Fair trade coffee is an important part of creating a global economy that benefits growers, consumers and the environment. But what is fair trade exactly? Is paying extra for fair trade really helping those who need it or is it just a label that looks good for a brand?
The truth is that fair trade goes a long way to making coffee growers’ lives better which, in turn, empowers them to use more sustainable practices while also producing higher quality beans. Good for growers. Good for the environment. Good for your favorite caffeinated beverage.
Here we will shed light on how choosing fair trade can help people around the world now and into the future.
According to Fairtradecertified.org, “Fair trade is a global movement made up of a diverse network of producers, companies, consumers, advocates, and organizations putting people and planet first.” Fair Trade certification takes into account “economic, social and environmental standards.”
While fair trade is largely known for helping to ensure growers are able to charge a fair price, it is also a holistic approach to protecting workers, the environment and the quality of crops. An equitable minimum price gives growers a sense of security with the knowledge that they will not be forced to sell crops at a loss. It also gives growers the resources to uphold their part of the three tenets of fair trade.
There are three core principles of fair trade that work together to improve the lives of growers, the environment and the quality of crops.
The market price of crops can vary widely depending on a host of factors. During extremely poor selling conditions, market price may even be below the cost of producing a crop. With the fair trade price standard, a minimum price is set to ensure growers can pay for their production and their own needs.
Fair pricing allows growers to also care for the land. With the security of a minimum price, growers have the resources to avoid detrimental environmental practices such as monoculture - the practice of planting the same crop year over year which depletes the land of nutrients. Monoculture and other poor farming practices often come about when growers are pushed to produce more to make up for low market prices.
When growers are subject to market pricing, there is a tendency towards quantity over quality. With fair trade, importers establish a relationship with growers which allows them to influence the quality of the beans being produced. This means a greater variety of high-quality beans reach your cup.
While the basic rules of supply and demand affect coffee, the full answer to how coffee prices are determined is typically more complex. Growers can expect to have the price of their crops affected not only by how much is being produced but also fluctuations in currency exchange, global politics and various trends. In some cases, these uncontrollable factors can even drop the price of coffee below the cost to produce it. This leaves growers in a vulnerable spot where they are forced to sell their crops at a loss. Fair trade prices set a minimum price which ensures this does not happen.
This leads many consumers to wonder how a cup of coffee can be so expensive if the main ingredient is so cheap. However, the price of coffee per pound being paid to growers is not correlated to what you might be paying for a drink at your favorite coffee shop. Coffee beans, once purchased from growers, go through multiple steps before reaching your cup. Processing and roasting green (raw) coffee beans adds to final costs along with other ingredients, labor, marketing, etc.
Fair trade creates a safety net for growers when the price of coffee goes below the cost of production, which happens all too often. Between 2014 and 2019, the price of a pound of coffee fell by more than 50% to only $0.89 per pound, although other costs of living factors rose. Even more recently, the global pandemic drove down the demand for coffee as restaurants, hotels and other venues were closed or limited.
Without the guarantee of fair trade pricing, growers would lose money every time they sold their crops. This not only creates a problem now, but it also creates debt that will make it harder for growers to operate in the future, even when prices rise.
Currently, fair trade growers can command a minimum price of $1.40 per pound of non-organic beans and $1.70 for organic. The difference between the fair price of $1.40 and one of the lowest recent prices of $0.89 per pound is only $0.51 per pound. This extra cost has minimal impact on consumers’ wallets while making a substantial difference in the lives and communities of growers.
While $1.70/lb is the current minimum, Larry’s is a proud member of Co-Op Coffees, “a green coffee importing cooperative, committed to building and supporting "Fair and Direct" trade relationships for the benefit of small-scale farmer families, their communities and exporting cooperatives.”
Co-Op Coffees sets a higher standard minimum at $2.20/lb. When the market price is higher, our price also rises. Why are we committed to paying higher prices? Simply because it is worth it. Larry’s believes not only in the importance of fair trade to the lives of growers and the environment, but also to the quality it allows us to achieve in our beans.
We work closely with growers to ensure all of our beans are certified Shade-Grown and Organic as well as Fair Trade. Starting with quality beans is what allows Larry’s to create smooth, flavorful and aromatic roasts. Learn more about why we’re committed to organic, shade-grown coffee.
While fair trade practices are most known for setting minimum prices, there is also an emphasis on putting money into the community. Currently, Fairtradecertified.org states “...Fair Trade producer groups receive $0.20 per pound to invest into their communities and production as they see fit.”
By putting this money directly into the community, fair trade puts the power to change in the hands of people who know best what needs to be done. This money frequently goes to improve production and also sustain growers when market prices are at “crisis level.”
Coffee growers operate under immense stress in many situations. Everything from environmental changes to unpredictable price fluctuations and the threat of poverty can make life for growers very difficult.
Without regulations in place to ensure farmers receive an equitable price for their crops, more and more will leave the industry in search of a better life. Fair trade prices allow growers to not only take care of their own health but put money towards bettering and growing their operations. It ensures they do not have to choose between their own well-being and producing crops.
Fair trade practices strive to not only improve farmers’ lives but also the land. Organizations like Fairtrade International and Fairtrade USA provide farmers with resources for employing sustainable practices. This includes improving water and soil quality and discouraging “monoculture,” which is the practice of planting a single crop without rotation.
Instead, fair trade organizations encourage “polyculture” which is the practice of rotating to ensure the soil is not depleted of vital nutrients. Standards set forth by fair trade also discourage deforestation by training farmers to work with the land as it is versus cutting down trees to make room for more crops.
Helping support growers and sustainable farming practices is easier than ever. Simply look for the Fair Trade Certification stamp when buying items like coffee, rice, and cocoa. Want coffee you can feel good about delivered to your door? Visit our subscription options page for our full range of Fair Trade Certified beans.