In the past six months, I have gone from knowing absolutely nothing about specialty coffee to, now, visiting coffee farms and seeing what life is truly like for the majority of coffee farmers. Since my early days in college I have enjoyed two or three cups of coffee per day, but I never really knew much about the industry. I started drinking Farmers First Coffee one year ago and I have always known that "fair" trade is not all its cracked up to be, but in the past two weeks, I have seen proof.
Earlier that morning Robert and Rosa were sorting through receipts and paperwork detailing the payment she had received for her coffee in 2018. We added up the payments from the cooperative, the "fair" trade bonus, and the organic bonus. The numbers were astonishing: they were just too low. The price of coffee had indeed dropped even further compared to the previous year. A feeling of irritation overcame the room, but we were not surprised. So...with the bitter taste of "fair" trade still fresh on our minds, we began to calculate Rosa's Farmers First bonus from 2018.
The transparency scorecard above shows the market price that Rosa was paid by her cooperative, and the percentage that her income was increased through the Farmer's First bonus.
Something powerful about the Farmers First bonus is that the Farmer can choose to do whatever they want with the money. We are not a patriarchal group. The farmers that partner with us know exactly what they need. We are simply paying them what they deserve, a truly fair trade. We have an authentic mission to pay the farmers fairly. We put the farmers first.
Rosa and her family were very happy with their bonus and decided to purchase a small cake for Emerson's sixth birthday to celebrate. Once we arrived to Rosa's home, we shared a meal and began to sing "happy birthday" as Emerson's cake was brought into the room. He was ecstatic and began grabbing at the chocolate cake almost immediately. As the celebration continued, I felt extremely blessed to have shared this moment with Rosa and her family. I saw just how selfless the Llocla family was. Instead of getting something for herself, Rosa decided to purchase her six-year-old son a cake to give him a truly happy birthday.
Throughout my life, I have noticed that those with the least give the most. In the past six months, I have visited the first five partner-farmers and the same rings true. The farmers that we partner with are kindhearted, hardworking individuals that simply want to continue the family tradition of growing coffee. With coffee being the number one consumed drink in America, ask yourself a question: why not drink a cup of coffee that creates an authentic impact in the life of the farmer who grew that coffee?
]]>"It couldn't really go much lower, could it?" Emiliano asked me. "No, no—I don't think that's possible," I said. "If the price were to fall any further, it wouldn't make a lot of financial sense to pick coffee." Emiliano replied, "Yes...I suppose that's true."
Fast-forward to January 29th, 2019, and my teammate Zach and I were interviewing Emiliano inside of a coffee shop in Jaen, the dusty, coffee-focused frontier town where his cooperative is located. As I entered data Emiliano had provided us with into the spreadsheet in front of me, I began to shake my head as the reality became clear: the price that Emiliano had received for his coffee in 2018 had, in fact, fallen even further.
"This is terrible," I said to Emiliano. He nodded softly, silently, unsure of how to reply. After a moment, he spoke up: "Well...I suppose it can't fall any further, right?"
I wanted to tell Emiliano "yes." "Of course!" But, then again, I had just realized that the amount Emiliano had been paid, at market price, per pound of coffee, fell by 14%, from $1.08 per pound to $0.93 per pound. The word that kept coming to mind was "ridiculous." It was ridiculous that Emiliano was being subjected to market forces infinitely beyond his control. In front of me was an honest man who just wanted to receive a decent return for his hard work.
Of course, our bonus would help him immensely: Farmers First Coffee boosted his income in 2018 by 110% compared to only 56% in 2017, an enormous increase (see our transparency scorecard at the end of this post). We had also doubled the amount of coffee purchased from him, from around 2,280lbs. to 4,564lbs.
But, given our current 50% market price bonus sourcing model, the additional premium Emiliano received from us fell from 54 to 46 cents. So, even as I gave to Emiliano a significantly larger bonus than last year's payout, it felt bittersweet that he was receiving less per pound than last year: the work was all the same.
Also, for what it's worth, the "fair trade" bonus his cooperative pays out to its farmers was documented on Emiliano's receipts: 25 Peruvian soles per "quintal" (101.40 pounds of coffee). This equals $0.07 cents per pound—which I find to be an insultingly-low amount.
Here, in February of 2019, I reiterate in no uncertain terms: something is very wrong with the way the coffee industry treats small-scale farmers, even though they grow 80% of the world's coffee. This sobering reality check from our meeting that day reinforces my knowledge that our cause is noble and our work is critically-important for farmers like Emiliano.
[The price of coffee] can't fall any lower, can it?
