A Viable Alternative to Conventional Traded Coffee
As one of the most recognizable products of fair trade, coffee has made strides into the marketplace. In 2005, the amount of coffee traded with fair trade practices amounted to less than one percent of the total world coffee trade. But that was almost a 70% increase of the amount produced in 2004. Growth continues each year going forward. With more people around the world becoming conscious of the effects of globalization on farmers and producers in developing nations, the growth will continue. There are many reasons why this will continue.
Large coffee manufacturers and sellers are seeing increased demand from consumers. Places such as Dunkin Donuts and Wal-Mart offer free trade coffee to consumers. And consumers are recognizing that their purchase helps the original farmer make a decent living. Another reason why people are looking for this coffee is the environment. Much of the organic coffee entering the United States comes through fair trade practices. The small farmers at the other end do not use massive plantations and harsh chemicals to grow the coffee beans. So they make more money and the consumer gets better coffee as a result.
Watch this video about Starbucks and Fair Trade Coffee
Demand for coffee has shot up the number of producers around the world. But, that has lead to extremely low prices that often do not even cover the costs of production, let alone provide a wage. With fair trade coffee, the farmer receives at least $1.26 US for each pound of coffee. If the market goes above that amount, they get the market value plus a premium. They also get credit and prepayments from their long-term buyer relationships. This gives them the extra money needed to plant seeds and get updated equipment.
What is most surprising about fair trade coffee is that consumers often do not see any price difference on the other end. Without so many middlemen in the process, the profits go to fewer people. That means the original farmer gets a fair share while the consumer pays no more for the same product. Many opponents argue that the farmers are not receiving a large enough proportion of the final profits. However, the fair trade practices offer them sustainable prices even when the market prices for coffee bottoms out as it did in 2001. Since the farmer can make more than the minimum fair trade amount, they can get higher profits when the market improves. That is why many choose fair trade over conventional coffee.