One of the key benefits of Fair Trade is to guarantee producers a minimum floor price when global commodity prices drop. In some years, when commodity prices are high, this benefit is more psychological rather than material. This year for coffee farmers, the benefit is again material and very important.
The small scale farmers that make up the majority of global coffee production remember all too well the calamity of 2001 when prices plummeted to 45 cents a pound, throwing hundreds of thousands of farmers and landless workers into poverty or destitution.
More recently, in May 2011, the price of Arabica coffee on the New York futures market hit a 34-year high of almost US$3.09 per pound. But, as if to justify its volatile reputation, the coffee price has plummeted in 2013 to less than US$1.10 per pound – nearly 65 percent off the 2011 high (see the latest market price here).
The price collapse this year is particularly unwelcome for farmers in Central America, Colombia, Ecuador and Peru where leaf rust, a fungal disease that destroys coffee trees also known as La Roya, has already wiped out up to 30-40 percent of the crop, according to the International Coffee Organization (ICO).
Fairtrade certified cooperatives can count on at least the Fairtrade Minimum Price of US$1.40 per pound for washed Arabica coffee sold on Fairtrade terms (30 cents more if organic), plus an extra 20 cents per pound Fairtrade Premium to invest as they see fit, 5 cents of which is dedicated to productivity and quality investments.
More at Fairtrade International post