]]>What does this have to do with coffee, you ask? Whatever your political beliefs may may be, the cold reality is that many of these people are coffee farmers, pickers and their families.
There are many reasons why coffee farmers are beginning to walk away in search of a better life for their families. At a current price of around $1 per pound, most coffee farmers are giving up on their harvest this year because there is simply no way to survive. Would you spend time harvesting a crop that would yield little to nothing for you and your family to live on?
Additionally, many coffee-producing countries suffer from extreme corruption and poverty. Social programs, public safety, and basic human needs are often neglected or unattainable. Simeon addressed these issues when he spoke with Bobby a few months ago. In one part of his interview he mentioned that his wife, Antonia, would have to travel over two hours to the hospital to deliver the baby they were expecting. This is very common in many Central American countries.
All of this may seem overwhelming, but it is important to share with you, our consumers, so you have a better idea of where our partner-farmers are coming from and why so many people choose to leave countries like Honduras every day. Farmers First is committed to telling the stories of these resilient coffee farmers and their families and will continue to do so with honesty and transparency. We hope you’ll grab a cup of coffee and stick around to chat.
References:
https://www.nytimes.com/2018/10/16/world/americas/trump-immigrant-caravan.html
https://sprudge.com/the-price-of-coffee-on-the-commodities-market-is-still-below-1-136589.html
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Most coffee farmers make just $2,000 a year. Think about how much you would be able to do – or not do – with that kind of salary. Fair trade claims to provide a “safety net” for coffee farmers by ensuring that they receive a set price per pound (no less than $1.40) regardless of the current market price. Unfortunately, in most cases fair trade practices fail the very farmers they are trying to protect.
In order to participate in a fair trade cooperative and receive the fair trade minimum, farmers must first make a significant investment to ensure their crop is up to par with minimum quality standards and have very little guarantee that their crop will be purchased for a few years until their coffee is "cupped" at a minimum score. This is something many of them simply do not have the time or money for.
Once selected to participate in a fair trade cooperative, farmers are often beholden to the minimum fair trade price, even if the market price is significantly higher. Any additional premiums are sent back to the cooperatives to be used as an investment in their communities and in the materials and facilities the cooperatives provide for the farmers.
At this point you’re probably thinking: But aren’t they using the additional premiums to help all the farmers? Won’t this, in turn, increase the quality of the coffee? Here’s why you should think twice:
Think about it. Would you be motivated to produce something of higher quality if you knew you’d be paid the same amount of money for a lower quality product? It’s human nature. People will only work as hard as you incentivize them to. Although the set price has good intentions, it does nothing to ensure the quality of the coffee the farmers are producing. Do you want to pay top dollar for coffee that doesn’t even taste good?
Some of the poorest coffee-producing countries are in Africa. Yet, African coffee only accounts for 10 percent of the fair trade coffee produced each year. Why, you ask? Because the poorest farmers do not have the money to invest in their farms to become fair trade certified. It’s a perpetual cycle of inopportunity and it’s an unfortunate side effect of fair trade practices.
A typically coffee farmer sells their beans to a local trader. That local trader, referred to as a coyote processes the coffee and then gives it to an exporter. The exporter then sells it to an importer and the coffee is then purchased from the importer by roasting companies. The coffee is then roasted and sold to retailers who then sell it to you, the consumer. Wait, how many steps was that? Let’s break it down.
Farmer
⇓
Local Trader
⇓
Exporter
⇓
Importer
⇓
Roasting Company
⇓
Retailer
⇓
Consumer
That means there are FIVE “middle men” between you and your coffee producer. You know what that means – profit for everyone. That's not always a bad thing because a farmer would often times not be able to export his coffee without the dry mill of an exporter, and likewise a coffee roaster doesn't have time to both roast coffee and then also operate a storefront. But the cold, hard reality is that the typical profit a farmer receives is around one to two percent of the retail price of a cup of coffee at your local cafe.
Here’s where direct trade comes in. Direct trade cuts off the fat. A typical supply chain for direct trade is Farmer ⇒ Roaster ⇒ Retailer ⇒ Consumer. Sometimes, the roaster can even be the retailer. Direct trade pays the farmers what their beans are worth – usually much more than the $1.40 minimum. Most importantly, because farmers are paid based on the quality of their coffee, they have more incentive to invest in their crop and make it taste better.
Wouldn’t you support something that provided a better quality of living for the farmer and a better quality product for you? I know I would.
Between content writing, whipping up yummy recipes, and playing the piano, Meaghan is a “Jill-of-all-trades." Digital marketer by day and coffee-lover every hour in between, her greatest passion lies in providing opportunities to those most in need. Charlotte, NC has been her home base for the past four years—a decision she will never regret.
