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Fair Trade Minimum Price for Coffee Again Benefiting Farmers

One of the key benefits of Fair Trade is to guarantee producers a minimum floor price when global commodity prices drop. In some years, when commodity prices are high, this benefit is more psychological rather than material. This year for coffee farmers, the benefit is again material and very important.

The small scale farmers that make up the majority of global coffee production remember all too well the calamity of 2001 when prices plummeted to 45 cents a pound, throwing hundreds of thousands of farmers and landless workers into poverty or destitution.

More recently, in May 2011, the price of Arabica coffee on the New York futures market hit a 34-year high of almost US$3.09 per pound. But, as if to justify its volatile reputation, the coffee price has plummeted in 2013 to less than US$1.10 per pound – nearly 65 percent off the 2011 high (see the latest market price here).

The price collapse this year is particularly unwelcome for farmers in Central America, Colombia, Ecuador and Peru where leaf rust, a fungal disease that destroys coffee trees also known as La Roya, has already wiped out up to 30-40 percent of the crop, according to the International Coffee Organization (ICO).

Fairtrade certified cooperatives can count on at least the Fairtrade Minimum Price of US$1.40 per pound for washed Arabica coffee sold on Fairtrade terms (30 cents more if organic), plus an extra 20 cents per pound Fairtrade Premium to invest as they see fit, 5 cents of which is dedicated to productivity and quality investments.

More at Fairtrade International post

7 Comments

  1. Mark Near RFK

    Sorry to be thick, but I want to be accurate when I share this information with the people who buy my FT coffee at church: Does the above mean that fair trade growers get $1.60 per pound and $1..90 for organic?

  2. Not exactly. As I understand, the prices quoted ($1.60 for non-organic, $1.90 for organic) are paid to the farmer cooperative. The cooperative then deducts some amount for administrative expenses, deducts 20 cents for the premium (allocated by the coop) and then pays the individual grower the balance.

  3. hi Jef, as you understood it? i am trying to find out what this min price guarantee acually is but on the official site you cant find anything.
    how did you do this calculus?

  4. we fine this price, If ok we mora up this premiun to develop the farm and organization FLO.

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  7. The FT minimum prices are for coffee FOB, free on board, that is, on a ship/train/truck ready to be exported, after all duties, licenses, etc. have been paid. FOB is not the same as farm gate price, which may be much lower. And keep in mind that FT is a middleman org that must meet its own costs. FT FOB prices are 1.35/lb for natural processed arabica, 1.40 for washed, 1.70 for organic. The social premium is .20, but that money goes for projects like schools–also for coop office space and administration.

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