In the UK alone, we drink approximately 70m cups of coffee a day and we’re increasingly opting for higher quality, premium coffee blends, spending an estimated £941m per year on it. In 2012 the turnover for coffee shops was £5.8bn. In contrast, most of the 125 million growers and workers who rely on coffee in developing countries live on less than $2 (£1.40) a day.
With global demand for Arabica coffee on the increase, market analysts are speculating that supplies won’t be able to keep up. This looming crisis is exacerbated by falling coffee prices, which for the past six months have been below the Fairtrade minimum price of $1.40 (96p) per pound of Arabica green beans.
Coffee is a precious commodity, it is one of the world’s most valuable tropical agricultural products. A newly planted tree typically take three to four years to bear coffee cherries, usually generating one big harvest a year. It takes real agricultural expertise to grow coffee and a lot of hard work, as cherries must be hand-picked from trees dotted precariously halfway up hills and mountains, before they can be processed, dried and exported as beans. Crops are also increasingly under threat from climate change, with farmers having to adjust to higher temperatures, erratic rain and drought.
Despite the skill and complexity of production, coffee has been de-valued by the international market. In December 2015, the coffee market reached its second lowest monthly average of the year; 24% lower than the same time the previous year, according to The International Coffee Organisation, which found that over the last six months, coffee prices have remained between 110 and 130 cents.
Some analysts expect coffee prices to rise later this year, but with 80% of the world’s coffee coming from small, often family-run farms, Fairtrade is concerned that the downward trend in 2015 has left coffee farmers, workers and their families all over the world extremely vulnerable.
Fairtrade’s 730,000 small scale coffee farmers are protected from this market volatility by the Fairtrade minimum price which helps cover production costs and an additional Fairtrade premium for investments in projects to improve their businesses and communities. In 2012-13 this generated €44m (£34m) in premium for producer organisations to spend on social, environmental and economic developmental programmes.
Within Fairtrade coffee production, at least 25% of the Fairtrade premium is spent by farmers on improving agricultural practices to increase productivity and quality of their coffee. This is ever more important as demand increases and supplies of coffee beans are increasingly affected by climate change. In addition, the very structures of the Fairtrade system empowers coffee co-operatives to collectively negotiate higher market prices and better terms of trade; including longevity of business contracts.
Soppexcca is a union of 18 co-operatives in northern Nicaragua which produces around 825 tonnes of coffee a year on very small plots of land. All coffee is shade grown and 30% is certified organic. Fairtrade International has provided business training to the group and helped them to access new markets and long-term partnerships with Fairtrade buyers who visit farms and understand the problems they are dealing with, such as unpredictable rains and leaf disease. Because of this, coffee can no longer be grown in some areas but the additional income from Fairtrade has enabled members to buy more land, address these challenges and increase their incomes. Juan Andes, president of Soppexcca, says: “Fairtrade has opened doors for us and kept us alive as small producers. You can see the people who are just selling to the conventional market and they have completely different lives to the ones we have.”
So what of the future for coffee? At a time of such change for producers it is time for businesses to change the way they work too and follow the lead of companies and retailers such as Matthew Algie, CaféDirect, M&S, Sainsbury’s and others in committing to Fairtrade and investing in the future sustainability of coffee.
If farmers don’t receive a fair price for their crops, they will stop growing coffee. And ultimately, until all coffee companies embrace a more sustainable way of working that pays producers a fair price for their production and tackles underlying issues of poverty and sustainability, the market will continue to lurch from crisis to crisis.
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