Getting to the bottom of the pricing on your fair trade coffee cup
Q I’ve heard fair trade coffee growers only earn a fraction more than conventional growers, so why am I paying so much for fair trade java?
A Whether we drink jumbo lattes or brown office water, lately it seems the bitter bevvy is giving us more jolts of guilt than energy.
Despite the inflated price of a cup of joe, coffee workers are some of the most poorly paid on the planet. The situation only got worse for the world’s 25 million java-growers when prices plummeted to 100-year lows in 2003.
The ensuing humanitarian crisis got a lot of us thinking. Maybe the price of coffee should oh, I don’t know cover the price of production? And maybe even the basic cost of living? So the conscious consumer turns to fair trade beans. According to TransFair Canada, the official fair trade price should cover all those things, plus it should be set without pressure tactics.
The idea was first promoted in the 60s and 70s by aid organizations that sold Third World crafts in the West. Now, labelling standards are set by Fairtrade Labelling Organizations International (FLO) in Germany.
But your question is, how fair is fair? How much money is actually going to the growers? The basic standard set by the FLO means that fair trade coffee growers (or co-ops) must be paid US$1.26 per pound at the very least. If the beans are certified organic, they’re paid a minimum 15¢ more per pound. An extra 5¢ social premium must be paid to a separate bank account managed by members of the coffee co-op to fund community projects like schools and health centres.
You’re right none of this sounds all that impressive given the global price for regular beans this month, averaging around 99¢. Yet fair trade beans are often peddled for 5 to 10 bucks more per pound than the conventional stuff. Are you being ripped off? There are a few things to consider. For one, no conventional farmer gets 99 cents per pound. They might only see 8 to 15 cents of that. Also, most fair trade bean roasters are spending more on their goods than the minimum standard mandates. Sometimes it’s just 50 cents more. But the freshest of the fresh, Toronto’s Merchants of Green Coffee, says it pays $2.50 to $3 per pound to farmer co-ops for top quality beans. That price can climb much higher for certain beans at certain times of the year from, say, Ethiopia, and the cost of shipping can be three times the price of the coffee itself. The company also spends a buck or two on packaging and delivering beans within 24 hours of roasting, selling to retailers for $6 to $9 dollars per pound, depending on the beans.
These small-niche roasters tend to be tiny operations that don’t have economies of scale behind them like Folgers and Nescafé, so their cost of production is necessarily higher than that of the big boys. So if you look at the wholesale price of, on average, $9/lb and consider that most places sell fair trade beans or grounds for $14/lb, basically retailers aren’t even doubling it (the typical retail practice). Just so you know, the best priced fair trade organic beans ($12 a pound) are at cafés like Moonbean on St. Andrew in Kensington and Alternative Grounds on Roncesvalles. If you want to talk rip-offs, note that Starbucks sells its regular non-fairly traded coffee for at least $15 per pound!
Procter & Gamble, Nestlé and Kraft have all launched specialty fair trade coffee lines in the U.S. or UK (a move many consider greenwashing, but a step in the right direction). Not sure what they pay per pound P&G declined to share that info.
Sadly, many fair trade farmers are actually being forced to sell their beans as conventional coffee just to get rid of them. Why? The supply of fair trade coffee dramatically outweighs demand, just as with regular beans. When that happens, cash-starved farmers do not get the certified fair trade stamp.
The fair trade system isn’t perfect, and policing half a million farmers around the world to make sure they’re living up to fair trade standards is certainly difficult, but there are many reasons to keep buying fair trade coffee. And if we all do, maybe the retail price can come down without harming fair trade farmer incomes. If you think growers deserve more for their fair trade crop, bug the FLO in Germany (www.fairtrade.net).
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