 What exactly is Fair Trade?
Coffee is the second most traded commodity in the world. The coffee industry employs an estimated 25 million people around the world. From farm to cup a single coffee bean undergoes many processes and passes through many, many hands. Although one can find state of the art equipment on large coffee plantations, most of the coffee we drink comes to us from small farms where little mechanization is used. The majority of the work of growing, tending and harvesting coffee is done the same way it has been done for centuries—by hand.
Fair trade is by no means a new idea. The roots of Fair Trade can actually be traced back to projects initiated by churches in North America and Europe in the late 1940s. Their goal was to provide relief to refugees and other poverty stricken communities by selling their handicrafts to Northern markets. In 1988, world coffee prices began a sharp descent, triggering the birth of the first Fair Trade certification initiative. TransFair USA is a member of FLO, an international umbrella organization for Fair Trade labeling which now has has representation in 19 countries across Europe, North America, and Japan.
Fair Trade standards and certification are designed to empower farmers and farm workers to lift themselves out of poverty, to invest in their communities, and to develop the business skills necessary to compete in the global marketplace. It also reduces the number of middle men involved in the purchase and sale of their coffee. Fair Trade standards include minimum price guarantees, social premiums for community investment, safe working conditions and environmental protections For washed Arabica, the highest quality coffee, the Fair Trade minimum price is set at $1.26 per pound in Africa, Asia, Mexico, and Central America, and at $1.24 in South America, plus an organic differential of $.25 if the coffee is certified organic. Should the world market price rise above these prices, the Fair Trade minimum price rises accordingly and becomes the world market price. In addition, importers pay farmer groups a social premium of $.15 over and above the Fair Trade minimum price. These premiums are designed to protect farmers against the frequent and often drastic fluctuations in the price of coffee on the world market. (Between 2001 and 2006 the average “C” price/lb of coffee has fluctuated between $.55 and $1.08.)
Fair Trade coffee cooperatives are run democratically, with all farmers having a vote in how the premiums are used. The money does not go directly to the individual farmers. Just like any business, farmer cooperatives must deduct operating costs, administrative expenses, business reinvestments and the cost of social and other programs before determining profits. The social premium paid by buyers can be used for infrastructure improvements, health initiatives and scholarship funds.
TransFair USA charges licensed companies a per-pound certification fee of $.10 for Fair Trade Certified products. It uses this license fee revenue for five primary activities:
- To verify that product supply chains meet Fair Trade standards.
- To develop the Fair trade market through relationships with retailers and other business partners.
- To raise awaremess of the FTC label and to build consumer demand. For example, TransFair provides marketing brochures, posters and other consumer materials to licensed company partners, retailers and advocates at no cost.
- To work with their partners in the international Fair Trade Labeling network to develop standards for new products.
- To connect producer groups to U.S. markets.
For an example of how fair trade can benefit a community, please read about Cafe Femenino and Coffee Kids! See who won our fair trade basket in October!
For more information about TransFair USA, please visit their website or contact them at:
TransFair USA
1500 Broadway, Suite 400
Oakland, CA 94612
info@transfairusa.org
Phone - 510 663 5260
Fax - 510 663 5264
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