What Does Fair Trade Coffee Actually Mean? (Explained!)

Last Updated on June 9, 2023 by Barry Gray

I think most people know that coffee is only grown in some regions of the world in countries with perfect growing conditions for the beans. However, the sad part is a number of the growers of coffee beans find themselves being exploited.

What you find is the actual farmer is often paid very little for all the hard work they put into growing the coffee, and that’s wrong. But there is something that helps, and it’s called Fair Trade.

Fair Trade coffee means the growers are given adequate compensation for their work without being exploited. Also, it means the coffee beans are grown in an environmentally sustainable way, which is also a fantastic thing.

But I find this entire concept of Fair Trade to be very interesting. Also, I’m all about fairness and people being paid for their hard work, so I try to only ever purchase coffee produced under the Fair Trade banner.

But if you have never really heard about Fair Trade or simply want to know more, don’t stress. I’m about to take you through everything you need to know about Fair Trade and coffee.

What Happens with Fair Trade and Coffee?

Fair Trade covers a huge number of products, so it’s not only coffee that gets these protections.

However, I’m not bothered about anything outside of coffee, so let me take you through exactly what’s going on with Fair Trade in this instance.

I admit I knew that Fair Trade works. I have a town near where I live that actively promotes itself as being a “Fair Trade” town, but I had never spent time really looking into it.

To look into it, I had to check out everything that goes on when it comes to coffee production.

Commodity Coffee and Specialty Coffee

The first thing to look at is that coffee is classified in two ways: commodity and specialty.

As the name suggests, commodity coffee is something produced in bulk, whereas specialty coffee is way more specialized. It also comes with a higher price.

But check what happens with commodity coffee.

All of this coffee is graded according to the quality of the beans. This is important because the coffee industry has worked out that coffee within a specific grading will have pretty much the same quality.

But that’s not the important part.

Each grade has a set price. Two batches from different places with the same grading will then be valued the same.

But Fair Trade does something pretty special. It has introduced a minimum price floor, and coffee is unable to go below that price.

I love this because it does stop people from exploiting the growers as they know they will receive a minimum price for their hard work.

What Does Fair Trade Do?

fair trade coffee beans

I mentioned earlier how Fair Trade seeks to provide growers with some protection when it comes to their coffee. There’s that environmentally sustainable aspect as well.

I love how Fair Trade seeks to give as much protection as possible. Yet here’s one of the cool parts, the entire Fair Trade thing was an agreement between both buyers and sellers.

Basically, they have worked together to ensure everything is fair.

Yet here’s another fantastic thing regarding this concept of Fair Trade, it doesn’t matter what the market is doing, so the grower knows what they will be paid even if the market has dropped.

That feels as if they are giving the growers a sense of real security as the raw cost of coffee fluctuates across the year. The fact something is secure allows the growers to really grow their coffee with some confidence.

Which Growers Are the Focus of Fair Trade?

lightly roasted coffee beans

Something else I love regarding Fair Trade is that they focus on those smaller growers who are perhaps more likely to be exploited.

But here’s a key point.

Out of all the coffee that’s produced yearly, roughly 75% of it is grown by small businesses. So, Fair Trade does have a number of companies to work with, but it also means the growers are not then pushed out of the equation.

I like this about it because Fair Trade knows that small growers can often be quickly consumed and swept up by larger buyers. Those large buyers do not care when it comes to the price they offer, and that’s a huge problem.

After all, those large buyers are all about making as much money as possible, so they want to spend as little as possible.

Is Fair Trade Actually Required?

I think we have a problem. We love to believe that everything in the world is fair and people are not being undercut when they produce a product or offer a service.

But sadly, that’s not the case.

Instead, it’s those small guys that tend to get the brunt of all the issues and problems, leading to them missing out financially.

But let me just focus on the coffee issue.

Take into account the fact that it’s believed more than 1.5 billion cups of coffee are brewed every single day around the world. That’s a lot of coffee.

