Is Fair Trade Coffee Beneficial to Farmers?

Have you ever experienced being underpaid for your product or services rendered? You knew what the right or fair price should be but could not negotiate for a higher price for fear that the buyer would go somewhere else and you really needed the money. Well, a lot of people went through this type of manipulation one point or another in their lives. Thus the minimum wage law was born. Now, anyone who experienced this kind of injustice can report it to a Labor and Employment Department in their country.

Same with the coffee bean industry. In the late 1980’s, there was no price regulation set up yet. On average, farmers were only paid $0.60 per pound of raw coffee beans. They were spending way higher in growing coffee than what they end up selling it for. This resulted to most if not all small farmers to be on or below the poverty line. They were doing all the work but were not fairly compensated for it.

Since there was also no regulation on the supply, coffee flooded the market but the demand was not the high. There was just too much supply available in the market. As a result, the prices in the world market for coffee dropped significantly. Finally, in 1988 in Netherlands, the Fair Trade certification began.

Now you might ask, what is fair trade coffee? To put it simply, fair trade coffee is directly buying from farmers their prized coffee beans for a standard or minimum rate of $1.26 for every pound of raw coffee beans bought. In other words, by eliminating the middlemen (or coffee traders as they are sometimes called), the coffee farmers and buyers ultimately get more profit. Buyers purchase it as a cheaper price and farmer get paid higher for their product.

There are a lot of fair trade certified products worldwide, fair trade coffee being just one of them. Some advantages of fair trade are promoting a healthier working environment and better economic incentive for coffee growers or farmers. However, coffee producers that grow fair trade coffee are obliged to be a member of cooperative composed of other coffee farmers in the area. Not only do farmers enjoy a basic price for the coffee but they also get a premium for each pound if the market price is higher than the standard rate.

Equal exchange coffee as it is sometimes called also has other advantages being given credit they badly needed to sustain their farms and if the farmers wanted to switch to organic farming, they were given adequate technical assistance.

Lastly, it benefits farmers and buyers in regards to price and continuous supply of coffee raw beans. So every time a cup of fair trade coffee makes you feel good, remember that farmers who laboured in producing it are also smiling because of it.