How Does Fair Trade Relate To Coffee? (Explained)

You know that if you see the Fair Trade logo on a product, it’s a good thing, or that it means the product has been produced sustainably under fair conditions. But what does this actually mean, and when it comes to your coffee, what difference does it make? For those coffee drinkers who know what they like and need their morning fix regardless of whether that Fair Trade label is on the product, the link between Fair Trade and coffee is one of the most important. 

Fair Trade is a non-profit organization that certifies coffee and other products according to a set of standards that aims to ensure that the products have been produced to encourage environmental sustainability and that laborers are treated and compensated fairly. 

Given that coffee production can be one of the most exploited farming practices globally, having these standards in place and buying coffee that supports them being maintained is key in giving recognition to the coffee-making process. 

how does fair trade relate to coffee

How Does Fair Trade Relate To Coffee?

So you understand what Fair Trade is, but how exactly does it relate to coffee? This is how the coffee production line works and where Fair Trade comes into the picture.

When coffee is harvested, it is classified as either commodity coffee, which is bulk, or specialty coffee, which is more valuable. Commodity coffee, which forms the bulk of coffee on the market, is graded according to its quality. Within each grade, the grade and quality of the coffee are standardized, so any two batches of the same grade will receive the same price. 

By introducing a price floor that limits how low the price of coffee can go, Fair Trade intends to protect the coffee growers. It is a choice made by the buyers and sellers in the market, both agreeing to sign up to Fair Trade and to pay and sell for a certain minimum for the product, no matter what the market may be doing. 

The majority of coffee globally, around 70-80%, is produced by smallholder farmers, approximately 25 million of them. Fair Trade focuses on these smaller producers specifically to try and set standards that protect them from being taken advantage of by large corporate buyers. 

Why Is This Important?

fair trade coffee farmer

While coffee is one of the most in-demand beverages globally, with an estimated 1.6 billion cups brewed every day globally, coffee farmers face several challenges. 

  • The global price of coffee is very volatile. Protecting farmers from this volatility, Fair Tarde aims to give farmers a sense of stability with the Fair Trade minimum price so that they can better plan their finances and make more reliable projections. Those that grow organic crops receive an additional price incentive. 
  • Pricing volatility is not the only challenge; to better the coffee economy and community’s that rely on coffee sales, a Fair Trade premium is paid to farmers and workers on top of the selling price, which they then need to invest into business or community projects of their choice. 
  • Smallholder farmers are assisted in organizing themselves better into associations and cooperatives so that they can have more collective power when it comes to negotiating terms of trade and reaching broader markets. 

Are There Any Potential Issues With Fair Trade Coffee?

There has been a lot of criticism with Fair Trade incentives and their efficacy in really helping the communities of farmers in the ways in which they claim to be doing. These are some of the most popular criticisms of the program and how it’s currently being run.

  • The economic benefits of participating in the Fair Trade system for the buyers are outweighed by the costs they have to pay for certification.
  • Fair Trade can attract bad beans by encouraging farmers to channel lower quality beans into the Fair Trade market because they know they’ll receive a minimum price for them. 
  • Fair Trade doesn’t help the poorest growers or educate their families or get them out of a cycle of poverty but instead imposes significant costs on impoverished growers. 
  • A relatively small portion of Fair Trade coffee originates from the poorest countries, as most of it is aimed at helping middle-income countries in central and south America rather than in Africa. 
  • The Fair Trade system lacks transparency and is not efficient at transferring the goodwill of the coffee consumer to the producers, who end up seeing less of the benefit than what studies have shown consumers are willing to give (in terms of higher prices paid).

Facts And Figures About Fair Trade Coffee

fair trade coffee facts

The extent of the impact Fair Trade is having overall can be debated, but the following facts show undeniably what the initiative has managed accomplish. 

  • There are over 1 million hectares of coffee-producing land under fair trade certification 
  • 72% of this land is in Latin America, 18.6% in Africa and the Middle East, and 9.4% in Asia and the Pacific
  • The concept of Fair Trade coffee began in 1989 with coffee from Mexico being sold in Dutch supermarkets
  • 824 404 metric tons of fair trade coffee was produced in 2019
  • 795 023 farmers were registered in the Fair Trade system, as of 2019
  • Fair Trade coffee is audited throughout the supply chain for sustainability and labor standards to be met, and price for the farmer is not the only factor
  • The improvement of soil and water quality, use of chemicals, control of pests, waste management, greenhouse gas emissions, and protection of biodiversity are all ingrained in the Fair Trade practice, which takes into account a long term view of both the environment and the farmers in coffee-growing communities

Conclusion

While its efficacy can be debated, the one positive outcome of the Fair Trade label on coffee is to make consumers more aware of the conditions under which their beloved beverage is produced and how they are contributing to that situation, one way or another through their spending habits. Next time you’re shopping for your morning fix, pay attention to what your coffee’s label says.