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  • #16
    Re: Fairtrade coffee - Q & A

    Originally posted by grendel link=1179628700/0#2 date=1179631222
    Id also love to hear what developmental work is being done to progress FT. My argument with FT has always been that it is a good start but there hasnt been any (apparent) effort to review the system and implement improvements.
    Hi Michael

    I think its often hard to appreciate, from the outside, the dynamic nature of systems like Fairtrade.

    Ive been involved in it for 3.5 years now and as an insider, it has always seemed in a state of flux - new products, product and standard reviews, big projects and questions on improving effectiveness and efficiency throughout the supply chain, etc.

    One of the biggest things, that I put in the category of systems improvements, to have happened in recent times is a rather radical restructuring of FLOs governance.

    See here for information on FLOs governance now http://www.fairtrade.net/structure.html.

    While its been on the table for a long time, over the last 18 months major constitutional and operational changes have happened to give greater producer voice and ownership of the FLO system. Previously, FLO was owned and essentially governed by the Labelling Initiatives - primarily in developed nations. Given what FLO is about, there have always been processes for producer engagement, but the lack of having them occupy a formal position in the power structure was not acceptable.

    Now, as youll see in the description of FLOs structure now, Labelling Initiatives share ownership of FLO with Regional Producer Networks. There are more producer seats on the Board.

    There is a lot more to all that, but I would hope you can appreciate how important these changes are to ensuring Fairtrade delivers on its vision and mission for producers around the world.

    As an example of the impact of these processes, the current Fairtrade Minimum Price and Premium review for coffee - which has already resulted in the increases to the Fairtrade Premium and Organic Differential - was prioritised because the Regional Producer Network from Central and Latin America (CLAC) conducted research on the sustainable cost of coffee production in their region and in relation to Fairtrade and presented this to the FLO Board. Their research demonstrated a clear need for change and, with their new status as one of the owners of FLO, the current process is happening.

    As I say Michael, no one in Fairtrade is resting on their laurels or thinking weve got it perfect. The system is continually evolving and changing and adapting - and hopefully improving! This is the case from the FLO governance, to standards, to how certification is done in the field, to how we here in ANZ support and interact with our stakeholders.

    Across it all, issues of resources and timing are always constraints and impact on priorities, when things can be done, etc.

    Michael if you had specific things in mind, which the above doesnt address, let me know. I think ive dealt with some of the quality issues in other postings.

    Cameron

    Comment


    • #17
      Re: Fairtrade coffee - Q & A

      That is alot of typeing!! Thanks for taking the time to explain it, im sure you will probably get a few more questions.

      Andrew

      Comment


      • #18
        Re: Fairtrade coffee - Q & A

        Originally posted by C Neil link=1179628700/0#12 date=1180477798
        Originally posted by Andy Freeman link=1179628700/0#7 date=1180428512
        US$ 0.10 per pound is the premium shortly (was US$ 0.05)

        so that is roughly AU$ 0.24 per kilogram... a cafe makes 80 coffees per kilo (7 gram shots, 20% waste)

        The amount of Fairtrade premium on a latte is AU$ 0.003

        The person on the street needs to drink 300 lattes to have given the farmer AU$ 1.00 and if the cafe is charging AU$ 0.50 per cup extra for Fairtrade then the cafe made an additional AU$ 149.00
        Hi Andy

        Some other things to think about in the metrics here - and in defence of many of our licensed operators who I know are working their butts off to support and promote Fairtrade, do the right thing, and are not lining their pockets with swindled gold:

        FACTOR ONE - BEAN PRICES

        - the current minimum price to buy a conventional (non-organic) Fairtrade green bean is US$1.21 / pound + the US$0.10 / pound premium = US$1.31

        - In Australia and New Zealand, the overwhelming majority of Fairtrade coffees available are purchased at prices far in excess of the Fairtrade minimum price due to their quality and high demand for coffee from these origins, i.e. in excess of US$1.21 /  pound

