What Does Fairtrade Mean?

What is meant when people say fairtrade?


We often get asked whether our coffee if fair trade or what certification we have to ensure that we are abiding to our mission and ensuring coffee is ethically and sustainably sourced. We wanted to provide a bit more clarity on why we don’t hold a fair trade accreditation for our coffee, and to do this, we need to explain a little bit about what Fair trade is and why it doesn’t necessarily produce the best salaries and working conditions for farmers.

The fair trade movement was implemented to support many social issues that arise through the production and sale of goods throughout many poor areas of the world. As a whole, a the fair trade movement has been monumental in changing consumers perceptions on products and to have a greater interest in where their products are from. However there has been a number of unintended issues with Fairtrade which has seen many importers going directly to the source.

Background on Fair trade in the coffee business -

Coffee is often publicised as being the second most traded commodity (after oil) in the world. This is in fact a myth, coffee isn’t even the second most traded agricultural product (wheat). However, coffee is the second most valuable commodity exported from developing countries. The sale of coffee makes up more than 50% of export earning for some countries such as Ethiopia and Guatemala. The nature of the coffee business means that crops are very susceptible weather conditions and temperature fluctuations which cause excessive boom-bust cycles.

What ‘Fair Trade’ sets out to do - 

The fundamentals of fairtrade is to alleviate poverty and boost developing economies in poorer countries around the world. The primary way to do this is to create a minimum price (price floor) for coffee to ensure that a bust cycle doesn’t mean economic disaster for the production countries. When there is a boom and prices are above the minimum, fair trade set the price at 20 cents above the going rate. It is important to note that these rates are for commodity coffee. The growing demand for speciality coffee for its distinct flavours means that it demands a higher price than that of commodity coffee.

Fair-trade coffee can mean lower grade coffee -

In the UK, around 25% of coffee sold is from Fairtrade. This means a farmer will often sell coffee to both fairtrade and on the open market for importers. Here is an example to show how this can effect the quality of Fairtrade Coffee -
A farmer has two bags of coffee - The first is a high grade bean and would be classed as speciality on the open market, with a value of $1.80. The second is a lower grade commodity coffee and would only fetch around $1.20. If he sold the first bag through fair trade he would only get $1.40 (the floor rate) and then would have to sell the lower grade on the open market for $1.20. The more likely scenario is that he will opt to sell the high grade on the open market for $1.80 and then sell the lower grade a the floor price of $1.40 giving him a much better price overall. Aside from the Fairtrade coffee being a lower quality, it could also mean that in future crops the farmer concentrates on improving his high grade coffee to reach higher prices, while neglecting the lower grade crop as it will always hit the minimum floor price.

Fairtrade isolates great smaller farms and cooperatives -

The majority of Fair Trade coffee comes from Central and South American countries where some form of development is already in place. Smaller farms from less developed countries do not qualify as part of Fairtrade as they can’t afford the free to be part of the certification, and they don’t often own the land they work. This fundamentally means that the farmers who need it the most, don’t have access to it.
There are many reports on how much money actually makes it back to the farmers and the amount of money that organisations like fair trade spend on things like improving offices and CEO’s flying first class. Although we can’t verify any of this, we are aware of many resources available online that point to the unfair practices.  

To summarise. -

Fairtrade is great at elevating price fluctuations in the market and ensuring farmers are paid fairly for their products.
Fairtrade raises millions of dollars but only a very small amount actually gets back the farmers themselves.
The business model inadvertently leads to lower quality coffee.
Farmers have to Pay to be part of the scheme, and smaller farmers often miss out on the opportunity.
We opt to source directly to ensure fair prices are paid, smaller farms and cooperatives are included and we maintain a high level of coffee for our customers.

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