Amanda Archila, Executive Director of Fairtrade America gives details on the recent new minimum price increase during an interview with CGM’s Editor D. L. Gemeda
July 29 - 2023
Coffee Geography Magazine
D. L. Gemeda
Amanda Archila, Executive Director of Fairtrade America which is the U.S. chapter of Fairtrade International, the world’s most recognized label for social justice and fair prices explains the new minimum price increase by Fairtrade International effective August 1 - 2023 to Coffee Geography Magazine’ editor, D. L. Gemeda.
D .L. Gemeda: It is nice to have you at Coffee Geography Magazine answering few questions in regard to Fairtrade International’s global activities and its latest activities. Let me jump to the recent announcement by Fairtrade for the new minimum price increases by 19% for Robusta coffee and 29% for Arabica coffee. What triggers the price hike now?
Amanda Archila: Coffee farmers are facing skyrocketing production costs and crop loss due to the effects of climate change. Many have left their farms, and young people don’t see a future in coffee.
Fairtrade is strengthening protection against price volatility for coffee farmers and their families, amidst global economic instability, rising costs and the intensifying impacts of climate change.
Starting August 1, 2023, Fairtrade International’s new Coffee Minimum Price will go into effect with the aim of better meeting the current realities of coffee growing communities that have unfairly carried the burden of low and unsustainable coffee pricing.
This price was created through an extensive cost of production study and an inclusive consultation process with outreach to over 600 producer organizations and 745 commercial partners. Ultimately, 86% of the people who responded were farmers and the resounding message was clear - farmers need a higher price for their coffee. We are proud to stand with farmers by increasing our prices to adapt to their evolving needs.
D. L. Gemeda: How do you describe the Fairtrade achievements so far in coffee growing countries?
Amanda Archila: The idea of Fairtrade began with coffee from Mexico more than 30 years ago. and since then, Fairtrade International has grown to work with over 650 small producer organizations across Latin America, Africa, Asia and the Asia Pacific. That is nearly 900,000 coffee farmers in 31 countries. In 2021, Fairtrade farmers sold 222,328 MT of coffee on Fairtrade terms resulting in over $97M in Fairtrade Premium. The Premium is additional money on top of the Fairtrade Minimum Price that producers invest in their communities as they see fit - whether that is investing in their business, converting to organic farming practices or investing in solar panels - the key is that producers know what they need best and get to choose where funds are invested. Our achievements in coffee growing regions are tangible, impactful and inclusive.
D. L. Gemeda: Does such price expect some type of coffee inventory increase in the long term as traders usually try to control future global prices by hoarding more to increase their bargaining power?
Amanda Archila: In a highly volatile and reactive industry like coffee, I'm not going to speculate, but what I can say in terms of long term impact of the Coffee Minimum Price increase is that it is a long overdue change that will put critical resources into the hands of farmers who are in the most need..
By 2050, up to half of the global surface area currently used for coffee farming may no longer be suitable for cultivation due to climate change.
We are living through a critical inflection point where action is necessary from stakeholders across the supply chain to ensure that farmers have the resources they need to be able to adapt to the pressures of climate change, new due diligence legislation and the other factors that stand in the way of decent livelihoods and a truly sustainable industry. If the industry isn't investing in farmers, it's not investing in itself.
D. L. Gemeda: How do you describe Fairtrade America’s relationship in the U.S. comparing to your interest for better value to farmers in coffee growing regions?
Amanda Archila: Fairtrade America is the U.S. branch of Fairtrade International. This global network spans over 70 countries and includes over 2 million farmers and workers and 2,500+ businesses all working to create fairer terms of trade for and in collaboration with communities that are historically left out of the benefits of trade - farmers and farm workers. This co-ownership is baked into our structure where producers hold 50% of decision-making power at our core governing body, and are included in major decisions - like changes to the Fairtrade Standards and pricing. We work side-by-side with farming organizations to raise greater understanding within the coffee industry (and others) of the true costs of coffee and the positive impact that businesses and consumers can have with their purchasing choices.
Fairtrade America is dedicated to expanding the market for Fairtrade certified goods in the U.S. We hear from farmers regularly that their #1 ask of brands and shoppers is to just choose Fairtrade products. This makes sense as the supply of Fairtrade commodities currently outweighs the demand. That’s why Fairtrade America is actively working to increase awareness of Fairtrade, the social and environmental injustices that make it necessary, and the impact it has on farming communities.
By comparison, the Fairtrade Producer Networks like CLAC, Fairtrade Africa and NAPP are implementing critical programmatic support work to meet farmers where they are and support their unique needs. This varies from country to country and commodity to commodity, but in the case of coffee it can look like local agronomists and coffee experts supporting climate change adaptation measures, convening training opportunities for women and young farmers, or supporting Producer Organizations that are working to get certified.
The challenges that Fairtrade is trying to address are global in nature, and in turn require global mobilization to change them.
D. L. Gemeda: There are some coffee trade inconsistencies between different coffee growing countries. Just the other day, a Brazilian coffee farmer mentioned to me that coffee prices are so low, the neighboring Colombia buys theirs in partnership with buyers in the U.S. Is Fairtrade involved in trade tactics to protect vulnerable farmers from aggressive trade routing?
