Coffee is one of the world's most popular beverages and 80% of it is produced by 25 million smallholders.
Around 125 million people worldwide depend on coffee for their livelihoods. Coffee is the most valuable and widely traded tropical agricultural product and 25 million smallholder farmers produce 80% of the world’s coffee. But many of them fail to earn a reliable living from coffee.
Coffee is well known for being a boom and bust commodity. Global coffee production varies from year to year according to weather conditions, disease and other factors, resulting in a coffee market that is inherently unstable and characterised by wide fluctuations in price. This price volatility has significant consequences for those who depend on coffee for their livelihood, making it difficult for growers to predict their income for the coming season and budget for their household and farming needs.
The coffee supply chain is complex as beans pass hands through growers, traders, processors, exporters, roaster, retailers and finally the consumer. Most farmers have little idea of where their coffee goes or what price it ends up selling for. The more lucrative export of green coffee – beans that have been processed ready for export and roasting – is only an option for farmers if they can form co-operatives, purchase processing equipment and organise export or hire a contractor to carry out these services.
Fairtrade was started in response to the dire struggles of Mexican coffee farmers following the collapse of world coffee prices in the late 1980s. With Fairtrade, certified coffee producer organisations are guaranteed to receive at least the Fairtrade Minimum Price for their coffee, which aims to cover their costs of production and act as a safety net when market prices fall below a sustainable level. Through their producer organisations, farmers also receive the additional Fairtrade Premium to invest in business or community improvements. At Fairtrade we care about improving quality, and Fairtrade coffee farmers must use at least 25 per cent of it to enhance productivity and quality, for example by investing in processing facilities. In 2012-13, certified coffee farmers earned an estimated £32 million in Premiums that were invested in farmer services and community projects. Watch this video about the impact of Fairtrade coffee.