        - pretty much all the Fairtrade coffee in Australia and New Zealand is also organic certified, so that is an additional US$0.20 differential / pound on top of the Fairtrade minimum price and Fairtrade premium

        FACTOR TWO - COSTS OF DOING FAIRTRADE

        - in addition to (perhaps) paying more for beans (obviously, again, some beans Fairtrade may be cheaper than some other non-FT quality beans), there are other Fairtrade cost factors

        - these factors include development of separate promotional material (brochures, cups, etc), differentiated product packaging, and of course the license fees they need to pay, the internal control systems they need to have in place, and the compliance efforts (reporting, etc.)

        FACTOR THREE - MARKET POSITIONING

        - as i mentioned elsewhere, there is also the thinking that goes in to market positioning, including price differentiation, which may lead roasters (and perhaps cafes, but they are not really my business) to put their coffees at particular price points, sometimes with lower profit margins, sometimes higher, depending on different factors


        Overall, we expect our licensees not to lose money from Fairtrade – it is business, not charity.

        Over the last 3.5 years, Ive known roasters to charge less, the same and more for Fairtrade compared to other products in their range. Many of them sell Fairtrade at a similar price point to their organic certified - or indeed move all their organic to be dual Fairtrade and organic.

        Cameron that was a lot of typing in all those posts.
        First let me say I appreciate your taking the time to respond.
        However, a lot of the repsonses read to me like an explanation of what Fairtrade are doing for the producers, which I am not disputing, rather than answering my question about retailers gouging the end consumer.

        One post mentioned encouraging retailers "not to make any more profit from Fairtrade than their other product lines"; thats a start but obviously being ignored by enough retailers give the impression there all trying it on with the prices they charge for Faitrade coffee.

        Andys figures are damning.
        The retailers cant justify the extra theyre charging.

        I suppose if Fairtrades encouragement doesnt work, the alternative is for the consumers (us) to jack up about it and argue with the cafe owners.

        The problem is that many consumers are ill informed and just pay the extra, thinking theyre doing the right thing when all they are doing is making themselves feel good.

        I dont think COffee Snobs or Fairtrade can overcome that sort of apathy and ignorance easily.

        At least the farmers are getting something more (but still not enough).

        Comment


        • #19
          Re: Fairtrade coffee - Q & A

          Hi Cameron,

          Without wanting to beat you about the head, Ill just say this: I view FT as a fantastic mechanism for lifting the floor price for coffee growers. In line with Thundergod and Andys comments, Im kind of disappointed that FT marketing isnt always in line with reality and that some people think that FT has something to do with quality. For example, it was quite disappointing to me to see a recent article in the Age where Jaspers claimed that farmers received 300 to 400% more under the Fair Trade scheme. Regarding quality, Im a big fan of CoE; just take a look at the recent "Best Of Panama" auction prices ... although I believe that we need programs like CoE and FT to lift prices at both the floor and the ceiling of the quality spectrum.

          *end rant*

          I do have a few more questions for you, though:

          (a) How transparent is the FLO system? For example, are reports from an independent auditor available online?

          (b) CoffeeSnobs has recently started its own social responsibility program, Fair Crack. Other than donating the proceeds to FT, can you suggest any worthy recipients? I think that what we would all like to do is to make a direct contribution to a project.

          Cheers,

          Luca

          Comment


          • #20
            Re: Fairtrade coffee - Q & A

            Originally posted by Thundergod link=1179628700/15#17 date=1180534239
            However, a lot of the repsonses read to me like an explanation of what Fairtrade are doing for the producers, which I am not disputing, rather than answering my question about retailers gouging the end consumer.

            One post mentioned encouraging retailers "not to make any more profit from Fairtrade than their other product lines"; thats a start but obviously being ignored by enough retailers give the impression there all trying it on with the prices they charge for Faitrade coffee.

            Andys figures are damning. The retailers cant justify the extra theyre charging.

