Fair Trade Coffee
Fair Trade promotes socially and environmentally sustainable
techniques and long-term relationships between producers, traders and
The world coffee industry is in crisis. A flood of cheap,
lower-quality coffee beans have pushed world market prices down to a
30-year low. Many now earn less for their crop than it cost them to
grow. Many coffee farmers around the world receive market payments
that are lower than the costs of production, forcing them into a cycle
of poverty and debtWithout urgent action, 25 million coffee growers'
The knock-on effects for national economies are just as catastrophic.
30 years ago, LEDCs received around 30% of the total value of
international coffee sales. Today, this has slumped to just 10%. As
export earnings from coffee shrink, national economies fail and the
first casualties are government education and health budgets.
chart of profit distribution
Coffee is a multi-million dollar industry, but the profits don't go to
the people who actually work so hard to grow the coffee beans, and
carry all the risks of failing crops or falling prices. Most of the
profits go to the shippers, roasters and retailers
chart: coffee producing areas Coffee grows only in the tropics. Mostly
small farmers grow it as a cash crop, a crop that they can sell to try
to make a living.
These farmers are poor, and they do not have any reserves of money to
support them when their crops fail or when coffee prices are low. The
small farmers have to sell their coffee beans when they are ready to
be harvested, and take whatever price the coffee buyers offer.
The governments of many coffee-growing countries have very large
external debts. Therefore the governments need to export in order to
get the hard currency with which to repay the debts.
The coffee-growing countries are forced into competition with each
other, each trying to get a bigger share of the market. This means
that they all produce more and more coffee. As a result, there is too
much coffee on the world market and the price falls, so each country
has to try to sell more coffee to make the same amount of money
chart: coffee consuming countries
Most of the world's coffee is bought by just a few countries, and most
of the world's coffer market is controlled by a very few companies.
Just nine countries in the North import over 70% of the coffee on the
graph: yearly price fluctuautionsThe weather can destroy coffee crops.
The chart shows how world coffee prices suddenly rose as a result of
serious damage to the Brazilian coffee crops (20% of the world's
coffee) in 1975 (frost), 1984 (drought), and 1994 (frost).
When prices are high, small farmers often plant more coffee bushes, in
the hope of making a little more money. However,...