Navigating the Future of Coffee Prices: Fair Trade USA Redefines its Strategy
Fair Trade USA has recently announced its decision to hold minimum prices and price premiums for all green coffee bearing its Fair Trade Certified seal until the end of 2023. This declaration comes at a time when Fairtrade International (FLO), another certification body, is planning to raise its prices from August 1st onwards.
Amid these shifts, Fair Trade USA is also launching an initiative called "Innovation for Impact". This scheme aims to reform the Fair Trade Certified program, focusing on aspects like scalability of volume, producer impact, and specific sustainability-related challenges like climate change.
Paul Rice, the Founder and CEO of Fair Trade USA, shared, "Our focus in the future is going to be much more holistically on the wellbeing of the producers and the value to the industry."
The two organizations, Fair Trade USA and Fairtrade International, operate independently but have often shared pricing structures. However, this current decision presents a divergence in their strategies. This shift by Fair Trade USA arrives after Fairtrade International's declaration of raising minimum prices for arabica and robusta coffees, in response to economic and climate-related pressures faced by coffee farmers worldwide.
The increase in Fairtrade International's prices won't be mirrored by Fair Trade USA. Explaining the potential benefit to producers of this decision, Rice stressed that increasing prices too much might lower demand, thus negatively impacting farmer income, a perspective backed by the majority of the industry stakeholders consulted by the organization.
Historically part of Fairtrade International, Fair Trade USA separated in 2011 under Rice's leadership, adhering to the same price model but amending certification requirements to include larger plantation farms. This recent decision could garner mixed responses, but Rice emphasized that price is only a piece of the fair trade model.
He shared, "In the future, what you will see Fair Trade USA doing is implementing a much more holistic model for producer impact and for industry impact."
Last year, Fair Trade USA certified approximately 210 million pounds of coffee, constituting 6% of all green coffee imported in the U.S. They aim to enhance the model to increase this market share, thereby benefiting a larger number of people.
The recently launched "Innovation for Impact" initiative is the outcome of a thorough outreach that incorporated feedback from over 500 U.S. roasters, importers, and retailers, and more than 400 producer organizations. Over two-thirds of these respondents suggested not to raise price minimums due to concerns of a significant decrease in demand and volume, leading to reduced overall producer impact.
Fair Trade USA is currently setting up an advisory board to steer this initiative, with board members including notable industry leaders. This board will address producer-related issues like climate resilience and adaptation, gender equity, youth engagement, and regenerative agriculture.
Rice sees both Fair Trade USA and Fairtrade International certifications as potentially viable components of a diversified marketing strategy. Fair Trade USA plans to publish a report detailing its initial findings and looks forward to announcing the "next chapter of fair trade" later this fall.