            I suppose if Fairtrades encouragement doesnt work, the alternative is for the consumers (us) to jack up about it and argue with the cafe owners.

            The problem is that many consumers are ill informed and just pay the extra, thinking theyre doing the right thing when all they are doing is making themselves feel good.

            I dont think COffee Snobs or Fairtrade can overcome that sort of apathy and ignorance easily.

            At least the farmers are getting something more (but still not enough).
            hi

            i guess there have been a few points ive been making in my posts relevant to this:

            * that its important to understand the full costs associated with Fairtrade that might be reflected in the prices charged by roasters for their coffee (not talking retailers here), i.e. beans, costs of Fairtrade

            * that while the Premium and the Minimum Price are set, there is variation in the actual end price of beans reflective of things like whether its organic (+US$0.20 to the cost per pound), quality, demand, etc. that might mean a large difference between the FT beans vs non-FT beans by the same roaster

            * that the only fit comparison about the pricing of FT coffee is to compare it to the price of the other coffees offered by the roaster (and i think that probably applies to the cafe as well, i.e. the difference between conventional and FT would include any higher costs + price differentiation)

            * that it is illegal and impossible (not to mention very difficult and expensive) to regulate end prices charged by roasters and retailers

            just to clear something you quoted - it is licensees we encourage not to make more money from Fairtrade than their other products. we very rarely deal with retailers.

            i think its also necessary to point out that many FT coffees, at the roaster level at least, are price comparable to their other coffees, and in some cases cheaper than some of the offerings they make.


            i also draw your attention back to something i posted:

            "Many Fairtrade products are now sold at very competitive prices to their conventional counterparts, and in the case of 100% switches (such as in the UK with M&S tea and coffee, AMT Coffee, Co-op own label coffee and chocolate, and all Sainsburys bananas), there is no difference at all. Given that you can also buy Fairtrade products more cheaply than some conventional ones, its clear that Fairtrade prices to farmers are nothing to do with shop prices to consumers. Instead, Fairtrade ensures that, whatever the price paid by the shopper for a product carrying the FAIRTRADE label, you know the producers have received at least the Fairtrade minimum price and social premium for investment in the future. Find out more about retail pricing on the Fairtrade Foundation UK website: http://www.fairtrade.org.uk/downloads/pdf/Retail_pricingmp.pdf "


            that is from the UK. i think perhaps we dont have enough competition or consumer awareness as yet to ensure that people dont engage in gouging. i hear you. i know it happens. but honestly i dont believe there is anything we can do about it except keep getting a clear message out to our licensees, the public, and increase the number of products in the market place to enhance competition.

            it could be relevant for CS readers and others to question retailers on their pricing of FT, i.e. does the increased cost reflect their additional costs? im not sure what answers you would get, but i guess the point im making, some of the answers might be legitimate and others may not. without doing a full business analysis and having access to their books, its a difficult question to answer well.

            however, if someone next door or down the road is offereing FT coffee that is of the same quality and type for a lower price, and customers start voting with their money, that is a lot harder for business to ignore.

            this is all the complexity of the market.

            what Fairtrade seeks to ensure is that the producers of the products are getting a fair deal and money to invest in breaking cycles of poverty and sustainable development. we are demonstrating its possible for that to happen, for businesses to be viable while ensuring that takes place, and for consumers to vote with their $$ to say we want people, planet and profit.

            Comment


            • #21
              Re: Fairtrade coffee - Q & A

              Personally Id like Fairtrade to say that FT certified coffee should cost no more than other coffee.

              looking at Andys numbers Id be willing to cough up an extra 5 cents a cup but no more.

              I know how much I can get green beans for and I know how much Id have to pay a roaster if I had a cafe.
              Ive worked in my fathers food retail businesses and also for a multi-national take away food retailer.
              Im also a qualified auditor and all this knowledge and experience leads me to my opinion that a lot of retailers are overpricing their FT.

