What is Fairtrade?
Fairtrade is an alternate commercial trading system, independently audited, which embraces community action within a democratic Cooperative structure to ensure a higher than market price for the coffee to each farmer, and elevates the living standards for whole communities through the receipt of payment of a Fairtrade Premium direct to the Cooperative.
Fairtrade empowers all who participate and gives rights to some of the poorest producers. Choosing Fairtrade products helps to build roads and schools, teach children, buy medical supplies and change lives and aspirations of whole communities.
Millions of hardworking farmers and workers in developing countries are trapped in poverty, because the volatile price paid for their crops is often less than the cost of production. This uncertainty of pricing through the New York Coffee Commodity Exchange pricing structure, does not allow for these growers to plan any budgets and assumes no certainty of forward pricing standards, unlike any standards within the economies of the consuming countries. In coffee production, there is no subsidising components to uphold prices for farmers, unlike the unequal practices of Governments of major consuming economies. There is no equity in the trading practices.
To support their families, coffee growers are often forced to abandon their crops to search for other work or adopt environmentally unsustainable farming practices, such as using pesticides or clearing rainforests to plant other cash crops, such as chat.
The Fairtrade Solution
Fairtrade requires a fair price to be paid to the grower. This improves living conditions for producers and their communities. In addition, a price premium goes to the grower Cooperative to fund much needed community projects, such as building schools, roads and health clinics and training new skills in agronomy.
Fairtrade Standards also include, fair labour conditions for all workers, reducing child labour, elevating and maintaining bio diversity in their agricultural practices. Regular third party auditing is required throughout the Fairtrade supply chain, including Jasper Coffee, who must submit regular reports and pay levy fees.
Improving Quality & the Environment
With better income, Fairtrade enables producers to improve the quality of their product so that we, the consumer, can enjoy these unique flavours in the cup. Fairtrade is re humanising the coffee supply chain….
How does Fairtrade work?
1. Cooperative = more bargaining power
Farmers organize themselves into a Cooperative, elect a leadership team and adhere to rules set by Fairtrade Labelling Organisation (FLO) to gain and maintain their Fairtrade certification. The Coop then owns the whole volume of beans to then sell through the Export arm of the Coop, or through a third party Licenced Exporter, to gain a premium price for the Coop members.
2. Shorter supply chains = greater share of the pie
The Cooperative sells directly to an exporter rather than farmers selling on their own to a middleman. These middlemen are often called ‘coyotes’ in Latin America countries, because they take advantage of farmers by offering very low prices when they have to sell their coffee. The Cooperative will also pool their resources together to buy harvesting equipment, or like the Yirgacheffe Hama Cooperative, a truck to transport their own coffee. This way they avoid exorbitant costs, leaving more income to spend on food, health and education.
3. A guaranteed higher price = stability to invest & income to break the poverty cycle
Cooperatives sell to exporters at the Fairtrade price plus a Premium for Organic Certified coffee. In addition, the Cooperative may negotiate a further premium for the quality or region of its product. The Fairtrade price will push for a higher than market price, but provides a safety net if the market price plummets below the fairtrade price.
Most importantly the higher price provides stability for farmers to invest in their crop and further improve their quality product and therefore income. Imagine if you didn’t know what your salary would be next week – it would make taking a mortgage out to buy a house very difficult!
4. Environment standards = sustainable approach to the environment
Fairtrade standards ban the use of certain chemicals and pesticides, and a price premium is paid for Organic Certified coffee. Using shade grown agronomy and organic agriculture reduces carbon in the form of humus composts and promotes biodiversity of critically important equatorial rainforests. It also generally leads to improved quality and therefore higher prices. With more income, farmers will further invest in their crops and protect the natural environment that grows the quality coffee bean. We witness this every time we visit our Coops.
Now that’s worth drinking to!
As a Wholesaler, Jasper Coffee must provide quarterly sales reports to FTAANZ, and pay a levy. This levy is used to support the Fairtrade certification system throughout Australia/New Zealand, and carry out audits and checks. In fact the cooperative, exporter, importer and roaster must all be licensed by FLO or FTAANZ and submit reports. All Fairtrade coffees are Traceable in this way…unlike the suspect Fairly traded or Direct Traded derivatives.