But it also means a lot of money is involved in the growing and production of coffee in order to serve that need and market.

This leads to an increased risk of exploitation and using farming methods that push through the growing of coffee without much care for the environment.

Yet there are other issues.

The Coffee Market

The coffee market is surprisingly volatile. People don’t realize this because we are so used to going to a store and paying a certain price for our coffee.

Because of our experience, we tend to have no idea that the wholesale price of coffee will have some serious ups and downs on almost a daily basis. 

But Fair Trade tries to ensure the growers do not have to worry about that volatility. That must be an amazing thing to experience and reduce the stress they feel at any time.

A Set Price That’s Not Market-Dependent

Fair Trade lets growers know what they will be paid for their coffee beans in advance. They understand how the price will stay the same, which allows them to really plan for their finances.

This stability does help each grower to really plan for their future. If the price they were paid was linked to the market rate, they would have no idea what to expect.

But I also discovered another interesting thing. Growers that focus on organic coffee beans are paid an extra premium for doing things organically.

Again, I find that amazing, but I can understand why the Fair Trade initiative does that.

Does Fair Trade Have Any Issues?

fair trade espresso

I admit I was being drawn into the real positives of Fair Trade as I explored more of what they have to offer. However, I need to tell you that it’s not all perfect, even though the concept is clearly good.

Instead, Fair Trade does come with some drawbacks that manage to slightly dilute what it’s trying to do. 

The Bean Quality

Growers know they will receive a minimum amount of money for their coffee beans, which opens up the possibility of people cheating the system.

The primary way in which they will seek to cheat the system is by avoiding pushing the beans through the same extensive quality control process they would have previously done. 

I can sort of understand why growers will do this. Without that minimum price guarantee, they focus on only trying to sell the best beans to get the best possible price.

With a minimum price guarantee, there’s no longer the same need to do this as they know they will get the same money anyway.

The Costs

To become involved in the Fair Trade initiative, a grower needs to pay costs. Now, the costs do result in a grower being able to get that price, but it costs them money in order to get that rate.

It sometimes comes across as being caught in a cycle, and that’s not always the best thing.

A grower has to look at certification, so some money is also involved. 

But here’s the part I find to be the saddest thing of all: A number of growers come from poor countries and are unable to really understand what’s going on.

So, while Fair Trade does help, there are some issues to think about as well.

It’s Not Always About the Poorest Countries

One thing I feel sad about is the fact Fair Trade does not always focus on the poorest coffee-growing countries. I think that’s perhaps due to the costs involved for the growers. 

Instead, what you tend to find is that Fair Trade helps countries that are slightly richer. There is a real focus on both Central and South America, whereas growers in Africa often struggle.

I wish that was something that could change. It would make the entire process significantly fairer than it is right now, even though what they are trying to do is a worthwhile thing.

My Recap About Fair Trade Coffee

I love the entire concept of Fair Trade coffee, but let me run over the key points that stand out for me. 

  • Fair Trade coffee gives growers a minimum price for their hard work
  • It protects growers from the volatility of the market
  • It allows growers to plan their finances
  • It focuses on helping small growers 
  • It does cost money to become involved in Fair Trade
  • It may mean some inferior beans slip through

Ultimately, I feel anything that allows those at the bottom to know with absolute certainty what they are going to earn for their work is a good thing. It must be terrible to work hard, and then you earn less because of market fluctuations outwith your control.

That is why I feel it’s a good thing, and Fair Trade is something that should be supported as much as possible. 

My Conclusion

I love Fair Trade and what it does, and I feel it’s something that should be supported as often as possible. It means people at the bottom of the ladder have the opportunity to be paid what they deserve and not to be ripped off.

I would suggest trying to buy Fair Trade wherever possible. Yes, you may end up paying a bit more, but it brings with it some peace of mind, and that in itself is priceless.