Give me a C!

02/11/2007 - 11:17 AM

The theme of this week’s entry is things that begin with the letter "C".

The first is ‘C’ price. This indicator of the coffee market is a big deal…it's a gauge of underlying coffee prices on the world market. Coffee is one of the world’s most important third-world crops, and when this indicator declines, it puts many of the world’s coffee producers at risk. During the coffee crisis earlier this decade, millions of farmers and farmworkers already living on the edge were forced to abandon their farms as prices plunged to $.50 or less per pound, well below the cost of production.

‘C’ prices represent a ‘basket’ of different origins and grades, so some coffee (e.g. Guatemalan) may be trading even higher, while other types (Brazilian) trade at a discount. Organic also trades at a different price than conventional.

Well….'C' prices have been up pretty high lately, which is generally good news for farmers. It has also sparked an overdue discussion about the floor price for Fair Trade coffee, which is currently set at $1.26/lb for conventional and $1.41 for organic. The Fair Trade price as a tool is somewhat of a Swiss army knife. It is a partial safety net against another coffee crisis, it creates greater predictability that makes it easier for small farmers and co-ops to invest, and it is designed to make sure that cost of production and a reasonable profit (a minimal living wage, if you will) are built into the price that farmers receive.

The Fairtrade Labelling Organizations International (FLO) standards committee reviewed and elected not to raise the Fair Trade price at this time. While we all are in favor of sending more money to farmers, there was debate about whether the data conclusively demonstrated that raising prices would actually do so, and how to implement a raise. TransFair was one of the stakeholders consulted, and gave input that our market could support a modest increase, based on market conditions and licensee feedback here in the US. This was only one of many variables considered by FLO.

Many of our Fair Trade NGO and advocacy partners are troubled by the FLO decision, and have expressed concern that TransFair’s focus on the market factors mentioned above supersedes our focus on the needs of farmers.

This is definitely not what we want, which brings me to the second “C”.

The CCC (Consejo Consultivo para el Café) or “Producers Advisory Council” was formed last year to help guide TransFair’s coffee policies and strategy. It is made up of representatives from small grower co-ops in most of the major producing markets. Members include Tadesse Meskela of Ethiopia’s Oromia co-op (and of Black Gold fame), Raymond Kimaro from Tanzania’s KNCU co-op (and also a FLO board member), and Merling Preza of Prodecoop (and the CLAC).

I attended the initial CCC meeting in Costa Rica last summer, and the group met again in Miami last week. They discussed some of TransFair’s long term strategies, and had Joe Alcantara from Café Bom Dia in to discuss retail conditions, and Bom Dia’s success with roasting at origin. The primary topic, however, was the Fair Trade price. The group had a very productive discussion covering outcome, process, and roles, and how to work together on the pricing issue. We all want to be on the same side of the table, and are working side by side to establish policy that helps farmers.

This take me to the last "C" - collaboration.

Fair Trade is a multi-stakeholder model, and requires the input and participation of growers, traders, industry, NGOs, retailers, and consumers to be successful. The system requires that many viewpoints and dynamics be considered, and it should be no surprise that conflicts will occur. We are all working towards the same goal, however, so we all keep coming back to the table to work on solutions.

Next week: A report from the (Ivory) Coast.
02/11/2007 - 11:17 AM
02/11/2007 - 11:17 AM