Driven by the 2018/19 coffee price crisis and decades of price volatility negatively affecting farmers, Fairtrade International has launched the first reference prices for living income for Colombian coffee.
The Living Income Reference Rates of international nonprofit organizations referred to as LIRP were created to accurately reflect the prices that would be required of Colombian coffee farmers to maintain a decent standard with essentials such as housing, nutritious food, education and health care services, as well as on-farm investments.
until Minimum Fairtrade International prices and premiums remain mandatory for Fairtrade certification, new Colombian price reference prices are voluntary. The group said it will work with coffee companies to include price references in their purchasing operations.
LIRPs follow two years of stakeholder research in the Colombian sector in response to Price crisis 2018/19, in which consistently low coffee prices in future international markets threatened the sustainability of coffee farming for millions of small-scale coffee farmers.
Global prices have since returned to above-average levels, although the global coffee market remains characterized by commodity-driven purchasing systems that have historically been used by coffee farmers, who typically bear the highest price risk in a volatile market.
For LIRPs, about 300 Colombian coffee farmers from Fairtrade-certified producer organizations spent a year recording farm expenses and income. These data helped determine an initial revenue base, which was then followed by a six-month consultation process with a range of stakeholders in the Colombian coffee sector, according to Fairtrade International.
Variables such as farm size and consistent yield estimates were created to help calculate living income prices based on production realities.
Revenue income is a human right and a prerequisite for achieving many Sustainable Development Goals (SDGs), said Carla Veldhuyzen van Zanten, Fairtrade Internationals Senior Advisor for Sustainable Living, said in a launch announcement of LIRP today. If growing coffee does not make business sense for farmers, the world will soon run out of coffee, as the younger generation is no longer interested in staying on the farm. An award that supports farmers’ prosperity and covers the costs of sustainable farming practices should be part of the solution.
Fairtrade says it has developed a range of reference prices for living income within Colombia, based on different living income standards. Nationwide, the recommended Fairtrade LIRP for Colombian Arab “conventional” coffee is 9,900 Colombian pesos (at the time of Fairtrade’s announcement, equivalent to approximately US $ 2.75) per kilogram of dry parchment coffee and 11,000 pesos ($ 3.06) per kilogram per organic coffee
Those price points, which translate to approximately $ 1.24 per pound (conventional) and $ 1.38 (organic), refer to the “farm gate” price, i.e., the freely paid price paid to coffee farmers compared to the most high of FOB.
Fairtrade LIRPs are part of a livelihood search wave that has emerged in recent years, as producer organizations, NGOs and more conscientious shoppers within the coffee sector have publicly denounced commodity-driven prices. Earlier this year, IDH released an innovative report on considerations and modeling of living income in the coffee sector.
Colombia, the world’s second-largest producer of Arabica with a well-defined coffee infrastructure, has provided a particularly fertile ground for livelihood-related research.
Earlier this summer, Heifer International, Bellwether Coffee and green coffee dealer Sustainable Harvest launched a “Living Verified Income” model, with the initial pilot taking place among coffee growers in Tolima, Colombia.
This research revealed that farmers would have to get a price of $ 1.89 per pound at the farm gate to keep living income full 65 cents higher than the figure reached by Fairtrade. A link to Fairtrade’s methodology may be found here.
In the Fairtrade announcement today, Veldhuyzen van Zanten said, The coffee market is complex and we certainly do not have all the answers, but we are excited to have started discussions with brands that are willing to commit to moving forward with projects. living income and prices, as well as tracking progress and sharing lessons.
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