Ottawa, ON – Last week, the Arabica coffee price plummeted below $1 USD/lbs for the first time in 16 years, closing at $0.975 USD/lb on August 20, 2018. The New York C Market price has been consistently declining for the past year and half, foreshadowing a crisis for coffee producers.
On Monday, representatives from the coffee industry in Brazil and Colombia, the world’s largest producers of Arabica coffee, released a joint statement decrying the destructive scenario in the world coffee market. “Currently, international coffee prices are below production costs,” the statement emphasized, “jeopardizing the economic sustainability and survival of 25 million coffee families worldwide.”
The cost of coffee production has steadily been increasing, with inflation, cost of labor, and the investment in better agricultural practices on farms all factoring into the rise of production costs. Nevertheless, the New York C Market price has consistently hovered around S1 USD/lb, holding coffee producers at ransom. Additionally, many external factors impact international prices, including the often nefarious influence of financial speculation and coffee stockholders who all too often remain outside the coffee supply chain and the producing countries themselves. If the state of the beleaguered coffee market does not improve, the beloved “black gold” enjoyed by millions on a daily basis could be irrevocably transformed.
Can coffee be a fully sustainable commodity?
Sustainable coffee will not be cheap. Roasters, traders, retailers and companies at large need to recognize that coffee farmers must receive a fair price for both the costs of production and a sustainable, decent living income.
Fairtrade was started in response to the dire struggles of Mexican coffee farmers following the collapse of world coffee prices in the late 1980s. The creation of the Fairtrade Minimum Price for coffee was meant to serve farmers as a safety net during periods of difficulty when stronger market forces would offer lower prices for the benefit of traders, roasters and consumers.
For 30 years, Fairtrade has increasingly become a major player in the sustainability and ethical consumption space and remains the voice for organized smallholders that demand better and fairer access to the market. According to a recently published Fairtrade Monitoring Report, as of 2016:
- There were 537 Fairtrade certified coffee organizations globally
- There were 795,457 Fairtrade coffee farmers
- Coffee farmers received $112,317,803 in Fairtrade premium
Thus far, Fairtrade has been the only system that offers stability to organized farmers during times of market volatility. By recognizing the role of farmer organizations and the support they provide in improving agricultural practices and competing in quality auctions, we encourage and reinforce their bargaining position in an increasingly consolidated market.
So: Can coffee be a sustainable commodity by 2020? Not if we don’t commit to long-term, fair relationships with organized farmers where negotiations are centred on the cost of their production and living rather than a fictitious and inherently unfair market price. However, we cannot do this alone. In order to continue to support coffee farmers, we need partners in consuming countries such as roasters, importers and consumers to commit to a fair deal.
About Fairtrade Canada
Fairtrade is a global movement for change with a strong and active presence in Canada, represented by Fairtrade Canada. We work directly with businesses, consumers and campaigners to make trade fair for farmers and workers by ensuring fair, sustainable and ethical supply chains for the products we consume. The international Fairtrade system represents the world’s largest and most recognized fair trade system, representing over 1.66 million farmers and workers in 73 countries. Visit fairtrade.cato learn more.