producing countries to stabilize the market and protect farmers from price fluctuations. However, due to political and economic pressures, the ICA was dismantled in 1989, leading to a drastic drop in coffee prices and a surge in supply.
This situation prompted some coffee farmers to organize themselves into cooperatives and seek alternative markets that would offer them better prices and terms of trade. They found allies in some non-governmental organizations (NGOs), consumer groups, roasters, and retailers who shared their vision of a more equitable and sustainable coffee industry.
Together, they developed the first fair trade standards for coffee, which included a minimum price that covered the cost of production plus a social premium that could be invested in community projects. They also created labels and logos that identified fair trade coffee in the market and raised awareness among consumers about the origin and impact of their purchases.
The first fair trade coffee label was launched in 1988 by Max Havelaar Foundation in the Netherlands. Since then, several other fair trade labels have emerged in different countries and regions, such as TransFair in Germany, Fairtrade Foundation in the UK, Fairtrade International (FLO) in Europe, Fair Trade USA (FTUSA) in North America, Fairtrade Australia New Zealand (ANZ) in Oceania, among others. These labels are part of a broader network of fair trade organizations that work together to promote fair trade principles and practices around the world.
Fair Trade Principles and Ethical Sourcing
Fair trade coffee is based on a set of principles that guide its production, trade, and consumption. These principles are defined by different fair trade organizations according to their specific contexts and objectives. However, there are some common elements that characterize fair trade coffee across different labels and systems.
Fair trade coffee farmers receive a minimum price that covers their cost of production plus a margin that allows them to improve their living standards. The minimum price varies depending on the type and quality of coffee (e.g., arabica or robusta), the origin (e.g., organic or conventional), and the market conditions (e.g., supply and demand).
The current minimum price for washed arabica coffee is $1.40 per pound, while for organic washed arabica coffee is $1.60 per pound. If the market price is higher than the minimum price, farmers receive the market price plus a differential that reflects their quality or certification status.
In addition to the minimum price or market price plus differential, farmers also receive a Fairtrade Premium of $0.20 per pound, which is paid separately by buyers and used by farmers’ organizations for social, economic, or environmental projects.
Fair trade standards:
Fair trade coffee farmers and traders must comply with a set of standards that ensure the quality, traceability, and sustainability of their products.
These standards cover various aspects of production, processing, transport, and trade, such as environmental protection, biodiversity conservation, water management, waste reduction, energy efficiency, pest and disease control, food safety, hygiene, labor rights, health and safety, child protection, gender equity, democratic governance, transparency, accountability, and capacity building.
Fair trade standards are verified by independent third-party auditors who visit farms and facilities regularly and issue certificates that allow them to use the fair trade label.
Fair trade relationships:
Fair trade coffee farmers and traders establish long-term and mutually beneficial relationships that foster trust, respect, and cooperation.
These relationships are based on direct and transparent communication, fair and timely payment, pre-financing options, technical assistance, market information, quality feedback, and dispute resolution mechanisms. Fair trade relationships also involve consumers who support fair trade coffee through their purchases and advocacy.
Consumers can learn about the origin and impact of fair trade coffee through product information, campaigns, events, and online platforms.
Empowering Coffee Communities
One of the main objectives of fair trade coffee is to empower coffee-producing communities and improve their livelihoods. Fair trade coffee achieves this by:
Strengthening producer organizations:
Fair trade coffee farmers are organized into small producer organizations (SPOs), such as cooperatives or associations, that enable them to access better markets, prices, and opportunities.
SPOs provide farmers with various services and benefits, such as collective bargaining power, economies of scale, quality improvement, certification support, pre-financing facilities, technical assistance, market information, social security, education, health care, among others.
SPOs also promote democratic participation and representation of farmers in decision-making processes. Farmers elect their leaders and representatives who manage the SPOs and allocate the Fairtrade Premium according to the needs and priorities of the members.
Enhancing social development:
Fair trade coffee farmers use the Fairtrade Premium to invest in social development projects that benefit their communities. The Fairtrade Premium is an additional sum of money paid by buyers on top of the selling price that farmers receive for their products.
The amount of the Fairtrade Premium depends on the volume and type of coffee sold under fair trade terms. In 2019-2020, fair trade coffee farmers received a total of $68.6 million in Fairtrade Premium. The Fairtrade Premium is managed by a democratically elected committee within the SPO that consults with the members and decides how to use the funds.
