Sebastian Xol and Lucinda Morales at Aldea Las Barrancas, in San Juan Ostuncalco, Quetzaltenango

We Have Set a Fair Trade Market Out of the Stock

San José, April 14th (CSF)- Since 2014 the price of coffee has dropped; however, in  2004, it has had a low cost. On April, the price was 0,90 USD dollars per pound.

Even though the crisis, it is important to remark that the coffee industry is still growing. It makes around 250 000 000 USD dollars annually to the corporations that manage the market. Although increasing costs of production, absence of capital for plantations, better technology, and productivity, increasing temperature, strong precipitations, droughts, and plagues; producers are only receiving 6 and 10% of the earnings. Without mentioning the pressure that exists towards natural resources and the lack of rural workers.

This reality has “turned on” the red light in between producers and countries of a possible humanitarian crisis. But, what caused the fall of the Stocking price? It seems that an overproduction of coffee in Vietnam and Brazil, (first and second coffee producers of the world), and a number of corporations in Switzerland  have been controlling the worldwide market with around 74% lower prices than the ones fixed on the International Coffee Agreement of 1983, that set a Price of 1.20 USD dollars per pound.

The crisis is not affecting everybody

25 million families of producers maintain the industry, but it is important to remark that the crisis does not affect all the parties involved. Currently, it has not affected the cooperatives from Cooperativas sin Fronteras. Therefore, through trustful commercial relationships that benefit social and environmental topics, the quality of coffee and stability, cooperatives have been able to establish a price out of the stock. Being out of the market stock allows them to reach out prices higher as 2.10 USD dollars per pound for Costa Rican producers, and 2.50 USD dollars and for Guatemalan producers. 

Captura de pantalla 2019 04 17 a las 8.52.39 pManager of Cooperative Norandino Santiago Paz pointed out that the harvest of 2019 is secured and the selling will continue. During The coffee expo in Boston, Norandino mentioned that they have a privileged position; their worldwide prestige allows them to continue ensuring good prices and finding and establishing more markets. “We are here searching for more buyers and new selling points for our producers” mentioned Paz. Paz is a well-known leader by the small scale producers. Also, he is the manager of one of the most successful rural companies in Peru, where it looks that the coffee crisis does not affect.

Minor Corrales a Costa Rican producer and president of “La Asociación la Alianza” said that the low prices of the stock, currently are not affecting families of producers. “ Our coffee does not sell by a standard set by the stock; we have created a fair trade market with consumers that take into account other matters”.  Long term commercial relationships with buyers, who constantly visit the farms, has permitted La Alianza to justify their pricing; achieving to convince people that it is necessary to pay the price set by the producers.

However, Corrales is not sure for how long this type of conditions is going to continue due to, the existing of low coffee prices that can engage the coffee roasters to comprise their quality over pricing. 

Juan Francisco González, the manager of Federación Comercializadora de Cafés Especiales de Guatemala (FECCEG), mentioned: “The Price of the bag does not have any influence over the cost of production nor over the producer`s work on the field. Our market area is different; we work on a set of consensus long-established relationships. It is a market that supports the quality of our special coffees, and our price range of coffee bags that goes from 1.60 USD dollars to 1.90 USD dollars, 2.25 USD dollars to 2.50 USD dollars.”

The Crisis and the challenge of fair trade

In this crisis, there are people that say that fair trade should be destined to help and resolve the need for underprivileged products in the market. Santiago Paz considers the crises as a challenge for fair trade, to open new markets and that producers organizations can have new opportunities, better prices that allow them to continue working and covering all their expenses; that they can live from the profit of their lands.

“Fair trade was created in order to help small scale producers. Fair trade cannot abandon its original misión; It cannot be there hoping that the industry is going to pay a higher price because is not going to happen”. Explained Paz. Paz stated that this crisis is going to harm small scale producers, is going to push them to cultivate cocaine and other dangerous and illegal products in order to have easy and quick income.

The main idea of fair trade is to facilitate disadvantaged producers the access to the market. Corrales said the values that created the fair trade market have been changing. Thanks to the certification of fair trade, organizations of producers can obtain funding for their harvest.  There is a problem, buyers instead of giving an advanced payment for the crops, what they do is to send an intent to purchase letter to a financial, so that they can loan them money. In the end, the producer has to pay the interest of the loan that the buyers got. This situation reveals that the auditorship of the certifier instead of strengthening the organizations of producers, it weakness them.

Listen to Minor Corrales

Listen to Juan Francisco González 

Written by Natalia le

Translated by Débora Solís