Fairtrade, still fit for purpose in our inflationary world?

Many years ago I travelled to Brazil as part of a fact-finding mission to understand why it was that some producers could sell Fairtrade certified coffee whilst others could not. I was trying to explain traceability but wasn’t getting anywhere. The “mark” was all that was of interest.

I discovered that the Fairtrade movement only supported co-operatives whilst stand-alone farms were considered big enough to fend for themselves. I wasn’t too sure about this at the time, however it was on a subsequent trip to Colombia that made me appreciate the importance of the concept. World coffee prices were on the floor and it was literally costing small producers money to grow their crop.  I recall Oxfam’s publication at the time “Poverty in your coffee cup” was a real eye
opener. What I saw in Colombia made me realise how the poorest farmers were beholden to prices over which they had no control and which at that time was making them destitute.

The key to the Fairtrade movement is that it organises small producers and gives them a level of influence that can’t be achieved by the individual. They also set a floor price for coffee which gives a return to producers that world markets are not prepared to pay.

The challenge of “adding value” to your coffee crop in the winds of a global market is challenging. In Peru I discovered “Café Femenino”. A project to support women in farming. Then there is the organic movement as well as “bird friendly” marks. The coffees became known as “triple seal” coffees, each element adding a small premium to the price paid to the producer.

It was however in northern Sumatra that I discovered some degree of frustration. Rather than staying together as a co-operative some producers who were signed up to the Fairtrade movement were found to be selling directly to processors as they were being offered more money than the co-operative was getting. It was an era when coffee was in short supply but world coffee market prices remained depressed. The lure of extra money was turning some producers' heads.

This is the insanity in which the commodity market now finds itself. Whereas in the past prices were dictated by simple supply and demand issues commodity prices today are now beholden to “Exchange traded funds”. This means that if the equity market falls major pension funds for example will look to the commodity market to achieve a return. The price of basic food stuff is now treated like gambling chips in a high stakes casino. A new moral low.

Today the irony is that the war in Ukraine has pushed coffee prices way above any Fairtrade minimum price and thus begs the question why pay a premium for a product that has increased in price so dramatically? It’s certainly something that challenges coffee roasters like ourselves in a market where all costs have risen so dramatically.

We must always remember that Fairtrade certified coffee no matter what the price offers stability to the producer. From planting the first coffee bush to production takes around 3 years. That’s a long term investment, that’s a commitment to the future. The Fairtrade premium also goes back into the community and helps producers gradually build resilience. That should mean that no matter what happens in the short term we will still have coffee to sell to our customers in the long term. Producers need stability, only then will they invest in the future.