Andreas Kratz, Director Global Products, Programs & Policy and Director of standards & pricing at Fairtrade International, shares his relevant opinion essay on high coffee prices and the organization value for coffee farmers. Kratz explains the Fairtrade Minimum Price wich remains an important safety net for farmers. Especially in this current period, according to Kratz, prices are volatile and the Minimum Price acts as protection when prices fall again. Below we share his opinion.
High coffee prices and Fairtrade value
by Andreas Kratz
MILAN – “Coffee prices have been consistently high for an extended period and farmers across the world are feeling the market pressure more and more, but being part of the Fairtrade system where the focus is on farmers is more important than ever now.
Fairtrade recognises that not all farmers are benefiting from the high prices. In fact, low yields due to climate change may mean declining farmer revenues. In addition, prices for labour, inputs, and logistics are all increasing, and the new regulatory environment is causing huge cost and administrative burdens. So even with a higher price, farmers’ overall income often remains low.
This is why the Fairtrade package is important: it puts farmers at the centre enabling strong organisations and relationships across supply chains and always offering stable benefits, such as the Fairtrade Premium, Fairtrade Minimum Price, despite the turbulence in the market.
Strong cooperatives
Vladimir Vivanco, general manager of Fairtrade certified Central Cooperativas Agrarias Cafetaleras (COCLA) coffee cooperative in Peru, said his 22 base cooperative members, associated with 3,500 small scale producers, occupy a strategic seat at the table and negotiate fairer deals thanks to their organisational structure.
He said together they are working on advocacy work, joint investments, and most importantly in this period ensuring liquidity. When it comes to high coffee prices, farmers are tempted to sell to buyers who can pay immediately. That’s why financially stable cooperative, such as those certified by Fairtrade, are important because they secure bank loans with competitive interest rates and increase farmer access to wider markets. “It’s clear that together we are stronger, and we can make an impact,” he said.
In fact, Fairtrade cooperatives are more resilient and financially stable. A 2022 study by Mainlevel Consulting found that farmers who are members of strong Fairtrade cooperatives – ones that provide training, access to credit, have good relationships with traders, and stronger collective action – were more resilient and had higher net revenues, and in some cases higher incomes, compared to those who offered fewer services.
Plus, cooperatives are getting support from Fairtrade on the big issues, including upcoming regulations, such as the EU Deforestation Regulation and EU Organic Regulation. Assistance in implementing climate adaptation programmes, productivity investments, and sustained farmer support through Fairtrade’s producer networks, is helping cooperatives like COCLA to be future proof.
Fairtrade Premium
The Fairtrade Premium is what sets Fairtrade apart from other sustainability schemes. Paid on top of the negotiated price farmers receive for their produce, farmers decide collectively how to use the Premium to address their biggest needs – from building and improving processing facilities to introducing more climate change resilient varieties of crops.
Merling Preza, general manager of Promotora de Desarollo Cooperativa de las Segovias (PRODECOOP) coffee cooperative in Nicaragua, said the Premium has made a significant impact on quality of life of the cooperative’s farmers and their communities. PRODECOOP is made up of 38 base cooperatives and over 2,700 individual producers.
Preza, who is also the president of the Latin American and Caribbean Network of Fair Trade Small Producers and Workers (CLAC’s) coffee network, explained that even when Premium funds are used for investments in member farms often the communities’ benefit in the long run as well. For example, in the past members have funded sustainable agricultural projects, such as the use of organic fertilisers, and that means there is less environmental impact, and their communities are also healthier and safer.
In 2023, Fairtrade coffee producers earned about €82 million in Premium.
Fairtrade Minimum Price
The Fairtrade Minimum Price remains an important safety net for farmers. In this current period, prices are volatile and the Minimum Price acts as protection when prices fall again. This has often been the case in the past where the market rises and falls. For example, in coffee, the Minimum Price has been in effect half of the time in the last 13 years (2011-2024).
Fairtrade recently started its review of the coffee price, which occurs every two years to adjust to inflation and every four years with new cost data from producers. This review will be carried out in close consultation with coffee producers, buyers, and traders. Fairtrade plans to share its decision on the coffee price by March 2026.
The Fairtrade Minimum Price is also assisting farmers with climate resilient production. A recent study by KIT – Royal Tropical Institute, the Chain Collaborative, and Expressing Origin found that Fairtrade Minimum Price (and Premium) provide essential resources for cooperatives and farmers to invest in forest conservation measures and they were also used to support compliance with legislation such as the EU Deforestation Regulation.
Fairtrade’s value remains strong for its 775,000 coffee farmers. At the base of all its actions and initiatives are farmers and their needs, which makes Fairtrade as relevant as ever whether prices are low like when Fairtrade was founded about 30 years ago or are high like have been the past two years”.
Andreas Kratz