Resources:
https://www.fairtrade.net/library/fairtrade-and-coffee-2012
https://www.huffpost.com/entry/10-reasons-fair-trade-coffee-doesnt-work_b_5651663
https://ssir.org/articles/entry/the_problem_with_fair_trade_coffee
https://www.fairtradeamerica.org/shop-fairtrade/fairtrade-products/coffee/
]]>Don't worry, though: in a new analysis of one of the country’s largest and longest-running studies, drinking coffee was linked to a lower risk of heart failure, stroke and coronary heart disease. Every extra cup of coffee consumed per day reduced each of these conditions by 8%, 7% and 5%, respectively, up to at least six cups per day.
]]>You might be surprised to learn, then, that the price Americans are paying for coffee is lower than ever. In fact, the average price in the U.S. for a cup of coffee in 1967 was more expensive than in 2017, despite this being 50 years prior!
According to data from a 2015 survey conducted by Mooseroots and Graphiq, the prices in recent years are indeed among the lowest over the past five decades: In 2017 Americans paid an average of $2.38 for a cup of brewed coffee, while in 1967 the price of a cup was $0.36. However, after adjusting for inflation, a 36-cent cup of coffee in today's terms actually costs $2.63.
No wonder, then, that coffee farmers are receiving less and less of their share of the price we pay per cup. In August of 2017, experts warned at the 6th Consultative Forum on Coffee Sector Finance that "coffee farmers face dangerously low profits," a state of affairs that could potentially cause millions of farmers worldwide to abandon coffee farming.
Coffee nowadays isn't expensive at all, translating into savings for the average consumer. The question of the hour in the coffee industry, though is, "at what cost?"
Sources:
http://policymatters.illinois.edu/coffee-farmers-face-dangerously-low-profits-experts-warn-at-6th-consultative-forum-on-coffee-sector-finance/
http://www.e-importz.com/coffee-statistics.php
https://www.usnews.com/news/blogs/data-mine/2015/09/29/americans-pay-an-average-270-for-coffee-while-tipping-20-percent
http://dailycoffeenews.com/2016/07/27/us-consumers-paying-less-for-coffee-now-than-they-have-over-the-past-50-years/
]]>With so many terms used in sourcing--and marketing--of coffee, how can the average consumer be expected to keep up with, much less understand, the difference between them all?
The reality is that there's no governing set of standards in use to define terms like "single origin" or "microlot," so they've unfortunately been abused by the marketing departments of coffee companies around the world. For instance, "Single Origin" can be used to mean coffee from one country (i.e. "Single Origin: Honduras"), or even from one particular farm. We can assume the usage of coffee lingo is meant to instill a sense of higher quality, which then assigns coffee a higher value and, subsequently, a higher sales price.
That should mean that coffee farmers receive more money from the final sale value of their coffee, then. Right?
Unfortunately, the truth is that most farmers rarely see any extra pay for their "single origin coffee." Even under most "fair trade" schemes, the majority of profits don't make it back to the farmer; bonus payments are usually retained by their respective cooperatives.
Enter direct trade. Under this format, coffee roasters purchase coffee directly from farmers in a "microlot," which can be defined as a varietal of coffee from a specific farm in a given year, usually 40 bags (giant burlap sacks) of green coffee or less. It's extremely expensive to transact coffee this way: there are, in theory, no middlemen that cut costs for those importing this coffee.
Due to those higher logistics costs, traditionally it was only feasible to import exceptionally-high quality coffees as microlots. Therefore, the overwhelming majority of direct trade coffee is very expensive. Farmers who sell their microlots directly to importers are an elite few, representing less than 1% of all coffee growers.
However, for other remainder of farmers with amazing coffee but a lack of capital to invest in their plantations, the prospect of selling in a direct-trade format is simply an impossibility. They're left to fend for themselves in an endless cycle of low prices, with no incentive to produce amazing quality coffee given that their coffee is purchased for nearly the same price irrespective of its quality.
At Farmers First Coffee Company, our farmers' coffees are not bad. Not one bit. In fact, they're excellent and have been graded as "specialty" coffee (an 80+ on the q-scale) in quality control.
But, they could be even better. Based on what we've already discussed above, normally our farmers would not be able to find a direct trade buyer.
That's why we've created the Social Microlot model in which we pay a 50% premium directly to coffee farmers for their hard work, an amount four times higher than the current "fair trade" bonus.
This extra capital allows the farmers we partner with to invest in their coffee plantations, meaning even better quality--and higher purchase prices--in future coffee harvests.
Farmest First Coffee Company's Social Microlot: the coffee that tastes great and boosts coffee farmers' incomes.
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