Prices on Green Coffee 2 -
Klaus has just returned from his trip to Guatemala and Panama. He has a lot of experiences that he is trying to write down and will post shortly!
Meanwhile we have learned that the Fair Trade price has the flexibility incorporated that when market prices rise above the ‘Minimum’ FT-price the market price is the price that should be paid to the exporting cooperative. Check this link out to see a graphical illustration of this.
We are very glad to know that FT has this flexibility and therefore even better can be seen as a reasonable ‘minimum wage’!
On top of the FT-price 10 cents/lb is paid to the producing coop for develoment projects. Therefore a higher price is still paid for the FT-coffee even when the market goes high and though the premium is given to the coop not the producer.
One of the problems that Klaus heard about in Guatemala was that selling to the ordinary market gives imidiate payment wheras selling through the Fair Trade system often delays payment. Another consideration is that when the farmer is choosing whether to get the market price through selling to the ordinary market or getting the same price through the Fair Trade market, the conditions put up by FT are demanding more work than ‘just selling’ to the ordinary market. However good these conditions are meant they economically will be seen as increased ‘production costs’ that demands extra benefits to be worthwhile. Togehter these things might make the ordinary market look more attractive in the short run. In Guatemala therefore it is feared that a lot of farmers will not fulfill their FT-contracts.