FAIRTRADE – BEYOND THE PRICE OF COFFEE

With coffee prices rising to historic highs, what role should the Fairtrade system now be playing? Kate Lewis of the Fairtrade Foundation in the UK discusses the options.

Fairtrade has always been most closely associated with coffee prices – both for the producers and the consumers wanting to ensure fair dealing with small scale farmers. Founded in the wake of the collapse of the International Coffee Agreement in 1989 and the resulting collapse of coffee prices, the establishment of a minimum price model, to ensure farmers could earn at least the basic cost of sustainable production, has always been a cornerstone of our system. For 15 of the past 22 years it has been needed, with global market prices for Arabica falling often well below the Fairtrade minimum – at their worst collapsing to just US $0.45 per pound in October 2001, with small scale farmers often receiving even less than this at farmgate.  As Raymond Kimaro, former General Manager of Kilimanjaro Native Cooperative Union in Tanzania says, in those years, involvement in Fairtrade meant his small farmer organisation was able to survive, whilst others around them collapsed.

For those that survived, however, those decades have still left a long and indelible mark on  coffee growing communities – a legacy of indebted farmers’ organisations, few precious resources for purchasing increasingly costly farm inputs or providing much needed technical support – perpetuating the cycle of poverty and low coffee productivity. Many in the Fairtrade system have been able to invest additional premiums to tackle these challenges, but for those only selling a small percentage of their harvest on fair terms, the needs of the farmers and the communities have still outweighed the additional resources earned.

Now, with higher prices trickling back into local coffee markets, and local private traders turning up at the farm gate offering cash to match or even exceed the farmers’ coop price, it’s no wonder that small farmers are tempted to sell to the first or highest bidder. For the cooperatives, this has posed a real challenge – including for us in the Fairtrade system.

In response, Fairtrade has been working with both coffee traders and producers on an action plan to address the new context for our work. This includes management training to improve purchasing practices within the coops, new mechanisms to improve access to pre-financing through 3rd-party lenders so that the small farmer cooperatives can pay members in better time, plus mediation services to deal with instances of potential contract defaults. Finally the Fairtrade standards for coffee have also been reviewed to ensure contractual requirements benefit all stakeholders in the value chain.

Meanwhile, price negotiation has only ever been one pillar of the Fairtrade system – with  market prices currently serving producers better than for many decades, it is the other social and environmental aspects of Fairtrade’s approach to farmer organisation that are coming to the fore – strengthening sustainable production, and building more effective peer support amongst producer networks. Of course Fairtrade premiums, over and above the market price, also then provide a steady stream of resources for investment in productivity, quality and sustainability improvements.

In Kenya, Ndumberi Coffee Farmers Co-operative Society Ltd in Kenya have used Fairtrade premiums and also a grant from Fairtrade’s technical assistance fund to hire its own agronomist support.  AS well as improving overall productivity (in some cases from a low of 1kg of coffee per tree to as much as 12kg), they have also upgraded production of premium graded coffee from 45% to 75%, thereby getting both volume and value gains. Training has also improved soil conservation, reduced the levels of silt in the rivers and increasing rain water harvesting, thus supporting their members to become more resilient to increasingly unpredictable rain patterns and extended dry weather spells.  Gikanda Coffee Cooperative in Kenya has run similar training, improving coffee husbandry and also achieving improved yield and quality. Such training programmes are not just delivering immediate value gains for individual farmers, they also contribute to an overall programme that cooperatives hope will ensure farmer loyalty and shore up volume deliveries, ensuring they can meet their contracts in the long term.

A recent study for the Fairtrade Foundation by Natural Resources Institute (NRI) of Greenwich, pointed to the likely impact of climate change on commodities including coffee.  Scientists’ predictions are that a combination of lower rainfall and higher temperatures are likely to render some coffee growing regions unsuitable for coffee farming by 2050.  With climate mitigation and adaptation increasingly on the agenda, Fairtrade networks are stepping up their role in supporting producers to understand potential impacts and play their role in vital soil, water and tree conservation efforts, or access low-carbon technologies.  In Costa Rica, members of COOCAFE have used Fairtrade premiums to reduce tenfold the amount of water used for wet processing.  They also bought environmentally friendly ovens fired by recyclables including dried coffee cherry pulp and macadamia nut husks. Meanwhile, working with TWIN Trading, Gumutindo Coffee Co-operative in Uganda are planting more shade trees to reduce the stress caused to coffee plants by higher temperatures – paid for with Fairtrade Premiums.  Access to climate adaptation finance remains a challenge, especially for small farmer organisations, and here again, being part of a global system such as Fairtrade can add value via additional regional or international advocacy, such as the work currently being coordinated by the Fairtrade Africa network towards the next round of climate talks in Durban in South Africa.

Finally, whilst coffee prices have been rising globally, a wider financial crisis has also been playing out in both developed and developing countries. As the focus of consumer concern moves back to domestic economic issues, the role of Fairtrade in making the case for sustainable, fairly traded coffee has never been so important.   Just this month, a new milestone in linking producers to consumers was reached with now 1000 Fair Trade Towns across 21 countries: local community based campaigns committed to raising awareness and promoting sustainable consumption.  With a plethora of product labelling now in many markets, this unique grassroots movement can provide word-of-mouth buzz  to complement the efforts of coffee roasters, brands and retailers,  and catalyse public interest in purchasing coffee that is based on equitable trading relationships, sustainable production and s real change for growers, their families and their communities.

Questions?

If you have any questions about the information in this article, would like further details on anything that is mentioned please do not hesitate to contact the Fairtrade Foundation’s Coffee Product Manager at kate.lewis@fairtrade.org.uk  

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