This guest blog comes to us from our very own Ben Schmerler, Senior Manager of Coffee Supply Chains at Fair Trade USA. You may remember Ben from his work on Haitian mangos , recertifying producer groups whose lives and businesses were devastated by the 2010 earthquake. Ben is now working on an exciting series of programs to help strengthen farming communities around the world through financial education and collaborative training sessions. By empowering farmers with the knowledge it takes to run a successful business in the international marketplace, Ben and Fair Trade USA are helping prepare farming communities for long term success through Fair Trade.
My name is Ben Schmerler and I am a Senior Manager at Fair Trade USA focusing on Coffee Supply Chains and managing Fair Trade USA’s exciting new program- Co-op Link . I recently returned from Manizales, Colombia  where Fair Trade USA, in partnership with the World Bank, provided 35 Fair Trade Certified Colombian producer groups with a workshop in Price Risk Management. I had the privilege of attending the 3-day workshop where groups from diverse regions of the country came together to engage, learn, and collaborate. In addition to Colombia, Fair Trade USA provided the same workshop in partnership with Twin Trading and the CLAC/Red de Café for all Fair Trade Certified coffee producer groups in Guatemala and Mexico in the weeks following the Colombian workshop. In total, Fair Trade USA has trained approximately 150 cooperative members in Price Risk Management in 2010.
The Fundamentals of Price Risk Management
Now you may ask yourself, what is Price Risk Management and why is it important? In simple terms, Price Risk Management is the simple concepts,tools and strategies for managing price risk/volatility within a coffee trading enterprise. Price Risk is the amount of exposure an organization has during periods of market fluctuation. In 2009 and 2010, a period with historic volatility, a proper Price Risk Management strategy may save a business, and conversely, a poorly managed strategy or no strategy at all could leave a coffee enterprise over exposed and potentially facing extreme losses. For coffee enterprises like cooperatives, a solid strategy and understanding of basic financial concepts translates to less losses, better delivery of their contracts, potential gains for their members, and trust and confidence from both their constituents (farmer members) and their market partners. It is a simple skill set that makes all the difference in the world for small coffee farmers.
Empowering Farmers Through Economic Education
Price Risk Management is not as exciting as building a health clinic, or sending children to school, but is an essential tool and skill needed to ensure that coffee cooperatives are equipped to handle fluctuation in the market so that they can, in time, invest in much needed community development initiatives. Fair Trade Certified producers benefit from higher prices and standards that lead to the improvement of their lives, but in addition to this, Fair Trade USA’s programs in Price Risk Management and other capacity building workshops create an environment where the true benefits of Fair Trade can be realized. A farmer from a Fair Trade cooperative benefits when the staff that he/she elected at the General Assembly has the tools and knowledge to guide their business with integrity, transparency, and foresight. Fair Trade USA’s Co-op Link program  is working to ensure that farmers and their cooperatives are empowered to understand the Stock Markets of London and New York and how these faraway places effect their lives. These simple concepts and tools learned in Colombia, Guatemala, and Mexico over the past few weeks translate to deeper knowledge of markets, how to negotiate their business relationships, and ultimately, ways to earn the best price possible for all of their hard work.
These workshops benefit not only the producers that attend them, but also their supply chain partners that rely on timely, effective delivery of their coffees.
Strong Communities, Bright Futures
Through programs such as these, Fair Trade USA seeks to strengthen small farmers and cooperatives with innovative programs designed to find solutions to some of the major pressing issues they face today. Co-op Link truly focuses on our core competencies of Certification, Quality Improvements, Productivity, Business Management, Market linkage, and Access to Capital, and to work in partnership with global leaders to build programs for farmers that include food security, community development like health and human services, and education. Our approach is to cast a wide net and to provide Fair Trade Certified producers with the most access to services as possible. Co-op Link is really designed to give farmers and their families the essential skills and resources to thrive in the market place, and to become true leaders in their communities across the globe.
Fair Trade USA and Co-op Link are actively listening to your feedback and we are building the programs that producers, cooperatives and industry have told us are most important to them.