FLO decides not to raise fairtrade prices
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Not so good news from FLO (they dudes that set the price for fairtrade coffee and the social premium), they’ve decided not to increase the price despite pressure from farmers and consumers. Although they did:
recognize the urgent need for a robust review of Fairtrade Coffee Minimum Prices and acknowledged the value of the data submitted by the CLAC. In view of the diversity of Fairtrade coffee-producing regions and coffee-consuming markets, a team at FLO will now obtain and study cost of production data for all coffee regions (including the study provided by the CLAC), seeking further data where necessary, and obtain information to allow a proper assessment of the market impact of different pricing options.
It’s been over a decade since any change has been made on the price of fairtrade coffee, over that time growers have been forced to absorb the rises in costs of production, living and even the cost of fairtrade certification. The one reasons given seems to be about not letting prices rise to high and so kill demand - as one blogger put it: “They fear that the SBUXs of the world would be alienated and perhaps reduce their marginal commitment if asked to pay more for “fair trade” coffee”. Hopefully FLO comes to their senses and realises that corporate patronage isn’t that big a deal if the farmers are still only barely scraping by. Sure volume of demand is important, but not at the expense of the very reason fairtrade exists!
This just goes to show that fairtrade, fair trade and ethical consumption are not necessarily the same thing. It’s nice having the label to easily pick out the fairest option at the supermarket, but we can’t just “rest on our laurels”. I remember the keynote by Brett Inder at the Hooked Conference last year where he mentioned that fairtrade isn’t the end of it, we have to keep pushing FLO and FTAANZ to make things more equitable and fairer.
Also, the stagnant price of fairtrade coffee means that there may be room for ‘non-fairtrade’ products to actually become a better option for ethical consumers. Which is why it’s important to keep a dialogue with retailers/sellers/farmers about exactly what is happening in the supply line. Dilmah for instance has long trumpeted their superiority over the fairtrade model (see comments below as to why this isn’t quite true). You can’t just believe what the companies are saying, but it’s good to think outside the fairtrade system - no point in being stuck in a low priced rut.
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5 Comments, Comment or Ping
Vincent
Hello James,
I also think there are some worthwhile initiatives outside the Fairtrade system. Dilmah Tea though is a bad example - I don’t know if you heard the guy’s interview (was it on Radio New Zealand) in September, it was rather sketchy.
As for the minimum price debate, here are my two cents (I made the same post on GreenLAGirl’s blog):
I, too, am disappointed about the decision not to raise minimum prices. However, I think it’s important to keep in mind that minimum price setting is a very, very, long, drawn-out consultative process that can take months. So, after last December’s promise for new prices, we shouldn’t really be surprised the people at FLO weren’t able to determine a new price this fast.
I interned at FLO last year and discussed the issue several times with Standards and Pricing staff… they actually send questionnaires to producers, call them to get answers, try to determine all living, production, environmental and social costs (aka cost of sustainable production). Then, once they have all this, they compare results to industry benchmarks etc. The larger the industry, the greater the number of countries involved, the longer the process… in the case of coffee, collecting representative production cost data for all coffee regions is an enormous undertaking.
I think though there will be a change this year - it’s just a matter of giving a little bit more time to the people there to do it right, instead of doing it haphazardly and setting a random price that we believe is “fairer” (as it was done before in the case of coffee)
I remember hearing from one of the Standards staff how they get insulted all the time by roasters, exporters and producers unhappy about out-of-date or inexistent minimum prices for products. Pricin and Standards staff are in a pretty tough position: they’re trying to get a credible price-setting process off the ground but at the same time they’re under tremendous pressure to set new prices, update old ones for dozens of different products etc. In the end, I think it’s basically an issue of being underfunded. Therefore I think we should be careful before accusing too quickly Fairtrade of “selling out”.
The fair trade labeling system is very much like the U.N. - if anything, FLO members (such as TransFair USA) should work towards increasing their funding of FLO activities in order to be faster at developing new prices and increasing producer support from there…
Anyway this is just my perspective - let me know what you think.
Feb 4th, 2007
devonwhittle
Hey vincent, thanks for the comment. I wasn’t being serious about the “selling out” comment (I ended up changing it above). I understand it’s a long process involving lots of variables, but at the same time the price hasn’t changed in 10 years! I guess what you say is true - the more money FLO has the easier/quicker it will be to regulate the industry and keep prices in check, but at the same time consumers want to know that the maximum amount is getting to farmers too.
Do you have a link to the Dilmah interview? My mate emailed them and had some interested replies. They are pretty anti-fairtrade, but seem a bit better then the other big tea companies. Would love to know more though!
Feb 4th, 2007
Vincent
I actually looked for the link and I can’t find it. All I remember it was on Radio New Zealand, towards the end of September/ early October. There was a very interesting discussion and debate between someone from Oxfam and Mr. Fernando, the owner of Dilmah Tea.
Just to clarify my point of view, I don’t think Dilmah Tea people are evil - I just think they are trying to pose as Fair trade but clearly they are not: they don’t offer crop pre-financing, they don’t offer development premiums etc. They’re just another type of “Fair trade lite” (with the likes of Rainforest Alliance certification, Utz Kapeh etc.), trying to mislead consumers genuinely interested in fair trade into buying their products.
I’d be curious to read the emails if you still have them, send them my way.
About the reason why minimum prices for coffee haven’t been changed in 10 years, I just posted another comment on that on GreenLAGirl and Justthings:
I think there are two issues we should consider when talking about minimum prices 1) how long it takes to set it right (which I covered in my last post) 2) why hasn’t it been updated in years
1) To add to my previous post, I remember hearing that it usually takes from 3-6 months to set a price. Sometimes there are also different prices in different countries - I suggest browsing the Standards section on the FLO website for more information on that. Basically we should expect probably a year between the moment the FLO Board decides to change the price and the moment the farmer is paid that new price. The process shouldn’t be this long, but again, FLO is underfunded and people there are overworked…
2) The really interesting issue is why hasn’t the price been changed during those years… until very recently (since Jan 1, 2007, FLO members now include producer networks), FLO was overwhelmingly dominated by labeling initiatives (i.e. Max Havelaar France, TransFair USA etc.). Some of these are more business-friendly than others (TransFair USA) while others are much more activist-like (i.e. TransFair Canada, TransFair Italy). There are currently some rumors within the movement suggesting that TransFair USA has been blocking price increases for a while (remember, TF USA has close ties with Starbucks and the like). TransFair USA has also been blocking the 2007 FLO budget - judging its plans for more staff unnecessary… so more and more labeling initiatives and producer groups are dissociating themselves from TransFair USA and some even think there might be major changes ahead in fair trade labeling.
I personally strongly believe in the FLO system - I just think some of its members (TransFair USA) are getting a little too friendly with business and forgetting why they are there in the first place. Anyway, we’ll see what’s going to happen… but I just hope people won’t turn away from fair trade certification to other, watered down schemes (such as Rainforest Alliance or Utz Kapeh) - now I think that would be the worse case scenario for producers.
Feb 5th, 2007
devonwhittle
Thanks for the detailed reply. I’ll try to find that email and send it on to you. I guess things are really just beginning for FT globally, and I know that a lot of work has gone into developing coherency across the world. I think the main issue that people are concerned about is your second point, the coziness with business that could really taint the FT label, especially if this had negative impacts for farmers (eg. price). Hopefully FLO can keep things ‘cutting edge’, but I guess they are a bit beholden to the groups that provide the funds, which is a shame. Hopefully FT-buyers can remind TransFair and others about the whole point of everything.
Feb 5th, 2007
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