What exactly is fair trade coffee? Basically, it is coffee which has been certified by an independent organization as having been produced by little farmers in developing countries. To gain this certification, these farmers need to meet certain conditions of production, human rights and community development. After certification, this coffee comes at not less than the minimum selling price set through the certifying organization (Fair Trade Labeling Organization (FLO) determines these prices).
The challenge for modest farmers is the fact that coffee price ranges can certainly vary greatly. In the past, coffee selling prices have increased dramatically when coffee output was restricted and demand from customers was great, and also have dropped when coffee production surpassed demand from customers. Most of these small businesses are not able to reduce their expenses or ride out some minor deficits when the price goes down. The minimum prices established by FLO are usually not set in accordance with market conditions, but are established instead in accordance with the typical cost to growers for producing coffee. Recognizing that their expenditures will be covered, growers benefit from the safety net they must have to carry on and harvest coffee year after year.
But fair trade certification does not stop there. In addition to setting a baseline price tag for coffee, it also creates a price premium. The money earned by this premium does not go straight to the farmer for his coffee, but instead it goes towards a community fund, and is used in what ever way the coffee growers and /or the coffee laborers democratically decide on it. This money must be used to improve their financial, environmental and social conditions. With these funds, farming areas can put money into education, healthcare and satisfactory housing.
So what is fair trade coffee? It is the opportunity for little family owned or operated farms and farming neighborhoods to emerge from poverty. It can also be the guarantee for individual workers that their working environments will be safe and that they are going to be compensated a fair wage for the job that they do.
It is also a chance for you to help improve a market place that treats the “little guy” with fairness. This coffee may cost you a little extra, but now you know why. Buyer help is important to the success of the fair trade concept. With no buyer assistance, it scarcely makes a difference what price is set because growers will receive no income at all if the coffee is not purchased.
The idea of selling fair trade coffee was created in 1987 as a result of a survey that indicated that buyers would acquire the higher priced coffee. Two Dutchmen, searching for a big-brand partner to establish a fair trade coffee brand name, were frustrated by the lack of desire from the coffee big boys. So they decided to launch their very own brand name — relying upon market research that suggested that approximately 15% of the Dutch coffee drinking public would support small farmers by buying their coffee. The brand name was introduced and was tremendously successful. From that point to this, fair trade coffee has experienced a small but growing reputation in the world-wide coffee industry.