The challenge of coffee prices
Coffee producers face major challenges. Coffee prices are one of them. The prices that producers receive for green coffee are often too low. As a result, some producers are not even able to cover their cultivation costs. In addition, the world market price for coffee is subject to strong price fluctuations. This causes great financial uncertainty. This threatens their livelihood and the future of coffee production.
Fairtrade as part of the solution &
Commitment to a living income
To tackle these challenges, we rely on Fairtrade. Fairtrade guarantees a minimum price for coffee, regardless of fluctuations in the world market price. In addition, Fairtrade-certified cooperatives receive a premium for the coffee they sell. Despite Fairtrade certification, some small producers still do not achieve a living income. That is unfair. And we want to change that. We are committed to paying prices that enable producers to earn a living income. Our coffee prices are based on the Living Income Reference Prices (LIRP) defined by Fairtrade. A living income covers the basic needs of a household and should guarantee a decent standard of living. It enables all household members to have a healthy diet, access to clean water, a secure housing situation, educational opportunities and healthcare. It also provides a margin for unforeseen events.
Transparency
And to guarantee that these are not just flat marketing promises, we practise genuine transparency and disclose our coffee prices. We share details such as purchase prices for green coffee (FOB prices), quantities, certifications and cooperatives from which we source. In doing so, we set industry standards and promote a culture of honesty and accountability.
What does the FOB price stand for?
The FOB price, ‘Free on Board’, is the amount paid to the exporter for green coffee at the port of origin. It includes the total costs from production to port loading. Although an important indicator, a high FOB price is no guarantee of fair trade. It only partially reflects what producers receive, the so-called ‘farm gate price’. This varies depending on the country and supply chain. In our countries of origin, on average 70-85% of the FOB price reaches the producers. We are working on obtaining and disclosing the farm gate prices in the future.
For the future
We want to sustainably improve the living conditions of coffee producers in our supply chains. By paying coffee prices that provide a living income, we are taking a big step towards this goal. And the consistent disclosure of the coffee prices we pay ensures transparency. In this way, we make the coffee market better in the long term and encourage other players to do the same. So that all coffee producers receive a fair wage for their work in the future.
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