Yay! Yesterday, the Fairtrade Labelling Organization (FLO) officially announced that it’s gonna conduct a review of fair trade minimum coffee prices.
As many of you know, the minimum price for fair trade coffee — $1.26 — hasn’t changed in like 16 years, despite inflation. This has both coffee producers and some fair trade coffee companies clamoring for a higher minimum price.
FLO’s the international org that certifies fair trade co-ops. It serves as an umbrella org for the various national orgs — such as TransFair USA for the US, or FTAANZ for Australia — that provide fair trade product certifications.
And FLO sez that its board agreed on Nov. 16, 2006, to review this minimum coffee price issue “in the coming months.” Calling the review a “producer-driven initiative,” FLO said that it sees this review “as an example of the good functioning of FLO as a truly multi-stakeholder association.”
The process for this review, as stated by FLO: FLO’s Standards Unit’ll start the review process ASAP, “in compliance with FLO’s standard setting procedures,” taking in the feedback from many stakeholders — including orgs like TFUSA, coffee producers, etc. Then, the Standards Unit’ll present a finalized proposal to the Standards Committee for approval. The final decision will be made and communicated to stakeholders.
FLO sez it “actively encourages all its stakeholders to take an active role in the development of Fairtrade Standards and Prices for the benefit of producers in the South.”
Cool — I hope all you coffee people weigh in. If you’re a coffee company or fair trade-related org, and decide to send a statement or letter in to the FLO, let me know if you’d like to share your thoughts with the readers here. I can either put it up as a new post if you email me; you can also post it as a comment.
Update, 2/6/07: FLO says it doesn’t have enough info to make a decision about raising coffee prices, and pushes back any price increase — to much anger from the activist community.
As a new grower and roaster located in Virginia and out of honduras I haveseen this a acritical issue the 1.26 rate was set when prices were .50 and .60 cents and served as a rescue to the the growers which 2years ago was when my education in the growers life and struggles began the price took the growes from enevitable ruin and a colapse of the industy but it did not adress the basis of the problem which is greed companys like Starbucks Maxwell house alike incress the cost to the consumer based on the cost of green beans .In starbucks case the last 5 cent incresse in that cup of coffee in which 50 cups can be had would be 2.50 incress in the cost per pound ridiculous When the cost is truly so low . Furthe the is a group that is left behind that a to small or underfunded to join a coop I feel it is unfair to have to join coops to get a better price .
Many leading experts in the industry acconlige tha the price woul be 2.00 -2.90 if the maket had developed with the other compable produce without the big four’s affect on the market the grower is in effect trapped if he growes to much coffee he gets less per pound if he grows less more but less to sell the is little gain int the pratice of raising high quality coffee for it can go unnotiuced and recive litte more than the standard prices so the are many many more issues
to adress but for starts Fto prices need to have aminimum with a sliding scale baised on a premium ove the C price
Arondo Holmes
Hondo Coffee Company
Comment by Arondo Holmes — November 25, 2006 @ 3:16 pm
Hey Arondo — Thanks for the input :) I got your email, and will contact you offline as soon as I get back to LA :)
Comment by Siel — November 25, 2006 @ 9:54 pm
Siel:
Cheers and thanks for this. Great news that FLO is finally getting around to formally reviewing its pricing levels for coffee–something struggling farmers have been requesting for years. While the move is welcome, I find that the way TFUSA explains it is very telling about its role in the Fair Trade marketplace.
TFUSA says the review is underway and explains the complex formula behind the research: “We have consulted producers, analyzed macroeconomic trends (particularly those linked to purchasing power and the value of the U.S. dollar), and looked at demand trends in Fair Trade coffee in all its markets.” Sounds like there is a whole team of Ph.D. economists on the case.
For others who have worked on this issue, like the good folks at Cooperative Coffees, the process has been significantly less complicated. In 2005, during a week of meetings with its producer partners overseas, Coop Coffees heard again and again from its friends and business partners that FLO minimums weren’t allowing them to live with dignity. So Coop Coffees decided it couldn’t wait around anymore for FLO, and unilaterally moved to raise its minimum prices for green coffee from $1.26/$1.41 to $1.30/$1.50. The coop’s green coffee committee met again this year to revisit the pricing issue and consider further price increases, financial incentives for transition to organic farming, and lots of other things that fulfill the promise of Fair Trade. No multi-variable regression analysis needed.
The difference between the FLO approach and the Coop Coffees approach, of course, is the difference bewteen corporate and developmental Fair Trade. TransFair writes in its release: “Asking buyers what they want to pay could very well result in a straightforward answer of ‘Less!’” Maybe this is true for its corporate licensees with one Fair Trade Certified SKU in a vast inventory. But this response would never occur to the Cooperative Coffees’ of the world…
Thanks for everything you do, Siel!
Michael
Comment by Michael — December 11, 2006 @ 12:32 pm