Worldwide in 2020 over 130 million people depend on coffee for their livelihoods. On average, these coffee farmers live off a shocking £1.37 a day. With over 75% of all the world’s coffee is being produced by 25 million smallholder farmers. These smallholder farms are usually farms supporting a single family with a cash crop such as coffee. The coffee market is well known for its price hikes and price falls, the fluctuating prices depend on the weather, demand, crop diseases and many other factors. The volatile nature of the coffee market has significant consequences on those involved in the production of coffee dependent on it for their livelihoods. This unpredictability makes it nearly impossible for the smallholder farmer to predict a yearly income. It’s for the above reasons the fair trade was set up in the 1980s to help struggling coffee farmers during a Worldwide crash in coffee prices.
Certified fair trade coffee producing organizations are guaranteed too to get at least the fair trade minimum price for their coffee. A fair trade minimum price covers the cost of production In addition to yielding a small profit, Thus providing a safety net for small farmers. Additionally, Fair trade farmers received a premium to invest in their business or local community. This premium is conditional that’s 25% of the investment must be spent to enhance quality or productivity. This is a fair and constructive system.
Prior to the existence of Fair trade, prices were regulated by the International Coffee Organization according to the regulations set forth by the International Coffee Agreement of 1962. This agreement had set limits on the amount of coffee traded between countries so there would be no excess in supply preventing a price drop consequently.
Fair trade certified coffee is certified as produced to fair trade standards by a fair Trade Organization. Fair trade organizations help create trading partnerships based on transparency and respect with a lofty overall goal of achieving equality in international trade. These partnerships contribute to sustainable development by providing fair and better trading conditions to the coffee bean farmers. In addition to this fair trade organizations also support producers to use environmentally sustainable farming practices and prohibit child or forced labor. Coffee Packers pay fair trade a fee for the right to use the fair trade logo which gives an insurance and assurance to consumers that it meets fair trade standards.
FLO-CERT, is a for-profit business owned by Fairtrade International that looks after production standards, inspection and certifying producers in over 50 countries In Africa, Asia and Latin America.
A Study conducted by Harvard Titled “The Economics of Fair trade” Found powerful evidence that consumers value goods produced in a social and environmentally responsible manner. In addition, the same study shows the existing fair trade label conveys credibility which affects consumer demand. Fair trade achieves many of its intended goals, fair trade farmers receive higher prices, access to credit, perceived economic stability and a higher likelihood to engage in environmentally friendly farming practices. Overall, the concept of Fair trade and the results have had a hugely positive impact on our environment and long may it continue.