Looks like certified fair-trade coffee price of $1.26 or $1.41 for organic will stay where it is for at least another growing season. I can't seem to find out when that was set, but by all standards, including TransFair's, it's been a very long time.
The Latin American and Carribbean Coordinator on Fair Trade (better known as CLAC) submitted a report to FLO on how the minimum price that its certification guarantees isn't cutting it any longer. After thinking about it for several months, FLO's Standards Committee decided unanimously not to raise the price:
The Standards Committee based its decision on a lack of consensus among the different stakeholders as well as on the lack of key data of production costs and market impact for coffee. The Committee noticed the “wide variety of views among stakeholders about the need to increase the price, and the rationale, timing and wisdom of doing so”, and in particular the view held by many stakeholders that “the result of a rapid or large increase of the price would be to significantly reduce sales or limit growth, which would actually harm producers most.” The Standards Committee members identified the need to obtain more extensive cost and market data on coffee, currently not available.
Basically, they're saying this needs further study. Kind of the way the Bush administration says global warming needs further study. But, could someone else at FLO make them see the light? Probably not:
The Chair of FLO’s Board, Barbara Fiorito supports the decision taken: “The Board recognizes the essential importance of the process and decisions taken by the FLO Standards Committee. The producer’s request has been very seriously considered by the Board and the Standards Committee. I am encouraged that this request will be taken forward in an inclusive, robust and timely manner with the aim to reach as constructive a broad stakeholder consensus as possible.”
But, hey, it's all still about the producers:
FLO: a truly multi-stakeholder association
Unlike other certification systems, FLO guarantees the producers a Minimum Price for their produce, which takes into account the costs of sustainable production (COSP). Producers also receive the ‘Fairtrade Premium’, which is invested for the benefit of the producers, their organizations or their communities, and an extra payment for organic production.
When a group of stakeholders notify the need to review a Standard or the Fairtrade Minimum Prices and Premium, FLO Standards Unit studies the proposal and initiates a broad consultation process involving all Fairtrade Labelling stakeholders. FLO actively encourages all its stakeholders to take an active role in the development of Fairtrade Standards and Prices for the benefit of producers in the South.
Very strange.
Here I was pleased with myself because I broke this news before the other blogs I read (only a week after it happened!). But today I've discovered that this hasn't been announced anywhere. Not anywhere. I only knew about it because Justin from New Zealand sent me a link.
Can you imagine the hoopla there would have been if they'd decided to raise the price? But when they don't, it's swept under the carpet.
we published it
we published the announcement the day we found out and sent the information to all our stakeholders. see still the front page of www.fairtrade.com.au
we are not happy with the decision - we support the increase - but we also recognise that there is a multistakeholder governance system at work here. the views of all stakeholders were sought and taken in to account.
it is my hope that further research on asia and africa will also show that the COSP is higher than the FT minimum price and premium and that it needs to increase steadily over the next 5 years.
in ANZ, most of the beans are bought at higher prices than the FT minimum because of both supply-demand dynamics and the commitment of some of our traders to fair trade more generally.
Oh, cool
The reason I didn't find your site was that I was looking on Google News, which, I'm sure, doesn't spider your front page.
I agree that FLO does has a multi-stakeholder structure, but in practice, some stakeholders seem to be more equal than others. That is, the ones who are served by the status quo need only stall change to get what they want. And it appears they can stall it indefinitely.
At this point, my fear is that when they finally do raise the price by 5 or 10 cents, it will generate no end of media praise, when in fact, it's what they should have been doing steadily all along.
I'm glad to hear you buy coffee above the FLO price, because that price seems less meaningful all the time. Granted, the C-price is lower still, so it still holds some meaning -- just less than it used to.
When I was in Australia last spring (your fall), I kept an eye out for fair-trade coffee, and never did find any. I can't afford to go back any time soon, but when I can, where are the best places to look?
Minimum Prices
My two cents on the minimum prices debate (I made on similar post on GreenLAGirl's blog):
I also am quite disappointed about the decision not to raise minimum prices. However, I think it’s important to keep in mind that minimum price setting is a very, very, long, drawn-out consultative process that can take months. So, after last December’s promise for new prices, we shouldn’t really be surprised the people at FLO weren’t able to determine a new price this fast.
