Fairtrade Coffee Price Increase for Small Scale Coffee Growers

From 1 June 2008, the Fairtrade minimum price for Arabica coffee will increase to ensure that farmers continue to receive a price, which covers the cost of sustainable production.

Producers will receive a guaranteed minimum price of at least US $1.25 per pound of Fairtrade certified Arabica coffee and US $1.20 for unwashed Arabica coffee, or the market price, if that is higher. In accordance with the Fairtrade model, producer organisations will also continue to receive an additional Fairtrade Premium of 10 cents per pound for investment in community and business improvements. For organic Fairtrade certified coffee an additional minimum differential of 20 cents is applied.

The announcement from Fairtrade Labelling Organizations International (FLO) means that farmers will receive an average increase of US$ 5 cents per pound on their coffee. This price adjustment will benefit more than 250 producer organisations across the developing world - around one million farmers and their families.

“I represent more than one million family farmers who need Fairtrade pricing to put food on the table and keep their kids in school,” said Raul de Aguila, a Peruvian coffee grower and Cafédirect board member. “No other label or certification system ensures a fair income for a hard day’s work. This increase will have a direct and positive impact on the lives of Fairtrade Certified coffee farmers around the world.”

The price increase is the result of extensive field research into the real costs of sustainable production to ensure that Fairtrade continues to address the needs of coffee-producing communities. A multi-stakeholder review process involving producers, consumers and industry representatives from more than twenty countries around the world followed the research. The new minimum price will be valid until June 2010, when another price review will take place.

Penny Newman, CEO of Cafédirect, says, "It's our mission to create secure, sustainable livelihoods for growers, and this decision is a step in the right direction. Working closely with our grower partners, Cafédirect champions the need to continually assess the Fairtrade pricing structure to ensure it's relevant to their needs."

The price increase has also received support from other UK coffee industry players. David Williamson, Managing Director of independent coffee roaster Matthew Algie said:

”We are 100% behind Fairtrade as the best way to work in partnership with smallholder co-operatives and provide them with stability. Today over 70% of our green coffee is Fairtrade certified and we welcome this increase in the Fairtrade minimum price.”

Fairtrade is the only certification model that guarantees prices to farmers that meet strict social and environmental sustainability criteria, and the FAIRTRADE Mark has become one of the most recognized consumer labels in the UK . Research by DEFRA this year showed that more than eighty percent of the UK public say they have heard of Fairtrade, and more than half of those people said they made an effort to buy it.

According to Ian Bretman, Deputy Director of the Fairtrade Foundation in the UK and FLO Board member,

“The conscious consumer demands high-quality products that make a difference in the world. The research is clear: consumers are willing to pay more for Fairtrade products because they help lift farmers out of poverty. This moderate price increase in Fairtrade coffee will not undercut the dramatic growth of consumer demand for Fairtrade products; on the contrary, it gives concerned consumers additional evidence that Fairtrade truly delivers on its promise of farmer empowerment.”

The Fairtrade minimum price for coffee is important because the international coffee market is highly volatile. Frequently international coffee prices have plummeted to under US$ 0.60 per pound, well below the cost of production, forcing literally millions of family farmers into poverty. In this difficult and unstable market, the Fairtrade price makes a tangible difference in the lives of farmers by ensuring greater price stability and a sustainable income.

Source - Fairtrade Foundation UK