Fairtrade Coffee Standards and Pricing
The Challenge…
Nearly 74,000 metric tonnes of Fairtrade certified coffee were sold in
Standard decisions
at a glance
consumer countries in 2009. Coffee is the flagship Fairtrade product
grown by over 444,000 farmers across three continents. Since May
2010, international prices for Arabica coffee have risen to a 14-year
high. Lower than expected coffee harvests due to inconsistent
rainfall and a lack of investment in coffee plots, increased
competition for high quality coffee beans, and financial speculation
fuelled the rise.
Though high prices can benefit the individual farmer, they can
challenge producer organizations that may have fixed contract prices
earlier in the year and find themselves locked into a buy-high/sell-low
scenario. Some producer organizations have to compete with local
buyers and are having a difficult time fulfilling contracts. The prices
and scarcity of coffee also put traders at risk of not being able to
meet the demand for coffee if adequate supply is unavailable.
Fairtrade Minimum Price increased
to USD 1.40/lb to provide a stronger
safety net and increase access to prefinancing
Fairtrade Organic Price Differential
to USD 30 cents/lb to incentivize
increased organic production
Fairtrade Premium increased to
USD 20 cents/lb including a USD 5
cent/lb earmark for productivity/quality
improvements
New Trade Standards covering
contract and pricing rules
Where to get a copy:
www.fairtrade.net/standards.html
Valid for contracts signed on or
after 1 April 2011
In addition, many coffee producers have been unable to invest in
improving their coffee plots, which are reaching the end of their
productive cycle. Producers are increasingly vulnerable to the effects
of climate change and crop disease, rising production and living
costs, an ongoing cycle of poverty and a lack of access to credit.
Fairtrade responds…
In November, Fairtrade International (FLO) announced the Fairtrade
Coffee Actions, a number of concrete steps to help producer
organizations, traders and roasters cope with market fluctuations.
The plan includes addressing pre-financing for producer
organizations, providing support in the case of contract defaults,
working to reduce certification costs for producer organizations,
facilitating training in price negotiation and risk management, and
bringing producers and industry professionals together on how
Fairtrade can better meet the needs of producers and the market. As
part of the Coffee Actions, an expedited review of price and
standards was implemented to quickly respond to the market.
The Fairtrade price and standards review process is a collaborative effort based on consultations with
coffee producers, traders and roasters, external studies on costs of production, and input from coffee
Updated: 15/3/2011
Fairtrade Labelling Organizations International e.V.
experts around the world. The outcome of the process strives to meet the needs of producers, strengthen
supply chains, and enable growth with integrity. All changes below apply to both Arabica and Robusta
coffees, except for the Minimum Prices. The Minimum Price review for Robusta will be conducted in the
near future.
Fairtrade Minimum Prices for Arabica coffee raised by USD 15 cents/lb
The Fairtrade Minimum Price acts as a safety net if coffee prices fall below the costs of sustainable
production. In light of high production costs and the depreciation of its value in real terms, the Fairtrade
Minimum Price needed to be adjusted. During high markets the Fairtrade Minimum Price also plays an
important role as a guarantee for producers to access pre-financing and help them purchase coffee from
their members. The Fairtrade Minimum Price was increased to USD 1.40/lb for washed Arabica coffee
from the current USD 1.25; Arabica naturals increased to USD 1.35/lb from USD 1.20.
Organic differential for all coffee increased
Fairtrade requires an organic differential to account for the higher costs of organic production and to
provide an incentive for converting to and maintaining certified organic production. As prices for
conventional coffee have risen, fewer farmers see value in seeking and maintaining organic certification
even as demand is increasing. As a result, FLO has raised the organic differential to USD 30 cents/lb from
the current USD 20 cents/lb.
Fairtrade Premium increased; productivity/quality earmark added
The Fairtrade Premium is additional money above the selling price
paid to organizations for use in social and business development
projects that benefit entire communities. To strengthen producer
organizations and provide greater value to their members, the
Fairtrade Premium was increased to USD 20 cents/lb from the
current USD 10 cents/lb. Of the Premium increase, USD 5 cents will
be earmarked for productivity and quality improvement efforts.
Encouraging productivity and quality investments provides muchneeded capital to help ensure health supply chains and can have more impact on producer income than
any price or premium increase.
New trading standards
The final piece of the review included revisions to Fairtrade trade standards to enable producers and
buyers to better deal with high and volatile market prices by providing clearer rules for contracts, pricing
and delivery. Complementary to the new Trade Standards, FLO is facilitating training for producers and
traders on contracts, price fixation and risk management strategies.
About Fairtrade International:
Fairtrade International (FLO) is a non-profit, multi-stakeholder association of three regional producer networks and 21
national initiatives. The producer networks represent the interest of producers in the system while the national
labelling initiatives promote Fairtrade to business and consumers. FLO’s role is to set the strategic direction for
Fairtrade, to produce the standards by which Fairtrade is conducted, and to support producers to gain Fairtrade
certification and secure market opportunities. The FAIRTRADE Certification Mark is a registered trademark of
Fairtrade International. It signifies that products meet international Fairtrade standards.
For further information about the Fairtrade Coffee Standard, please contact:
Fabienne Yver, Project Manager Standards Unit: +49 228 949 23264, [email protected]
Updated: 15/3/2011
Fairtrade Labelling Organizations International e.V.