The coffee industry

From Honduras over Vietnam to Kenya and Indonesia, some 125 million people worldwide depend on coffee for their livelihood. For a number of reasons, the global price of coffee is highly volatile. The coffee supply chain is a complex one. After leaving coffee farms, the beans pass through a succession of traders, processors, exporters, roasters and retailers. Most farmers have little knowledge of where their coffee ends up, or the price it sells for.

Current challenges

Though the coffee industry is a billion-dollar one, many farmers are paid less for their hard work than what it costs to grow and harvest their beans. The situation is unsustainable, and the future of coffee is under threat.

• Farmers aren’t earning enough to cover their costs. While others in the supply chain are also facing higher bills, many farmers don’t have the reserves to cope. There is often nowhere to cut costs, either. Many coffee farmers are living in poverty.
• The global price of coffee is highly volatile. Production depends on variables such as weather and diseases. Coffee is also a popular object of speculation on the stock market.This instability means farmers can struggle to predict their income and budget ahead for what their farms and families need.
• The beans a farmer grows are often exported early on. Being left out of the processing along the value chain means producing countries are missing out on the chance to earn valuable extra income.
• The climate change is an ever-increasing threat. Coffee farming is becoming harder as a changing climate brings extreme and unpredictable weather, more pests and faster-spreading diseases. Coffee leaf rust is one example.

How Fairtrade makes a difference

We all need to understand what coffee actually costs to be produced sustainably. Farmers need fair pay. There are 845,000 coffee farmers in the Fairtrade system, making up almost half of all Fairtrade farmers and workers.

• The Fairtrade Minimum Price is a safety net that offers coffee farmers stability in the unpredictable global market. This security protects them from sudden price drops, allows them to better plan financially and make investments that would increase their income for the future. Cooperatives can invest in value-adding equipment like roasting machines, or branch out into new areas such as agrotourism.
• The Fairtrade Premium. Farmers can invest the Premium, an extra sum of money paid on top of the selling price, in business or community projects they choose. A portion of Premium goes towards improving coffee production or quality. Organically grown coffee receives an additional price. 
• Fairtrade farmers are fighting the effects of climate change. That includes sharing ways of adapting and making their farms more resilient, such as spending Premium on drought and disease-resistant coffee variety seedlings.
• Stronger together. By getting together in small producer organisations, farmers can negotiate better terms of trade and reach more markets.

Fairtrade coffee is good for people, planet and business. Find out how your company can get involved.