Fairtrade Coffee Only 3% of US Market

Lisa Zaslow is a guest blogger and the views expressed herein are her own and do not necessarily represent the views of Shared Interest Society.

Lisa is a passionate fair trade and microfinance activist currently living in North Carolina, USA. She is the founder of Blue People Fair Trade Ltd., an online store that specializes in fair trade and environmentally friendly accessories from all over the world. If you would like to be a guest blogger, please contact us with your interest.

I was in a shop getting bagels the other day when I asked for my daily cup of Fairtrade coffee. The guy behind me said, “I read that fair trade isn’t doing the coffee farmers any good”. I asked him what he meant, and he said that fair trade wasn’t “fair” and was hardly a fraction of the coffee trade so, “why bother?”

I find this often in the US; most people either don’t understand what fair trade is or they confuse it with “free” trade–so “why bother?”

Coffee is one of the most important commodities in the world. It is produced and exported by nearly 60 nations, is one of the top cash crops and is critical to the economies of several developing countries. In some developing nations, producers receive only USD$0.30 per pound of coffee when export prices are over three times higher. In one African nation, producers earn an average of only USD$0.09 per pound. Nearly all coffee sold in North America is imported from developing countries. The North American coffee market accounts for over one quarter of global coffee imports in value (27 percent in 2005), and the United States is the world’s single largest buyer of coffee.

Coffee is also by far the most important Fairtrade product. The Fairtrade Labelling Organization International (FLO) indicates that sales of certified Fairtrade coffee worldwide were up by 53% in 2006. Nearly half of this volume was sold in North America. TransFairUSA calculates that Fairtrade coffee represents just 3 percent of the US retail market. The FLO Standard is a guarantee of a Fairtrade Minimum (or floor price) that is based on the estimated cost of sustainable production. The minimum price ranges from USD$1.01 to USD$1.21 per pound depending on the type of coffee and the country of origin. There is also an additional USD$0.10 per pound which is a premium paid to cooperatives for use at the community level for social and economic investments. When the coffee is certified organic, an extra premium of USD$0.20 per pound is also paid.

More than 20 million families rely on coffee for their livelihood and between one and two million farms participate in special certification programs. Many are small-scale family farms that produce over 70 percent of the world’s coffee. FLO estimates that the fair trade system earned each farmer an extra USD$200 per year above what they would normally have made in the conventional market.

Oliva and her husband Joseph own and run their own certified organic coffee farm on the slopes of Mont Elgon in Uganda. They belong to their local Buginyanya Primary Co-operative Society, which has 690 members and is a member of the larger Gumutindo Coffee Co-operative, a group of six village co-operatives. Gumutindo (which means “excellent quality” in the local Lugisu language) started in 1998 as a joint project between Bugisu Co-operative Union (BCU) a group of 250 village co-operatives and TWIN Trading, a UK alternative trading organization that sources Fairtrade coffee for partners such as Cafedirect.

Fairtrade buyers pay premium prices for the high quality coffee produced by Gumutindo. The co-op receives a stable, guaranteed price of at least USD$1.25 per pound, plus a premium of USD$0.10. This gives farmers a sustainable return on their coffee and protects them from volatile fluctuations in the market. Market prices for Ugandan Arabica coffee have been under USD$0.80 for the last six years, which has allowed Gumutindo to pay higher prices to farmers. Gumutindo buys all the coffee its 3000 members produce and sells 99% of it to fairtrade buyers. It receives the guaranteed fairtrade price of USD$1.21 a pound, plus USD$0.05 fairtrade social premium and USD$0.15 organic premium. By knowing what price their coffee will bring, members are able to plan their finances and their lives.

There are around 90,000 coffee growers on Mount Elgon, but not all of these farmers belong to fairtrade co-ops. The farmers must carry their coffee to village trading posts where they are at the mercy of the traders who cheat them with rigged scales and low prices. These traders’ priority is quantity rather than quality. They mix good coffee with bad, ruining the reputation of coffee from the area and reducing the value in the market.  Many of the farmers on Mount Elgon have seen the benefits of producing high quality coffee and want to join Gumutindo. Gumutindo hopes that market demand will continue to grow so that all coffee growers on the mountain will eventually become involved and benefit from fair trade.

So, when the guy behind you questions your choice in Fairtrade coffee, just smile and know that you are doing a coffee farmer somewhere in the developing world a world of good.

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Mexican coffee farmer at work in the fields

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One thought on “Fairtrade Coffee Only 3% of US Market

  1. HI Lisa,

    Thanks so much for sharing this information on some of the statistics of fair trade coffee. Your right of course, many people still struggle to understand what fair trade is all about. In Australia, the concept is still a very, very new one and most people here have limited knowledge of either its intent or current achievements.

    I have just been reading Daniel Jaffee’s book ‘Brewing Justice’. If you haven’t read it already you may find the comparisons he makes between Mexican fair trade and non fair trade coffee growers both in terms of benefits and commitments. One of the things that really came home to me in the book is the significant interrelationships between organic production and fair trade. In Mexico it seems that one is synonymous with the other.

    Thanks again!

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