The ethical movement to ensure living wages for coffee farmers took a step forward with the announcement that Fairtrade International has signed up two commercial partners in the United States that will use its new "Living Income Reference Price" in sourcing beans from Guatemala. The companies are roasting system maker Bellwether Coffee and its green coffee importing partner, Sustainable Harvest Coffee.
To accurately assess a price level that is truly sustainable for coffee growers and workers, Fairtrade worked with Guatemalan civil society partners and associations to collect economic data on living costs. This allowed them to establish a baseline price for beans: $3.40 per pound ($7.48 per kilogram), which is 13% higher even than other fair trade prices.
Announcement of the pledge by Bellwether and Sustainable Harvest offers evidence that the LIRP is commercially viable. If the LIRP gains further acceptance, it could help reduce the stranglehold of commodities markets on remuneration for growers. The internationally quoted "C-market price" has long been a nightmare for small producers, jumping to new highs one day, plummeting the next, causing what Jorge Cuevas, chief coffee officer at Sustainable Harvest, calls "chaos at origin."
Among the groups in Guatemala that worked with Fairtrade International on the Living Income Reference Price were the Smallholders and Workers for Fair Trade, or CLAC (La Coordinadora Latinoamericana y del Caribe de Pequeños Productores y Trabajadores de Comercio Justo) and the Association for Cooperation for Integrated Development of Huehuetenango, or ACODIHUE (La Asociación de Cooperación al Desarrollo Integral de Huehuetenango).
Bellwether Coffee, based in Berkeley, California, makes all-electric, no-emissions coffee roasting systems that handle small batches. Its bean sourcing partner, Sustainable Harvest Coffee, is B Corp-certified green coffee importer based in Portland, Oregon.
Fairtrade International, a non-profit association based in Bonn, Germany, is owner of the "FAIRTRADE Mark" certification label seen on 37,000 products worldwide. The group says that it represents some 1.8 million farmers and workers.
It’s not easy to raise retail prices at any time, and with inflation pulling down consumption worldwide, now is a particularly difficult moment. Part of Fairtrade International's strategy is to encourage retail consumers to keep fairness and sustainability in mind when they make a purchase.
Looking further ahead, living income pricing has the potential to strengthen every link in the value chain, including traders. Coffee is the world’s 7th most traded commodity, and markets have an interest in keeping output high. That will not happen if growers continue to leave farming.