New Premium, Minimum Price and Trade Standards in Fairtrade Coffee
Fairtrade International (FLO) today announces a new Fairtrade Minimum Price and Premium, a higher organic differential and revised trade standards for coffee to support producers and help ensure stable supply chains.
In the past year international prices for coffee have hit a 14-year high, sending waves throughout the coffee world from farmers to consumers.
Lower than expected coffee harvests due to inconsistent rainfall and a lack of investment in coffee plots, increased competition for high quality coffee beans, and financial speculation fuelled the rise of coffee prices.
In November, Fairtrade International (FLO) announced the Fairtrade Coffee Actions, a number of concrete steps to help producer organizations, traders and roasters cope with the market fluctuations. The review of the Fairtrade Minimum Price, Premium and trade standards are part of the effort.
Changes include:
• An increase in the Fairtrade Premium to USD 20 cents/lb from the current USD 10 cents/lb, of which 5 cents will be earmarked for productivity and quality improvement efforts. Use of the Premium is democratically decided upon by members of the producer organizations and is often used for social or business development efforts.
• An increase of the Fairtrade Minimum Price to USD 1.40/lb for washed Arabica coffee from the current USD 1.25; Arabica naturals will increase to USD 1.35/lb from USD 1.20. The new Minimum Price provides a stronger safety net for farmers if prices fall and helps producer organizations secure more pre-financing to purchase coffee from their members.
• An organic differential of USD 30 cents/lb from the current USD 20 cents/lb. As prices for conventional coffee have risen, fewer farmers see value in seeking and maintaining organic certification even as demand is increasing. The organic differential is in addition to the agreed price to account for higher costs of organic production and encourage organic coffee farming.
• Revised trading standards that were developed to encourage fairer negotiations, clarify the role of price fixing, and reduce speculation. Complementary to the new Trade Standards, FLO is facilitating training for producers and traders on contracts, price fixation and risk management strategies.
The changes made by FLO strive to meet the needs of producers and ensure healthy supply chains for traders and roasters.
Silvio Cerda, Executive Director of the Red Café, an organization representing the interests of small-scale coffee producers throughout Latin America, added: ‘In the medium- and long-term, we hope to see a strong impact from the creation of this earmark for improving productivity and quality. We are convinced that having the resources needed to invest in the medium-term can guarantee that small producers will be able to increase their productivity, which will result in not only greater income, but will help ensure that producer organizations can deliver and supply coffee for the industry.’
In researching and recommending premiums, prices and trade standards, project managers at FLO weigh up how to provide the greatest benefit to small-scale farmers and workers, while ensuring market accessibility. The review process is a collaborative effort based on consultations with producers, traders and all players in the field, external studies on costs of production, and input from experts around the world.
‘The current market for coffee has pushed us to consider how the Fairtrade system operates and provides value to producers, importers and roasters,’ said Richard Anstead, Head of Product Management at the Fairtrade Foundation. ‘The results strive to meet the needs of producers and address the challenges at the heart of this coffee crisis.’
The Fairtrade Premium, organic differential and trade standards will apply to Arabica and Robusta coffee. The Minimum Prices announced apply only to Arabica coffee. A review of Robusta coffee, which makes up 4% of Fairtrade certified coffee sold, will follow in the near future.
Eileen Maybin
Head of Media Relations
020 7440 7686/07770 957 451
eileen.maybin@fairtrade.org.uk
Martine Julseth
Media and PR Manager
020 7440 7695/07825 827 791
martine.julseth@fairtrade.org.uk
Faith Mall
Media and PR Manager
020 7440 8597/07766 504 947
faith.mall@fairtrade.org.uk
Neil Martin
Assistant Press Officer
020 7440 7620
neil.martin@fairtrade.org.uk
Notes to Editors
1. The Fairtrade Foundation’s estimated retail value figures are extrapolated from wholesale product sales, which are reported by both volume and value on a quarterly basis to the Foundation by company licensees.
2. According to research published in September 2010 by the international food and grocery analysts IGD, following a survey of 2,700 shoppers about ethical issues across four countries (Britain, France, Germany and Spain), half of shoppers expect to buy more ethical food and drink in the future. Of the list of ethical issues that interest shoppers, Fairtrade came out second along with animal welfare, behind buying food from their local area. In Britain, 38 percent of shoppers said they would expect to buy more local and regional produce and 31 percent said they would expect to buy more Fairtrade products, compared with 24 percent in France, 10 in Germany and 7 in Spain. This research again corroborates evidence that Britain leads the way on Fairtrade!
3. The full range of Fairtrade products are coffee, tea, chocolate, cocoa, sugar, bananas, grapes, pineapples, mangoes, avocadoes, apples, citrus fruit, dried fruit, juices and smoothies, cola, biscuits, cakes and snacks, honey, jam, peanut butter and preserves, chutneys and sauces, rice, quinoa, herbs & spices, seeds, nuts, wines, spirits, ale, confectionery, muesli, cereal bars, oils, ice cream, flowers, green beans, mung beanshoots, baked beans, sports balls, cotton products including homeware, cloth toys and cotton wool, and beauty products including lip balms, body butters, lotions, soaps and gels, Fairtrade and Fairmined artisanal gold jewellery.