Are farmers really receiving a fair price for their coffee?

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Average coffee price from 1990 to 2017

When I think about coffee, one of the questions that comes to mind is if coffee farmers are being fairly paid for their product. Lately, I’ve been doing some research and found out that well-intentioned entrepreneurs have created a few ways to fight coffee price uncertainty.

One of the programs is called FairTrade. FairTrade is a certification that is issued by an organization with the same name. This certification is issued to cooperatives in developing countries that meet certain social, environmental, ethical, etc. standards. With this certification, farmers receive a FairTrade minimum price plus a FairTrade premium for their products. According to the FairTrade website, when the market price is higher than the Fairtrade Minimum Price, producers should receive the current market price, or the price negotiated at contract signing.

Another program that has lately been gaining popularity is “Direct Trade”. With this program, consumers are reaching out to farmers directly. Coffee importers such as roasters are contacting farmers directly and paying a higher amount of money per pound of coffee according to the conversations that I have had with entrepreneurs in the Greenville area. The reason for doing this is that direct trade cuts out the middleman leaving more cash available to pay for the coffee.

However, if these two mentioned methods above seem to be quite successful, why are coffee farmers still struggling? A few days ago, I talked to my relatives in Peru and asked about the price they are currently receiving for their coffee and with a very concerned tone they said that “el café está bajo” which means that the price is very low. The price they are receiving per pound of coffee is between $0.97 and $1.08. With that price, they barely reach the break-even point. So, what’s happening? Cooperatives don’t pay the FairTrade premium to the farmers? Direct traders (roasters, individuals, etc.) are not capable to reach all the farmers to make their method the most efficient for fighting coffee price fluctuations? Perhaps FairTrade is not as efficient as it is being said. Or perhaps, direct traders don’t know how to overcome the language barrier to reach the farmers.

If you have creative ideas to fight coffee price uncertainty, please leave your comments below or reach out to me through the contact button. Our farmers need us!

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