The most common uses of the Fairtrade Premium are education (e.g., scholarships, school supplies), health (e.g., clinics, medicines), infrastructure (e.g., roads, water systems), income diversification (e.g., food crops, livestock), and organizational development (e.g., training, equipment).
Advancing gender equality:
Fair trade coffee farmers promote gender equality and women’s empowerment in their organizations and communities. Fair trade standards require that women have equal access to membership, leadership positions, training opportunities, credit facilities, and income distribution within SPOs.
Fair trade standards also prohibit any form of discrimination, harassment, or violence against women in the workplace or at home.
Fair trade initiatives support women’s participation and representation in decision-making processes at different levels, from the household to the global market. Women also benefit from specific projects funded by the Fairtrade Premium that address their needs and interests, such as health care, education, child care, and income generation.
Environmental Sustainability in Fair Trade Coffee
Another key objective of fair trade coffee is to promote environmental sustainability and mitigate the effects of climate change. Fair trade coffee achieves this by:
Adopting sustainable agricultural practices:
Fair trade coffee farmers adopt sustainable agricultural practices that protect the environment and enhance the quality of their products. These practices include organic farming, shade-grown coffee, agroforestry systems, soil conservation, water management, waste reduction, energy efficiency, and integrated pest management.
These practices help to preserve biodiversity, reduce greenhouse gas emissions, improve soil fertility, conserve water resources, and prevent pollution.
Fair trade standards encourage farmers to obtain organic certification or other environmental certifications that recognize their efforts and offer them additional incentives.
Adapting to climate change:
Fair trade coffee farmers face the challenges posed by climate change, such as rising temperatures, droughts, floods, storms, pests, and diseases. These challenges affect their productivity, quality, and income.
To cope with these challenges, fair trade coffee farmers implement adaptation measures that increase their resilience and reduce their vulnerability.
These measures include diversifying crops, introducing drought-resistant varieties, installing irrigation systems, building water harvesting structures, establishing nurseries, restoring forests, and developing early warning systems, and participating in disaster risk reduction programs.
Fair trade coffee farmers also receive support from fair trade organizations and partners to access climate finance, insurance, and technical assistance.
Supporting environmental education and awareness:
Fair trade coffee farmers support environmental education and awareness among their members and communities.
They organize training sessions, workshops, field visits, and campaigns to share knowledge and best practices on sustainable agriculture, climate change adaptation, and natural resource management.
They also engage with local authorities, NGOs, civil society groups, and media to advocate for environmental policies and actions that benefit small-scale farmers and protect the environment.
Consumer Support for Fair Trade Coffee
Fair trade coffee relies on the support and participation of consumers who choose to buy fair trade products and promote fair trade values. Consumers can support fair trade coffee by:
Buying fair trade coffee:
Consumers can buy fair trade coffee from various sources, such as supermarkets, specialty shops, online platforms, cafes, restaurants, hotels, offices, schools, and universities.
By buying fair trade coffee, consumers ensure that farmers receive a fair price and a Fairtrade Premium for their products.
They also contribute to the social and environmental development of coffee-producing communities. Consumers can identify fair trade coffee by looking for the fair trade label or logo on the packaging or display.
Learning about fair trade coffee:
Consumers can learn more about fair trade coffee by reading product information, visiting websites, following social media accounts, watching videos, listening to podcasts, or attending events that feature fair trade coffee stories and facts.
They can also contact fair trade organizations or producers directly to ask questions or share feedback. Learning about fair trade coffee can help consumers understand the origin and impact of their purchases and appreciate the quality and diversity of fair trade coffee.
Spreading the word about fair trade coffee:
Consumers can spread the word about fair trade coffee by recommending it to their friends, family, colleagues, and acquaintances.
They can also share their opinions and experiences with fair trade coffee on online platforms, such as blogs, forums, reviews, ratings, or comments. They can also join or create online communities that support fair trade coffee and engage in discussions and debates.
Spreading the word about fair trade coffee can help consumers raise awareness and influence others to support fair trade coffee.
Advocating for fair trade coffee:
Consumers can advocate for fair trade coffee by signing petitions, joining campaigns, participating in protests, or contacting decision-makers that affect the coffee sector.
