When JC entered the coffee scene-- almost ten years ago-- it was a buyer's market. That was the problem. Some of the farmers we knew in Chiapas, MX, many who would go on to form the Yachil cooperative, told us that they were receiving around twenty-five cents per pound of coffee. This is the situation that led us to form Just Coffee.          

                                                          

Fair trade grew up with a pricing focus. The narrative was that farmers could make significantly more money selling into "fair" markets than they could working through conventional buyers and importers. Even today, when cruising around the web and reading about Fair Trade, one can easily still find references to the low price crisis and the success of fair trade minimum pricing as if it were still in the same situation today.

But things have changed dramatically. In 2006 coffee prices began to climb and since 2008 the world market price for generic washed arabica coffee has been at or above the fair trade minimum price. Where before 2007 we were in a textbook "buyer's market" with more supply than demand, things have quickly transformed as the market for fair trade, organic, and specialty coffee in general has increased while supply-- which had been high for years-- is suddenly receding.  This is a welcome swing for individual coffee farmers who struggle to feed their families, but it presents challenges to their cooperatives and to the fair trade movement as a whole.

At this point the challenge to the fair traders is one that should be embraced. For too long fair trade marketing has focused almost exclusively on the increased prices paid to farmers. Now we must focus on the other components of the FT philosophy such as pre-financing, long-term relationships, and other forms of cooperation while also staying above the world price. This will most certainly create a challenge for "low bar players" who have maximized their marketing based on the higher prices that they paid to growers, but who also have not generally delved very deeply into the pieces of FT that go beyond their dollars.

For farmer co-ops at this moment, the challenge is more immediate. As local middlemen are willing to buy coffee for prices at or above what FT roasters and importers are willing to pay, they are gaining a foothold on local coffee markets. This inevitably weakens farmer cooperatives as growers sell outside the co-op and co-ops are in turn unable to deliver on coffee contracts with buyers.

This is the background of the "new coffee crisis". The current "seller's market" may be beneficial to individual farmers in the short term, but the reasons for the shrinking coffee supply are cause for concern. While specialty coffee consumption is growing-- particularly in countries without a strong tradition of coffee drinking-- supplies are dwindling due to two to three years of increased rainfall in many coffee growing regions. Farmers who we work with are increasingly telling us that they understand this to be the result of global climate change.

Heavy rains are not atypical in any coffee growing region. However, the duration and amount of rainfall in many countries in the past few years is not normal. Farmers are investing in mechanical coffee dryers because there are not enough sunny days to dry the coffee effectively without risking significant quality loss. Women from La FEM recently lost their entire community and all their land in a mudslide. Similar mudslides have affected other co-ops in Guatemala, Mexico, and other places as well. The untimely and heavy rain has also caused outbreaks of mold and caused coffee cherries to drop to the ground where they are worthless. Many co-ops have seen their production cut in half in the past year.

So while the high coffee prices are a wonderful development for farmers, the corresponding crop loss that has led to them is a serious issue. While coffee growers may see a brief rise in income in the next few years, if conditions continue many will be making cumulatively less money as their yields dwindle moving forward. The increased competition in the local markets could continue to damage grower cooperatives as they lose coffee, default on contracts, and lose membership. If co-ops decline and fold they will no longer be able to provide the services and community/political organization that they now offer in many coffee regions. This could lead to more fragmented and isolated coffee communities

On the consumption end, things are going to get dicey as well. For coffee drinkers, prices for good coffee will rise quickly on the shelf for all specialty roasters-- fair trade or not. The traditional "truck stop" coffees will cut the amount of arabica coffee in their coffees in an attempt to keep shelf prices down. This will create a temptation for consumers to go back to (or start) drinking bad coffee instead of bucking up more money for arabica beans. Smaller roasters will increasingly come into competition with larger roasters who are able to pay more for their coffee in the short term leaving them in a disadvantageous position.

All of this will make us re-evaluate the meaning of "fair trade".

If I were a betting man, I would wager that the coffee scene will not be the same again. We all are going to have to assess the viability of an industry that connects people who live thousands of miles away from each, but are depedent on one other through market exchange. Growers may seek new ways to make a living including growing or making different products for local, regional, and national markets. Some growers will inevitably be forced off of their land and migrate to other places in search of opportunities. This will fragment communities and disrupt some of the stronger pockets of indigenous culture left in the world. Coffee drinkers will have to choose to embrace their newly super-expensive habit or find a new one that is less expensive or simply more dependably available. And companies like Just Coffee could have to deal with the realities of an occupation that may not be sustainable no matter how we practice our trade.

Should be a wild ride. Continue to check back with us and we'll keep you updated.