              To change it, we as consumers and you as the certifier need to keep pointing out that a few cents a pound CANNOT justify the prices the gougers are setting to take advantage of the gullible public.

              Trouble is, we are in the minority.

              Comment


              • #22
                Re: Fairtrade coffee - Q & A


                As a relative newbie to the world of coffee, beans look like beans to me, and I cant determine just by looking at the bean where it came from and how much was paid for it.

                Its a bit like chicken eggs. I really really cant tell the difference between free range eggs and battery eggs. People say its the colour of the shell, etc, but for the non eggspert like me, its still an egg.

                So if I go into a coffee shop and the FT coffee sold there tastes similarly to another shop where none of the coffee is labelled as FT, but markedly cheaper, I know that Ill simply buy it from the cheaper store, as Im equating the value of my purchase to the perceived quality of the coffee.

                Sorry, but I am not a big supporter of any scheme where the product ends up costing more but with no change in quality.

                If free range eggs were priced the same as battery eggs, if FT coffee is priced the same as non FT coffee, AND the coffee quality was comparable, only then will I vote with my dollars.

                I dont have a lot of dollars to play with, and with rising price of water, electricity, petrol, houses, etc and inflation, theres just much less of it to go around to have the luxury of making decisions on buying what is essentially a commodity item.

                Why does coffee get "special" treatment compared to sugar, wheat, grapes, rice, milk, vegetables, etc? Are the farmers of those other primary industries paid "fairer" wages than coffee?

                If someone can help me understand, I am open to changing my current stance.



                Comment


                • #23
                  Re: Fairtrade coffee - Q & A

                  Originally posted by tempestv8 link=1179628700/15#21 date=1182307043

                  Why does coffee get "special" treatment compared to sugar, wheat, grapes, rice, milk, vegetables, etc? Are the farmers of those other primary industries paid "fairer" wages than coffee?

                  If someone can help me understand, I am open to changing my current stance.


                  tempestv8,

                  Whilst not a believer in the way FT is implemented (too many are using it as an excuse to gouge extra profits from the customers..... and the FT organisers seem powerless or unwilling to control this.....) the basis of the arrangement I believe is good.

                  The other products mentioned in your post are produced in Australia, by Australians..... and we wont work unless we get a fair days pay..... well just go on the "dole"...

                  Coffee is mainly produced in third world countries by the equivalent of "slave labour" where the workers get paid very little.... and they have no bargaining power - except what you are offered or you and your family can starve.... (and no dole either!!!!).

                  So the FT arrangement is supposed to ensure these people get a fairer income.... only a little better than they get now.... but important in their lives. What we pay is only a fraction of what someone in the western world would be paid for similar work.... they probably get the equivalent of what we pay for a cup of our coffee as a days salary!!!!

                  So the idea is great.... Im just not sure of the implementation.

                  Comment


                  • #24
                    Re: Fairtrade coffee - Q & A

                    As a cafe owner who sells only FT coffee (and who charges a very reasonable price for it - ie less than what my nearest competitor charges for their Vittoria product), I would say that market forces play a pretty strong roll in determining what the consumer is prepared to pay for coffee, FT certified or otherwise.

                    I know what I charge for my coffee and we sell plenty of coffee in this price range.

                    I for one would like to know who are these rogue operators that i keep hearing about, how much FT coffee do they actually sell at these supposed inordinate prices, what do they pay for the coffee in the first place, and what percentage of revenue do these sales make up when compared to total sales revenue.

                    I know of a couple of places locally which were charging an extra $1.00 per cup on top of their base operating prices for a FT product, that was costing them less than their non-FT house blend - and three of these venues no longer sell the FT product, as there was not enough established demand for it.

                    There seems to me to be a lot of misinformation about FT in general, too little focus on the benefits to the coffee community, and not enough focus upon the new and comprehensive Environmental Development requirements, as stipulated in the Generic FairTrade Standards.

