Cost of coffee.indd - RISC

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200 Robusta coffee market 1986-2005: comparison of fairtrade price & London LIFFE prices Sept 1994 frost damage in Brazil 150 ® 100 1997 drought in Brazil 50 1989 collapse of International Coffee Agreement November 2001 30-year low of 17.37 cents/lb 0 Jan 1986 June 1992 Sept 1994 Jan 1999 Dec 2005 source: Fairtrade Foundation Fairtrade minimum price = 101 cents/lb + 5 cents/lb premium when LIFFE price is 101 cents or higher, the Fairtrade price = LIFFE price + 5 cents 12 US cents/lb
links in the chain farmers D 80% of coffee is grown on small farms of less than 3 hectares (300x100m – about 3 fullsize football pitches) D 25 million families are dependent on coffee for their cash income middlemen D growers receive more if they do more processing but farmers may sell beans to ‘middlemen’ – local traders or exporters – at any stage, because their harvest is too small to hire a pickup to transport beans to the mill or they are too remote to cycle or walk D farmers can be exploited by these traders who offer low prices because there are few alternative buyers – small producers often need immediate cash to pay off debts and do not have access to information on international prices nor storage facilities to wait for higher prices D many farmers get a better deal from cooperatives which provide support to members – buying and/or processing beans, improving quality through training or laboratory facilities to test acidity and moisture; some cooperatives supply fair trade roasters directly or sell on to local exporters local exporter D buys, cleans, grades and bags green coffee from producers and transports to coast for shipping; provides warehousing and ‘bulking’ into 60kg bags for export according to contracts from dealers international traders/dealers D manage the flow of coffee to roasters at required quantities, type and grade; important because coffee is harvested seasonally but demand is steady throughout the year D six largest traders account for 50% of world’s coffee and increasingly involved throughout the supply chain to increase their profit margins, with local subsidiaries growing or buying beans, and processing, grading, transporting and bulking them for export (www.nkg.net, www.ecomtrading.com, www.volcafe.com) shipper/importer D organises and pays for freight costs, insurance, landing charges, import duty, transport to roaster roaster D secure supplies from international traders – no need to hold large stocks because contracts guarantee supplies of different types at short notice – the ‘futures’ markets enables them to maintain stability in the price they pay for coffee D roast, blend, grind and package beans; transport to supermarket/coffee bar; advertise to maintain brand image, market share and profits D import duties imposed by ‘developed’ countries on unprocessed coffee are low, but much higher for processed coffee – this discourages poor countries from developing their own processing plants and benefitting from higher value-added elements in the coffee chain supermarket/coffee bar D retain a high share of the price charged to consumers with few major costs or risks – supermarkets capture about 15% of the shelf price source: Economist Intelligence Unit 2000 13
Page 2 and 3: credits devised, written and design
Page 4 and 5: “ A company that adopts and imple
Page 6 and 7: the instructions What you need - ge
Page 8 and 9: glossary bluewash The ploy used by
Page 10 and 11: coffee file Coffee: adaptation of A
Page 12 and 13: 8 the story of coffee D the coffee
Page 14 and 15: wet method D requires the use of re
Page 18 and 19: drinker roasted, ground, instant CO
Page 20 and 21: 16 key ideas ◆ ◆ ◆ ◆ ◆
Page 22 and 23: Profit margins are high - Nestlé h
Page 24 and 25: key ideas ◆ ◆ ◆ ◆ In respon
Page 26 and 27: • because of past price fluctuati
Page 28 and 29: aim a fair price? ◆ To analyse th
Page 30 and 31: ◆ Although in The coffee cycle Ne
Page 32 and 33: s Analyse the photos used and the o
Page 34 and 35: ◆ ◆ Real costs A supply and dem
Page 36 and 37: aim how fair’s fair? ◆ To explo
Page 38 and 39: actionpage: how fair’s fair? s Re
Page 40 and 41: 1990 european fair trade associatio
Page 42 and 43: Actionpage: Pros & cons 38 PROS Gua
Page 44 and 45: aim fair marketing ◆ To analyse t
Page 46: Actionpage: Logo ® 42
Page 49 and 50: actionpage: press release Statement
Page 51 and 52: appendix 1: the coffee crisis The I
Page 53 and 54: demand sides in which the coffee cr
Page 55 and 56: demonstrating that traditional shad
Page 57 and 58: appendix 4: co-op’s fairtrade cof
Page 59 and 60: appendix 5: mugged introduction The
Page 61 and 62: women earn less, work longer, have
Page 63 and 64: appendix 6: rescue plan A Coffee Re
Page 65 and 66: Consumer governments 1 Provide poli
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joining forces we believe that we w
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of shortfalls that occur (see Nestl
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appendix 8: robbing coffee’s crad
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appendix 9: behind the mask the rea
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• change the law to enable people
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Fair Trade in Action - KS 3-4 Fairt
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ackground reading* Behind the mask:
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useful contacts Anti-Slavery Intern
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International Coffee Organisation w
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isc Reading International Solidarit
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