Two weeks ago 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, on the New York ‘C’, a global indicator price for coffee. The ‘C’ has been consistently declining over the past year and half foreshadowing a looming crisis for coffee farmers.
On Monday, representatives from the coffee sector 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.”
Costs of production for coffee have been steadily increasing as inflation, labor costs, and agricultural inputs all drive costs higher. Simultaneously, the ‘C’ has crashed to below S1 USD/lb, effectively holding coffee producers at ransom.
Additionally, external factors weigh international prices down, including the often nefarious influence of financial speculation and coffee stockholders who all too often are far removed from where coffee is produced. 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?
Truly sustainable coffee will not be cheap. Roasters, traders, retailers and companies must recognize that coffee farmers need to receive a fair price that covers the costs of production and a sustainable, decent living income.
Fairtrade was rooted in 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 as a safety net for farmers during volatile periods.
Over the last 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 fairer access to the market. According to a recently published Fairtrade Monitoring Report:
- There were 537 Fairtrade certified coffee organizations globally
- There were 795,457 Fairtrade coffee farmers
- Coffee farmers received $112,317,803 in Fairtrade premium
Fairtrade is the only certification that directly addresses issues of price offering 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 reaching a living income rather than a fictitious and inherently unfair market price. However, we cannot do this alone. In order to continue to support coffee farmers, Fairtrade needs partners in consuming countries, including roasters, importers and consumers to commit to a fair deal.