Fair trade coffee has been in the spotlight in 2023 after Fairtrade International, based in Germany, announced in March that it would lift its coffee minimum price and organic differential starting August 1. In North America, however, Fair Trade USA said in July that it would hold its premium steady through the rest of 2023 pending further stakeholder consultation. The two certification groups are separate entities that operate independently.
This means that for now, importers, roasters, and retailers working with Fair Trade USA will continue to pay a minimum price of $1.40/lb. for washed arabica, $1.05/lb. for washed robusta, a social premium of $0.20/lb. and organic differential of $0.30/lb. Fair Trade USA, based in Oakland, California, is known for its "Fair Trade Certified" label.
The group declined to hike its rates following months of consultations with stakeholders. Most believe that an increase in price in the current inflationary environment would significantly lower demand and volume over the next 12–24 months, thereby reducing overall producer impact.
"While many producer leaders interviewed supported the price increase in principle, they also expressed concerns about the magnitude of the increase, the timeline for implementation, and the risk of reduced market demand," the group said in a news release. "Most producers only sell small percentages of their total production on Fair Trade terms, so their primary goal is to secure and increase demand."
The consultations involved surveys and interviews with over 500 roasters, importers, and retailers and nearly 400 producer organizations. Respondents represent over 84% of all Fair Trade Certified coffee sold in the U.S. market, which was 210 million lbs. in 2022. Among the survey respondents, 63% were producers and 37% were industry partners such as roasters, importers, and retailers.
Look for revised premiums next year, however. Reasoning that the fair trade model has been little modified its 35-year history, the U.S. group is undertaking a multi-stakeholder project called the Innovation for Impact Initiative, aimed at better meeting needs among all involved.
The initiative will be led by an advisory board chaired by Rüdiger Meyer, founder and former CEO of FLOCERT. Other members include Lindsey Bolger, former managing director of Keurig Trading; Carlos Vargas, general manager of CoopeTarrazú, the largest Fair Trade coffee cooperative in Costa Rica; and Guido Fernandez, executive vice president of the Colombian Coffee Federation.
“Through our recent listening tour, we heard clearly from stakeholders that to grow our impact for farmers, workers, companies, and consumers, we need to innovate and renew the Fair Trade coffee model. The time is now,” said Paul Rice, founder & CEO, Fair Trade USA.
Fair Trade USA was established in 1998 by Paul Rice after he spent 11 years in Nicaragua, where he ran the country’s first fair trade coffee cooperative. Over its 25-year history, Fair Trade USA has partnered with more than 1,700 companies across dozens of product categories. Over 65% of U.S. consumers now recognize its Fair Trade Certified label. The group says that over the years it has generated more than $1 billion in financial impact for farmers and workers worldwide.
Fairtrade International, whose certification label is known as the "Fairtrade Mark," has two affiliates in North America: Washington, D.C.-based Fairtrade America and Ottawa-based Fairtrade Canada.