The Coffee Price Crisis, Fair Trade, and How We Pay Our Producers
Jun 03, 2020
You can hardly buy or read about coffee without hearing about Fair Trade, the C-Market, and a variety of often vague labels and terms. A few years ago you might have heard murmurs about the Coffee Price Crisis. But what does that mean? And why is it important? We’re going to take a few minutes here to answer these questions and explain why, amidst the swirl of often confusing coffee talk, we at Desert Sun do what we do.
Let’s start with the latter: the Coffee Price Crisis. If you have ten minutes, here is a great presentation explaining it. If you don’t, know this: coffee is a commodity that, like all commodities, is largely traded on futures. The coffee market, known as the C-Market (the daily, average trading price of coffee), fluctuates wildly. The last 45 years look like this:
What a rollercoaster ride, huh? And yet millions of people (as much as 10% of the world’s population according to this) depend on coffee production for their livelihood. This market instability forces the vast majority of people and companies into the production of low-grade, highly efficient coffee.
Market fluctuations aside, this drives down the average price of coffee per pound to $1.07/lb—and that price doesn’t even account for inflation. The current C-price is $1.05. If you enjoy good coffee (flavorful, sustainable, diverse) the C-market price does not cover the cost of its production. To put it more severely, the vast majority of coffee production (over 85%) is inherently exploitative - economically, environmentally, and socially.
Coop Coffees is a member of the Fair Trade Federation and is registered and certified through Fairtrade International. Both organizations aim to address trading inequities by ensuring that producers are paid for the true cost of production for their products. (The labels themselves, and the many extant fair trade organizations, can be quite confusing. Useful summaries can be found here and here, if you want to dive deeper.)
The current Fair Trade Minimum price for coffee is $1.40/lb ($1.70/lb for organic Fair Trade). However, even this amount has been shown to be insufficient to provide a sustainable livelihood for coffee producers given production costs and market fluctuations. In our last blog post, I mentioned that Desert Sun, as a member of Coop Coffees, pays our producer partners above Fair Trade. You might be wondering how much? Or more importantly, why?
In 2018 Coop Coffees committed to paying our producer partners a minimum price of $2.20/lb. It may not seem like much, but the price itself and the commitment to a long term relationship insulates our producer partners from the volatility of the “C” market and, most importantly, ensures them the financial stability to maintain and develop sustainable livelihoods and production practices that directly benefit lives, the environment, and coffee quality. If you’d like to see exactly how much we paid for your favorite Desert Sun single origin, you can easily look it up here.So does this mean that you're paying more for a cup of coffee? A little, perhaps, although our prices at Desert Sun compare well with national averages for premium gourmet coffee. (Curious? Check out this recent analysis of Specialty Coffee Retail Price Index.) The important point is this: you are not paying us more, you are paying our producer partners more. Relationships matter. We are committed to providing you with superb organic, premium coffee. And we are equally committed to providing our producer partners with the means to a sustainable livelihood and production process. In short, we refuse to shortchange our farmers or our quality. That’s our Desert Sun commitment!