I interned at FLO last year and discussed the issue several times with Standards and Pricing staff… they actually send questionnaires to producers, call them to get answers, try to determine all living, production, environmental and social costs (aka cost of sustainable production). Then, once they have all this, they compare results to industry benchmarks etc. The larger the industry, the greater the number of countries involved, the longer the process… in the case of coffee, collecting representative production cost data for all coffee regions is an enormous undertaking.
I think though there will be a change this year - it’s just a matter of giving a little bit more time to the people there to do it right, instead of doing it haphazardly and setting a random price that we believe is “fairer” (as it was done before in the case of coffee)
I remember hearing from one of the Standards staff how they get insulted all the time by roasters, exporters and producers unhappy about out-of-date or inexistent minimum prices for products. Pricing and Standards staff are in a pretty tough position: they’re trying to get a credible price-setting process off the ground but at the same time they’re under tremendous pressure to set new prices, update old ones for dozens of different products etc. In the end, I think it’s basically an issue of being underfunded.
The fair trade labeling system is very much like the U.N. - if anything, FLO members (such as TransFair USA) should work towards increasing their funding of FLO activities in order to be faster at developing new prices and increasing producer support from there…
Anyway this is just my perspective - let me know what you think.
Thanks for the insider perspective!
I have no doubt that you're right about this being a long, involved process. On the other hand, it has been -- what, 12 years now? That seems like time enough. To give us some perspective, do you know how long it took to raise the price the time before?
Could you talk a bit more about how the price was set randomly?
In the bigger picture, this bureaucracy raises issues of its own. As you correctly note, there are a lot of factors to weigh, and they can vary widely from one country to the next. That makes it really hard to set a single price, and even calls its practicality in to question. What might be a great deal in one place might be a rip-off in another. Perhaps one size does not fit all.
Either way, all I know is what I was told in Nicaragua by growers and other coffee workers, and that is that $1.26 and $1.41 are not enough to lift people out of poverty, the way so much fair-trade paraphernalia talks about. The longer the FLO price remains the same, the more people will look for alternatives.
Minimum Prices pt 2
I think there are two issues we should consider when talking about minimum prices 1) how long it takes to set it right (which I covered in my last post) 2) why hasn't it been updated in 12 years
1) To add to my previous post, I remember hearing that it usually takes from 3-6 months to set a price. Sometimes there are also different prices in different countries - I suggest browsing the Standards section on the FLO website for more information on that. Basically we should expect probably a year between the moment the FLO Board decides to change the price and the moment the farmer is paid that new price. The process shouldn't be this long, but again, FLO is underfunded and people there are overworked...
2) The really interesting issue is why hasn't the price been changed during those years... until very recently (since Jan 1, 2007, FLO members now include producer networks), FLO was overwhelmingly dominated by labeling initiatives (i.e. Max Havelaar France, TransFair USA etc.). Some of these are more business-friendly than others (TransFair USA) while others are much more activist-like (i.e. TransFair Canada, TransFair Italy). There are currently some rumors within the movement suggesting that TransFair USA has been blocking price increases for a while (remember, TF USA has close ties with Starbucks and the like). TransFair USA has also been blocking the 2007 FLO budget - judging its plans for more staff unnecessary... so more and more labeling initiatives and producer groups are dissociating themselves from TransFair USA and some even think there might be major changes ahead in fair trade labeling.
I personally strongly believe in the FLO system - I just think some of its members (TransFair USA) are getting a little too friendly with business and forgetting why they are there in the first place. Anyway, we'll see what's going to happen... but I just hope people won't turn away from fair trade certification to other, watered down schemes (such as Rainforest Alliance or Utz Kapeh) - now I think that would be the worse case scenario for producers.
FYI
FYI: For FLO's justification, see the minutes of the Standards Committee meeting, available here:
http://www.fairtrade.net/fileadmin/user_upload/content/Approved_SC_minutes_Jan_2007.pdf
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