FLO International raises minimum price for Arabica coffee

By Melanie Gagne

FLO's decision to increase the minimum price of Arabica coffee to 1.25USD comes into effect June 1st, 2008

On June 1, 2008, the Fairtrade certified coffee producers will receive at least 1,25USD per pound of Arabica. After almost a year of research and analysis, FLO International decided to increase the minimum price of Arabica coffee by 0,05USD to allow farmers to cover the costs of sustainable production and ensure that Fairtrade certified coffee remains attractive in the international market. This adjustment happens in a particularly appropriate time, considering the food crisis affecting many farmers around the world.

FLO had been criticised of late as many felt that their minimum price had not kept up with the cost of living. Indeed, the previous minimum price for Arabica set by FLO International, namely 1,20$USD per pound, had not been changed since the late 80’s. The decision of the FLO Board to increase the Arabica minimum price was taken in October 2007, after a year-long process based “on analysis of costs of sustainable production, the needs of producers to invest in their organizations and communities as well as Fairtrade market conditions” (13.12.07 Press Release, FLO). During the entire consultation process, FLO’s Standards Committee was assisted by an advisory group composed of coffee producers, buyers and importers to provide the necessary information and expertise.

The decision was motivated by the increase of sustainable production costs, and the higher costs of labour and oil inputs that have had a major impact on producers’ overall production costs. Moreover, because of inflation and exchange rates rises in the past years, the former Fairtrade Minimum price for Arabica was devalued in the local currency of many countries. Consequently, the producer’s income had diminished considerably and this affected their capability to invest in production techniques to improve quality and protect the environment. Since one of the main objectives of Fairtrade is that producers receive adequate remuneration for their labour and investment in sustainable production, FLO decided that the actual situation required a minimum price adjustment for Arabica coffee.

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