Amanda Archila: Coffee - even organic, specialty and Fairtrade certified - is unfortunately impacted by the highly volatile and unpredictable commodities pricing mechanism. That is why Fairtrade has instilled since its founding the guaranteed Minimum Price as a safety net and risk management tool for farmers.
But from country to country and region to region, there are many elements that impact both the true costs of production as well as the market value of a specific coffee.
When smallholder coffee farmers organize under well-managed cooperatives, as encouraged through the Fairtrade Standards, they are accessing technical support to improve productivity, lower costs of production and be part of the collective negotiation on price.
FLOCERT, the third-party certifier that audits against the Fairtrade Standards, provides oversight of both producer and trader participants to assure best practices according to the Fairtrade Coffee Standards.
D. L. Gemeda: What is your future plan to improve your branding for customers? How much are buyers in the U.S. concerned to farmers in Africa, South America and Asia?
Amanda Archila: As the U.S. branch of Fairtrade International, Fairtrade America works to accelerate market access for farmers in the U.S. market - a core part of this work includes increasing awareness among both consumers and businesses.
The exciting news is that awareness and trust in the Fairtrade Mark is on the rise. Results from the 2021 Fairtrade Consumer Insights report conducted by GlobeScan showed increased trust and favorable perception of Fairtrade certified brands and products, as well as increased recognition of the Fairtrade Mark:
● Fairtrade awareness among U.S. consumers grew by almost 50% between 2019 and 2021.
● The Fairtrade Mark has a very positive impact on brand perception among U.S. consumers – 80% of U.S. shoppers aware of Fairtrade would look at a brand that carried its certification label more favorably (versus 76% in 2019).
● Coffee remains the most recognized Fairtrade product, and U.S. shoppers are willing to pay up to 35% per pound more for Fairtrade coffee.
The COVID-19 pandemic served as a wake-up call to consumers about the need to make more ethical purchasing choices. According to independent GlobeScan public opinion research, consumers now expect companies to demonstrate fair wages, fair employee treatment, and environmental protection in sourcing and production. Since the pandemic, GlobeScan has seen significant increases in the public’s expectations of companies to act responsibly. In fact, more than half of respondents said they had changed their purchasing choices to make a difference on an economic, social, environmental, social, or political issue, indicating people increasingly see their everyday shopping as an important way to make a difference.
The Fairtrade Insights report found that nearly three-quarters of consumers who have seen the Fairtrade label when shopping feel it is more important than ever to support Fairtrade in building a better economy for all. Shoppers looking for ethical products are most concerned about child labor, deforestation and sustainable farming practices, and working conditions, all key impact areas for Fairtrade internationally.
In terms of future plans to improve our branding for U.S. customers, we continuously work to meet consumers where they are to educate them, build empathy and close the gap that exists between U.S shoppers and farming communities in other parts of the world.
In fact, to celebrate Fairtrade Month later in October, we will be launching our ‘We Are Fairtrade.’ campaign, a multi-channel marketing campaign that uses public art to tell the stories of three Fairtrade farmers at three retail locations across the country to help close that physical gap between farmer and shopper. Curious shoppers and brands can participate through in-person and online events (@FairtradeMarkUS.) (Click here to see previous work at ChooseFairtrade.org.)
D. L. Gemeda: Does Fairtrade’s action attribute to the Climate Change assuming farmers do better to the environment if they get better for their coffee?
Amanda Archila: Pricing and fairer terms of trade are a critical foundation for coffee farmer resilience writ large. Without the stability of fair pricing along with long-term contracts, coffee farmers’ livelihoods are at the whim of a volatile market.
According to available data, smallholder farmers grow 60 percent of the world’s coffee yet nearly half of those smallholder farmers are living in poverty; nearly a quarter of them live in extreme poverty. On top of that, they are directly experiencing the impacts of climate change, which could affect not only their next harvest but also their ability to make a living off of farming.
In a decade-long study, conducted by Mainlevel consulting, it was found that farmers who are part of Fairtrade certified Producer Organizations experience better economic resilience, social wellbeing, environmental sustainability and governance of their cooperatives than farmers not in Fairtrade certified organizations, particularly in times of global crisis.
○ That study showed that Fairtrade’s foundational price mechanism - the Minimum Price and Premium - represent a crucial safety net for farmers, their cooperatives, and eventually their communities.
○ In one specific instance, coffee farmer members of the Fairtrade certified La Florida cooperative in Peru reported earning incomes 50 percent higher than those of non-Fairtrade farmers.
Beyond pricing, Fairtrade has local support networks that collaborate directly with farmers in implementing programing like the Tree Challenge that resulted in the planting of over 300,000 trees across Latin America and the Caribbean alone and the Fairtrade Climate Academy that has already had a tangible impact on the climate resilience of farmers and their businesses both in terms of income diversification and in the sustainability of their farms.
D. L. Gemeda: And lastly, how do you like your coffee and what’s your favorite brand?
Amanda Archila: I like a simple drip coffee with a dash of milk and the sweetness of a fairer deal for farmers and farm workers. I admire all of the brands that have stepped up to source Fairtrade. You can find a full list of brands at FairtradeAmerica.org.
D. L. Gemeda: Thank you for your time