This blog focuses on sustainable coffee specifically as it pertains to the environment. I’ve written some about Fair Trade, because there is a connection between poverty and environmental degradation. But Fair Trade is complex, and the issues surrounding Fair Trade coffee alone are numerous. There are many blogs that focus exclusively on Fair Trade, and C&C will continue to deal more with science and leave the economics to the others. But October is Fair Trade month, and there have been several interesting articles on Fair Trade in the media lately. I’d like to just point out a couple.
- Fair Trade in bloom — New York Times. Discusses the increase in consumer demand for FT products, and how many big companies are jumping on the bandwagon. Specifically highlighted are Sam’s Club and its Brazilian supplier, Cafe Bom Dia. I’ve already written about Cafe Bom Dia. It is an enormous operation. It’s hard for me to believe Bom Dia cannot pay their farmers more than FT prices. I think the Times article is worthwhile to read along with last year’s piece by the Organic Consumers Organization, Wal-Mart’s attempt to sell the “cheapest Fair Trade coffee in America” generates skepticism.
- Fair Trade coffee price unchanged after 10 years — National Post (Canada). After a recent increase of US$0.05/lb in the social premium (which goes to communities for schools, clinics, etc.), the minimum price for FT coffee paid to the cooperatives is $1.31/lb. When FT pricing was established, coffee was trading around $0.60/lb. Today, when I checked the market price (“C” coffee futures on the NYBOT), it was trading at $1.36/lb, and yesterday’s composite indicator price (how calculated) for arabicas was around $1.40/lb.The FT price is indexed to the market price; it rises to $0.05/lb above the market price if it reaches the FT minimum. I’m not sure which “market price” FT is based upon (I’m pretty sure it’s the C market), or when or how the new FT price is triggered. However, when coffee prices are rising, due to any number of factors including poor weather, the gap closes between the FT and market prices. Then there is less incentive for co-ops to become FT certified (which costs money), diluting FT’s power until prices fall again. Rising prices aside, the FT is not indexed to inflation or (falling) value of the US dollar. This is a challenging time for FT and farmers, and it will be interesting to see how this all unfolds.