Fairtrade will raise its Minimum Price for coffee in an effort to strengthen protections for coffee farmers around the world amid the intensifying impacts of climate change and growing global economic volatility.
The new Fairtrade prices, which come into effect for contracts signed as of 1 August 2023, will increase the baseline price by 19 per cent and 29 per cent for Fairtrade certified Robusta and Arabica coffee, respectively.
This will provide farmers with significant price risk management support in times of wild market fluctuation, inflation in their home countries and substantial additional costs due to climate change adaption.
“Many coffee farmers are abandoning their farms in search of opportunities elsewhere and young people today in coffee-growing communities struggle to see a future in coffee. The fact that farmers cannot make a living in coffee is a tragic commentary for the industry and a huge risk for the future of the global coffee sector as a whole,” says Monika Firl, Senior Manager for Coffee at Fairtrade International.
From an Australia and New Zealand perspective, the increase in the Fairtrade Minimum Price ensures that the producers they deal with in the Pacific have a pricing safety net that helps them deal with the uncertainty in the market and the environment.
“What’s important about the Minimum Price is that it’s a floor price which allows producers to plan knowing the lowest amount they will receive for their coffee. We continue to work with the farmers in Timor-Leste and PNG to increase coffee quality and processes so that their coffee is in demand and gets higher than the Minimum Price,” says Virginia Jones, Head of Communications at Fairtrade Australia New Zealand.
According to Fairtrade, smallholder farmers produce 60 per cent of the world’s coffee yet nearly half of those smallholder farmers are living in poverty; nearly a quarter of them live in extreme poverty.
To achieve the new Minimum Price, Fairtrade conducted a cost of production analysis as well as a three-month consultation process with key stakeholders. More than 540 participants – 86 per cent of whom were farmers – from 40 countries provided critical inputs ultimately resulting in Fairtrade’s proposal to the Fairtrade Standards Committee and the decision to raise the Minimum Price.
“This new Fairtrade Minimum Price is an important step but even this increase does not address the ongoing issues faced by producers like climate change and deforestation. The whole industry needs to stop and look at how we can ensure a future for this industry – it’s not something Fairtrade can do alone,” Jones says.
-Global Coffee Report
