October is Fair Trade Month!

Fidalgo Coffee supports fair trade certified programs. It’s part of our triple bottom line philosophy with the business.

What’s fair trade? The fair trade price is paid at origin by the importer to producers. Here’s a look at what happens behind the scenes with fair trade/organic coffee:  

The market is currently trading above the fair trade minimum for the first time in about five years. But let’s look at it from the fair trade minimum to get a picture of what it looks like for the producers:   

$1.40/lb fair trade minimum conventional

$0.20/lb social premium/community development

$0.30/lb organic premium  

$1.90/lb total pre-shipment

The Social Premium/Community Development Premium is $0.20/lb. It’s the same for conventional and organic, though Organic does result in an additional $0.30/lb onto the minimum price (acts as a differential).

The fair trade minimum price paid by our importer to the producer at country of origin is $1.90/lb or more if the C market is above the fair trade minimum. Add to that the country of origin/specialty differential, the importer fee, freight to US port and freight to our roastery and the cost easily reaches $4/lb to our back door.

Other fees behind the scene. The roaster pays a license fee to Fair Trade USA. Fidalgo Coffee’s current rate is $0.074/lb after the first 20,000 pounds (our first 20,000 lbs each year of FT green coffee is free of fee). The license fee is paid directly to Fair Trade USA, which is a non-profit org, to run operations in US. Fees pay for auditing supply chains (guarantees chain of custody), supporting efforts at origin (connecting producer organizations, sharing best practices, etc), consumer engagement (marketing and education), and overhead. In addition to licensing fees, Fair Trade USA is also supported by grants (which fund specific projects at origin), and individual contributions/donations. We’re cool with that.

What if the C goes above the fair trade floor price? If the C coffee price rises above the fair trade minimum price, say to $2.04/lb (like is today 10/20/21) then the importer would pay $2.04/lb, plus .30 organic, plus country of origin differential example .40, plus $.20/lb as Fairtrade Premium, for a total of $2.94/lb.

In either scenario, the buyer agrees to pay the fair trade premium, which helps producers pay for programs that benefit their producer community. Coffee is grown at elevation in rural, subtropical regions around the world. The fair trade social/community premium makes a difference. The social premium is paid by the importer. For Fidalgo Coffee this means that Royal Coffee Importers is the company who pays that premium to the producer. In some cases a roaster buys directly from a producer or works with the exporter at origin. But most of the coffee is traded using an Importer.

What is certified—the coffee or the roaster? It’s the coffee that is certified. Not the importer. Not the roaster. Fair Trade USA certifies the products, not organizations. Importers and roasters are eligible as Fair Trade USA partners to purchase, sell, and market Fair Trade products. Fidalgo Coffee is a licensee of fair trade certified coffees.

Fair trade is cool! It seeks to connect all levels of the supply chain to build a sustainable industry. Farmers adhere with strict social, environmental, and economic standards and in exchange receive more direct access to international markets, price assurances (minimum pricing), community development funds, and are connected with a system that values their investments and efforts. Businesses meanwhile have access to farmer groups who can provide high quality products and are able to communicate the impact of their efforts to consumers. Consumers finally are able through Fair Trade to express their preference for sustainable products through direct action and can trust the claims made by brands sourcing through Fair Trade.

Learn More: https://www.fairtradecertified.org/why-fair-trade