A message of this research is that, in the absence of strategies and policies targeting the demand for Fair Trade coffee and the price received by coffee growers, the regime will keep falling short in achieving its noble objectives.
The Dutch responded by introducing fair trade certification in 1988. A Dutch organization called Max Havelaar created a label for products that met the appropriate conditions for coffee farmers. The International Coffee Agreement remains in place, with new versions ratified in 1992, 2001, and 2007.
Currently, coffee packers pay a fee to Fairtrade, who assigns the right to use the Fairtrade logo for coffee packers whose farmers and cooperatives meet Fairtrade criteria for growing and delivering coffee. Coffee retailers are free to sell Fairtrade coffee at a higher price.
These welfare losses to growers of conventional and Fair Trade coffee can be mitigated by having the cooperatives market the entire Fair Trade coffee quantity and offer their members an average price from the sale of Fair Trade coffee to different (Fair Trade and conventional) coffee markets.
The Effects of Fair Trade on Coffee Growers. Two and a half billion cups of coffee are consumed in the world annually making coffee the second-most-traded commodity after oil and the caffeine contained in it the most widely consum ed psychoactive drug. Coffee is produced in more than 60 countries and provides a livelihood for some 25 million ...
Coffee consumption has been increasing over the past 50 years, but this increase has, for the most part, not been accompanied by increases in raw coffee prices and improvements of coffee growers’ lives. After the International Coffee Association (ICA) dissolved in 1989, coffee production increased substantially ...
Despite their noble objectives, Fair Trade movements have had limited success in improving coffee growers’ welfare – while some coffee growers did benefit from the increased prices of Fair Trade coffee, others have suffered losses and some have even been driven out of coffee production. A study completed in the UNL Department ...
In such a case, when coffee growers are responsible for marketing their excess Fair Trade coffee production, these producers lose as they have to sell their Fair Trade coffee at conventional coffee prices. In addition to making some Fair Trade coffee growers worse off, the marketing of Fair Trade coffee as conventional can reduce conventional ...
And many of these changes are directly related to the Fair Trade Coffee Movement. It all started in 1962, when the International Coffee Agreement (ICA) was drafted at the United Nations by the Coffee Study Group. This agreement enabled the International Coffee Organization to regulate coffee products. It also set careful limits on how much coffee ...
The agreement was renegotiated in 1976 due to increasing coffee prices, which were largely a result of a severe frost in Brazil. The new agreement allowed for the suspension of price quotas if the supply of coffee could not meet the demand, and enabling them if prices dropped too low.
Over time, four organizations were borne out of fair trade certification. Transfair in Germany, the Fairtrade Foundation, TransFair USA, and Rattvisemarkt. They joined together to form Fairtrade Labeling Organizations International, which sets Fairtrade standards for coffee growing and packing to this day.
Things broke down in 1988 when the global supply of coffee vastly exceeded demand, at a time when the International Coffee Agreement had failed to implement new price quotas. The Dutch responded by introducing fair trade certification in 1988.
Currently, coffee packers pay a fee to Fairtrade, who assigns the right to use the Fairtrade logo for coffee packers whose farmers and cooperatives meet Fairtrade criteria for growing and delivering coffee. Coffee retailers are free to sell Fairtrade coffee at a higher price.
In the 1960s , the fair trade movement began to take shape, along with the criticism that industrialized countries and multinational corporations were using their power for further enrichment to the detriment of poorer counties and producers, particularly of agricultural products like coffee.
As the name implies, Fair Trade has sought not only to protect farmers but also to correct the legacy of the colonial mercantilist system and the kind of crony capitalism where large businesses obtain special privileges from local governments , preventing small businesses from competing and flourishing.
Rice sees cooperatives as the key to the empowerment of the independent coffee farmer, providing a union-like type of collective bargaining power that enables cooperative leaders to negotiate pricing for the individual members. Membership in a cooperative is a requirement of Fair Trade regulations.
Because specialty coffees are of a higher grade, they command higher prices. Fair Trade coffee can come in any quality grade, but the coffee is considered part of the specialty coffee market because of its special production requirements and pricing structure.
Specialty coffee, on the other hand, is sold because of its distinctive flavor characteristics. Because specialty coffees are of a higher grade, they command higher prices.
The idea of fair trade has been around since people first started exchanging goods with one another. The history of trade has shown, however, that exchange has not always been fair. The mercantile system that dominated Western Europe from the 16th to the late 18th century was a nationalistic system intended to enrich the state. Businesses, such as the Dutch East India Company, operating for the benefit of the mother country in “the colonies,” were afforded monopoly privileges and protected from local competition by tariffs. Under these circumstances, trade was anything but fair. Local workers often were compelled through force—slavery or indentured servitude—to work long hours under terrible conditions. In the 1940s and 1950s, nongovernmental and religious organizations, such as Ten Thousand Villages and SERRV International, attempted to create supply chains that were fair to producers, mostly creators of handicrafts. In the 1960s, the fair trade movement began to take shape, along with the criticism that industrialized countries and multinational corporations were using their power for further enrichment to the detriment of poorer counties and producers, particularly of agricultural products like coffee.
Because the US government was concerned about the spread of communism in Latin America, it supported the cartel by enforcing import restrictions. In 1989, however, with the fall of the Berlin Wall and the waning of communist influence, the United States lost interest in supporting the agreement and withdrew.