Coffee is the beverage that kick-starts the day for many of us – and it is a product that some 125 million people around the world depend on for their livelihood.
Coffee is the most valuable and widely traded tropical agricultural product on the planet. While 25 million smallholder farmers grow 80% of the world’s coffee, many are not earning a living they can depend on.
Unpredictable weather conditions due to climate change, disease and other factors mean coffee production fluctuates from one year to the next, leading to an unstable market characterized by price volatility. The knock-on effect is that farmers struggle to predict what they will earn for the next season and find it difficult to plan for their future.
Most farmers know little of where the coffee they grow ends up or the price it eventually sells for. Beans pass through a complicated supply chain of growers, traders, processors, exporters, roasters and retailers before finally reaching the consumer’s cup.
Exporting green coffee, which means the beans have already been processed and are all set for shipping and roasting, is more profitable. But it is an opportunity open only to farmers who can form cooperatives, invest in processing equipment and organize exportation or employ a contractor to do so.
As part of a Fairtrade coffee cooperative, coffee farmers earn at least the Fairtrade Minimum Price for their coffee, which is set to cover production costs and provide security when market prices drop below a sustainable level. If a Fairtrade coffee cooperative is also a certified organic farm, they get an extra minimum price differential.
Farmers also receive the Fairtrade Premium, an additional sum they can spend on business or community improvements. They must allocate at least 25% of the Premium to boost productivity and quality — for example by investing in processing facilities or in organic farming. In 2012-13, Fairtrade coffee farmer organizations received over $49.3 million in Fairtrade Premium. They invested around half in improving the infrastructure, facilities and processes in their organizations.