Can you believe that HIGH PRICES are a problem for fair trade coffee growers? Just Coffee has posted on what they call "the new coffee crisis" and it is very worthy reading. As you know, I've been hanging out in coffee country myself this past year, and everything Just Coffee says completely jives with what I've heard. They explain it as follows:
For farmer co-ops at this moment, the challenge is more immediate. As local middlemen are willing to buy coffee for prices at or above what FT roasters and importers are willing to pay, they are gaining a foothold on local coffee markets. This inevitably weakens farmer cooperatives as growers sell outside the co-op and co-ops are in turn unable to deliver on coffee contracts with buyers.
To give you some background, recall that part of a Fair Trade agreement means forming a coffee growers cooperative to sell your coffee through. This is, of course, in many ways a good thing for the growers. But back several years ago when coffee prices hit rock bottom and Fair Trade prices were significantly higher than what a coffee grower could otherwise get, there was much more reason for the growers to actually sell through their cooperatives. Now, with high prices and a relatively small fair trade premium, the incentive is smaller.
What the Just Coffee article doesn't mention is that the "middlemen" (coyotes) outside of the fair trade system pay the growers immediately for their beans. You hand over the beans and they hand you cash. A cooperative might not pay the growers until much later. So even if Fair Trade offers a modest premium to the growers, the value of cash in their hand immediately might still lure them to sell to a coyote.
Just Coffee says:
At this point the challenge to the fair traders is one that should be embraced. For too long fair trade marketing has focused almost exclusively on the increased prices paid to farmers. Now we must focus on the other components of the FT philosophy such as pre-financing, long-term relationships, and other forms of cooperation while also staying above the world price. This will most certainly create a challenge for "low bar players" who have maximized their marketing based on the higher prices that they paid to growers, but who also have not generally delved very deeply into the pieces of FT that go beyond their dollars.
They then go on to address yet another challenge - the climate crisis. Strange weather patterns have played a role in the decrease of supply (and devastating losses to growers) and increase in coffee prices lately. Will that continue? Or get worse? To me, the climate crisis is the real problem here. Prices so high that a fair trade program isn't needed is a blessing - if they last. But if the prices are only high because the coffee growers are having their crops wiped out, that's a problem. A big problem. Especially if weather patterns remain like this or get worse. |
