Update on FLO Coffee Efforts

Image by Linus Hallgren

23 February 2011

 

 

Since the coffee market began its steady climb around May 2010, it has reached a 14-year high of USD2.75 as of 21 February. While these prices can help farmers, a high market is deceptive.

According to the Fairtrade Standards, the reference price for Fairtrade certified coffee is the ICE Coffee 'C' Futures contract for Arabica coffee. When the ‘C’ price is above the established Fairtrade Minimum Price, traders must pay the market price or the price negotiated at contract signing.

Many of the organizations representing small scale farmers signed contracts earlier in the year to qualify for the pre-financing. In the ensuing time, the prices for coffee have risen, harvests have been smaller than expected, there has been intense competition on the ground for high quality coffee, and a small number of cooperatives are having a difficult time fulfilling contracts. The high prices also affect traders and roasters.

This market is an opportunity that is pushing Fairtrade to learn how to strengthen, deepen and broaden the Fairtrade impact for the farmers, traders, roasters and consumers who make up the Fairtrade system.

In November, FLO announced the Fairtrade Coffee Actions, concrete actions to address the challenges in coffee.

Since the actions were announced, we have made a number of advances:

  • A mediation process was set up that will be distributed to stakeholders shortly and will include a best practices component for handling defaults.
  • A review of the coffee standard and minimum price, which was scheduled to finish at the end of 2011, has been stepped up and any changes to minimum prices, premiums and trade standards will be announced in mid-March and go into effect on April 1.
  • A surplus in our Producer Certification Fund from 2010 was used to offer financial assistance to any coffee producers with open invoices in 2010. This fund is still available for coffee producers who qualify.
  • A Product Advisory Council (PAC) meeting was held on 13 January. The PAC is a gathering of select individuals from all levels of the coffee chain, including cooperative representatives, traders, roasters and others. PAC meetings help staff at FLO gather market and product intelligence that informs strategy and projects such as standards improvements.
  • FLO is also supporting the participation of Fairtrade Africa at the EAFCA and working to bring coffee buyers to their round table event. FLO and Fair Trade USA will partner on a producer forum with workshops for producers and traders at the Specialty Coffee Association of America’s Expo in April. FLO is also looking to utilize the Specialty Coffee Association of Europe’s event to engage with European traders.
  • FLO is working to improve access to financial resources for certified producers.
  • Fairtrade producers are enrolling in risk management training and FLO is funding workshops and trainings around the world.

FLO is working closely with farmers and industry to solve this problem over the short, medium and long term.

 
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