Monday, September 17, 2007

Fair-trade coffee price unchanged after 10 years

Kathryn Young
National Post

Sunday, September 16, 2007

Coffee drinkers who prefer a shot of social justice with their morning java might be surprised to learn that the minimum price paid to fair trade coffee-growers hasn't changed in 10 years.

"It's like not taking a raise in 10 years," said Monika Firl, producer relations manager for Cooperative Coffees -- a group of 22 small coffee roasters in Canada and the U.S. who import only organic fair trade coffees.

"Everything is slower than it should be," said Robert Clarke, executive director of Transfair Canada, which certifies Canadian businesses who sell fair trade products.

Coffee producers are assured a minimum price -- US$1.19 per pound of Arabica coffee beans or US$1.21 depending on what part of the world the coffee is grown -- even when the volatile market price drops below that, as it has for most of the past seven years.

"I wish it was $20 a pound," said Mr. Clarke, who considered unilaterally offering a higher price, but was told that wouldn't show unity with FLO -- Fairtrade Labelling Organizations International, which monitors and certifies the coffee-growing co-ops to which farmers belong, as well as sets the minimum price. Transfair Canada is one of 20 FLO members along with three producer groups representing Africa, Asia and Caribbean/Latin America.

The Caribbean/Latin American group proposed a nominal increase in the minimum price last year. Canada and other countries supported the increase, but FLO said it wanted to overhaul the entire process for evaluating how and when minimum prices are set for all fair trade products, not just coffee, Mr. Clarke said. FLO also wanted to consult with the African and Asian groups.

FLO's answer on a price increase is expected in early October during its annual meeting in Bonn, Germany.

"In my eyes, it shouldn't impact the consumer," he said, citing the example of VIA Rail, which moved last year to offer only fair trade certified coffee. The per cup increase in price would have been only 1.2 cents, so the company opted not to charge consumers more.

"The demand will hopefully drive down the pricing," Mr. Clarke said, acknowledging that some retailers will probably try to raise prices.

Fair trade coffee pricing is complicated. On top of the minimum price, coffee growers receive a social premium -- increased in June from five to 10 cents per pound -- that helps communities build schools, health centres and other improvements. And an organic premium -- increased from 15 to 20 cents -- is paid to organic coffee growers since their costs are higher.

Meanwhile, Cooperative Coffees -- which includes five Canadian coffee roasters in Toronto, Whitehorse, Chicoutimi, Montreal and Almonte, Ont. -- went ahead two years ago to increase the minimum price they pay for their coffee. Subsequent increases mean they now pay US$1.56 (including the two premiums) and propose increasing that to $1.61 at its annual meeting in two weeks.

"It ultimately didn't affect our price [to consumers]," explained Craig Hall, president of Equator Coffee in Almonte. Although the cooperative pays more for coffee, it also eliminates the middleman by dealing directly with coffee producers.

Fair trade coffee sales in Canada have risen an average of 52% a year since 2002. By volume, they've risen more than five-fold from 425,000 kilograms in 2002 to 2.2 million kilograms in 2006, while the estimated retail sales value has risen from $12.8-million to $67.2-million in the same time period.

This article was originally posted on September 17th, 2007 by