By Kyle Freund, Fairtrade America
Coffee continues to be the world’s most-recognized Fairtrade product, representing an estimated 4 percent of the global market. By encouraging direct relationships, sharing of information, and stable prices, Fairtrade can provide both roasters and farmers with greater stability and a quality product.
Fairtrade America, the US-member of Fairtrade International, is preparing to release its annual monitoring and impact report, a compendium of facts, stats and data covering the full supply chain spectrum from origin to store shelves.
In 2017, more than 18 million pounds of roasted coffee was sold in the United States with the Fairtrade label. These sales generated nearly $3.9 million in Fairtrade Premium over and above the purchase price, which farmers invested in their community, business or local environment according to their priorities. However there remains much room for improvement with the average producer organization selling just 30 percent of their total production as Fairtrade (even though 100 percent of their coffee is Fairtrade certifiable).
Fairtrade continued to represent significant market share of direct imports into the US. The top origins included Peru, Indonesia and Colombia. According to 2016 data, Fairtrade certified green coffee from Peru represented 30 percent of volumes imported into the United States. Indonesia, Colombia, Honduras and Mexico all hovered around 10 percent.
Looking at total exports from a producer country perspective, nearly 68 percent of Bolivia’s coffee exported to the US was sold on Fairtrade terms. Peru was also a front-runner with Fairtrade coffee representing 17.8 percent of all volumes exported to the US.
Impact of ICE & Fairtrade Premium Investment
While volumes of Fairtrade coffee remained steady in the US, the ICE ‘C’ price was anything but, collapsing to $1.14 per pound at its lowest point, far below a sustainable level. In a volatile market, Fairtrade can serve as a bulwark for the more than 800,000 coffee farmers around the world organized into Fairtrade associations or cooperatives. Fairtrade’s Minimum Price, which aims to cover average costs of sustainable production, can provide a safety net for many farmers when they sell on Fairtrade terms.
The Fairtrade Premium, an amount paid on top of the coffee’s purchase price, also provides an important tool for dealing with volatile markets. Fairtrade believes that farmers are in the best position to identify priorities and decide how to invest in their communities. During times of extreme volatility, farmers regularly opt to distribute a sizable portion as cash payouts to farmers. Other investments often overlap with the priorities of most coffee companies, such as providing farmers with inputs like fertilizer, and trainings to improve productivity and quality. Other investments are made in education, healthcare and environmental improvements.
Improving Understanding & Building Capacity
Fairtrade’s (MEL) program is key to understanding outcomes and impacts, and how to improve performance. The annual monitoring and impact report draws on a data set of more than 300 indicators and external research (download previous versions of the report here). The next report will be released May 2018.
Fairtrade is also exploring new, innovative ways for measuring impact. In most supply chains, information is collected from the top down, removing control of the data from producers. To ensure that Fairtrade producers can harness the power of their own information, Fairtrade America and CLAC have partnered with Universidad Federal De Viçosa in Brazil, to pilot a performance measurement system that enables producers to monitor their own goals and measure the change they create. Four Fairtrade organizations have joined the pilot project and are actively contributing to the design and implementation of the performance measurement tool.
For more information on Fairtrade’s approach to measuring impact and theory of change, click here.