• Fair trade

Fair trade

The report presents the value chain analysis of Fair Trade in coffee. Taking a closer look at the value chains of mainstream coffee and Fair Trade coffee, the report demonstrates how added value is distributed along these value chains. It also discusses some possibilities for the Fair Trade movement to improve market access and market development, especially to the benefit of small-scale producers.

The report notes that despite the stagnating or declining sales in some former strongholds for Fair Trade coffee, the overall sales of Fair Trade coffee worldwide have increased in the period from 1998 to 2004.

The report points out that when compared to mainstream coffee value chains, there are significant differences in the distribution of value among the actors in the Fair Trade coffee value chains. For Fair Trade certified coffee, smallholder producer organisations receive more income than they do for coffee sold to intermediaries, exporters, traders or roasters in a mainstream coffee value chain.

It also says that Fair Trade co-operatives are generally in a better position to diversify vertically and horizontally than small-scale farmers that produce coffee exclusively for the mainstream market, because of the stability of their organisations, their knowledge of the coffee market and their growing awareness of the environmental aspects of their agricultural activities.

The report concludes with a set of recommendations on how the economic and social situation of low-income and small-scale coffee producers may be improved. These include:

• the Fair Trade organisations working in the coffee and financial sectors should identify and target unorganised, small-scale producers for assistance
• a monitoring system has to be in place to assess the quality of training among co-operatives
• fair Trade organisations should provide more capacity building and technical assistance to small-scale producer organisations specifically aimed at enabling them to take control of more stages of the value chain
• the Fair Trade movement should continue to facilitate access to information for small-scale producer organisations
• the Fair Trade movement should support lobbying and advocacy efforts to improve the availability of credit facilities to small-scale coffee producers
• for mainstream companies that sell Fair Trade coffee as a (small) percentage of their total coffee sales, a draft model code of conduct should be developed. Adherence to this model code will prove the commitment of mainstream companies to improving sustainability in the whole coffee sector

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