They can also support or donate to organizations that work for fair trade coffee causes. Advocating for fair trade coffee can help consumers voice their concerns and demands for a more equitable and sustainable coffee industry.
Challenges and Opportunities in Fair Trade Coffee
Fair trade coffee faces several challenges and opportunities in its ongoing partnership with coffee producers, traders, and consumers. Some of these are:
Market access and competitiveness:
Fair trade coffee competes with conventional coffee in a highly competitive and volatile market. Fair trade coffee has to overcome barriers such as limited availability, high prices, low awareness, and consumer preferences.
Fair trade coffee also has to deal with the increasing competition from other sustainability certifications, such as organic, Rainforest Alliance, UTZ Certified, and 4C. Fair trade coffee has to find ways to increase its market share, visibility, and differentiation in the global coffee market.
Quality improvement and innovation:
Fair trade coffee has to meet the high expectations of consumers who demand quality, consistency, and variety in their coffee products.
Fair trade coffee has to invest in quality improvement and innovation at different stages of the supply chain, such as production, processing, roasting, and packaging. Fair trade coffee has to develop new products, services, and experiences that cater to the diverse needs and tastes of consumers.
Climate change adaptation and mitigation:
Fair trade coffee has to cope with the effects of climate change that threaten its productivity, quality, and income.
Fair trade coffee has to implement adaptation and mitigation measures that reduce its vulnerability and increase its resilience to climate change. Fair trade coffee has to collaborate with other actors in the sector to address the causes and consequences of climate change at local, regional, and global levels.
Impact measurement and communication:
Fair trade coffee has to measure and communicate its impact on producers, consumers, and the environment. Fair trade coffee has to use reliable methods and tools to collect, analyze, and report data on its performance, outcomes, and impacts.
Fair trade coffee has to use effective channels and strategies to communicate its impact stories and facts to various audiences, such as buyers, consumers, media, and policymakers.
The Future of Fair Trade Coffee: Growth and Impact
Fair trade coffee has a bright future ahead as it continues to grow and make a positive impact on the industry and communities. According to a report by ResearchAndMarkets.com, the global market for fair trade products is expected to reach $16.5 billion by 2025, with a compound annual growth rate (CAGR) of 9%.
Coffee is one of the leading products in this market, accounting for 31% of the total fair trade sales in 2019-2020. Fair trade coffee sales reached $1.8 billion in 2019-2020, with a growth of 8% from the previous year. Fair trade coffee reached 1.8 million farmers and workers in 30 countries, who produced 1.1 million metric tons of coffee.
Fair trade coffee has also demonstrated its impact on various dimensions of sustainability. According to a study by the Natural Resources Institute (NRI) of the University of Greenwich, fair trade coffee has generated positive impacts on income, poverty reduction, food security, education, health, gender equality, environmental protection, and organizational development.
The study also found that fair trade coffee has contributed to the Sustainable Development Goals (SDGs) of the United Nations, especially those related to poverty eradication, zero hunger, quality education, gender equality, decent work and economic growth, reduced inequalities, responsible consumption and production, climate action, and partnerships for the goals.
Fair trade coffee has a lot of potential to continue making a difference in the lives of millions of people and the planet. Fair trade coffee can leverage its strengths and opportunities to overcome its challenges and threats.
Fair trade coffee can also collaborate with other stakeholders in the sector to create synergies and scale up its impact. Fair trade coffee can also innovate and diversify its products and services to meet the evolving needs and preferences of consumers. Fair trade coffee can also engage and educate consumers to become more aware and supportive of fair trade values and practices.
Fair trade and coffee are an essential partnership that has transformed the coffee industry and communities for the better. Fair trade and coffee are more than just a label or a product. They are a movement and a lifestyle that embody fairness, sustainability, and empowerment.
In this article, we have explored the various aspects of fair trade coffee, from its origins and principles to its impact and challenges. We have also discussed how consumers can support fair trade coffee and contribute to positive change in the coffee sector.
We hope that this article has provided you with useful information and insights about fair trade coffee. We also hope that this article has inspired you to try fair trade coffee or to continue supporting it if you already do.
We would love to hear your feedback and suggestions about this article. Please feel free to leave a comment below or contact us through our website. Thank you for reading!