                    From my albeit not impartial observation FLO has gone a long way towards meeting criticisms which have been levelled at it – and the organisation itself openly admits that it is not THE answer to inequality in the economic South, but only one of a number of initiatives that should be considered.

                    I for one am sick of hearing all the what are IMHO baseless accusations against what I think is a terrific initiative, and I would say to the knockers: Show me the money! Where is the evidence of this so-called ‘gouging’ on behalf of retailers, how serious are these so-called retailers in their commitment to the FT product in the first place, and how is this reflective of the Australian coffee environment.

                    And I would like to openly issue a challenge to any coffeesnobs who are interested in the FT debate to come in to my café, have a coffee and a chat to me, and then decide where they stand in the scheme of things.

                    I cant promise that I have all the answers, but what I can say is that we’re passionate about FT coffee, and about benefiting the community from where it’s derived, we don’t rip people off when it comes to prices, and I will leave it up to the punter to decide whether they think it’s a quality product or not.

                    I also openly applaud initiatives such as COE and Rainforest Alliance, but question why they do not appear to receive the same level of scrutiny as FT coffee.

                    Could it be because they don’t occupy the same percentage of market-share?

                    Cheers,

                    Pat


                    Comment


                    • #25
                      Re: Fairtrade coffee - Q & A


                      I also openly applaud initiatives such as COE and Rainforest Alliance, but question why they do not appear to receive the same level of scrutiny as FT coffee.
                      Could it be because they don’t occupy the same percentage of market-share?
                      Ummm...

                      Cup of Excellence is a competition that promotes the highest quality coffee in different (and expanding) regions. Those coffees are auctioned to the highest bidder and has nothing at all to do with this debate as far as I can tell.

                      Rainforest Alliance (RFA) coffee is a scheme that educates and promotes sustainable faming practice and carries no where near the same fees or promises. A farm needs to meet management criteria to be RFA certified, not just pay a licence fee. Their Annual reports are freely downloadable and show 2% management expenses, 6% spent on fundraising/advertising and 92% spent on the program of education and training. Reasonable figures I would have thought.

                      I for one am sick of hearing all the what are IMHO baseless accusations against what I think is a terrific initiative, and I would say to the knockers: Show me the money!
                      "show me the money" was my point too when I wrote...

                      US$ 0.10 per pound is the premium shortly (was US$ 0.05)

                      so that is roughly AU$ 0.24 per kilogram...
                      a cafe makes 80 coffees per kilo (7 gram shots, 20% waste)

                      The amount of Fairtrade premium on a latte is AU$ 0.003

                      The person on the street needs to drink 300 lattes to have given the farmer AU$ 1.00 and if the cafe is charging AU$ 0.50 per cup extra for Fairtrade then the cafe made an additional AU$ 149.00

                      I really would have hoped that more of the money spent by consumers got to the farms.
                      Surely you dont tell your customers that AU$0.003c of their latte was all the farmer would see and when they have 15 coffees on their loyalty card the producer at origin would have got 5 cents.

                      I cant promise that I have all the answers, but what I can say is that we’re passionate about FT coffee, and about benefiting the community from where it’s derived, we don’t rip people off when it comes to prices, and I will leave it up to the punter to decide whether they think it’s a quality product or not.
                      Bravo Pat, I applaud your passion and encourage your fairness in not using FT to gouge customers on price. It’s admirable but also fairly rare.

                      Comment


                      • #26
                        Re: Fairtrade coffee - Q & A

                        I suppose that the thing that irks me about FT is that the campaigns seem pretty misdirected. Why go and beat up cafe owners who make coffee from (hopefully) decent beans, which (hopefully) command decent prices, when the farmers who are getting really screwed over on prices are the ones who sell garbage quality coffee to the manufacturers of instant coffee? Wheres the furore about instant and why is it that we always see FT ad campaigns with pictures of coffee made in cafes? Or am I just completely missing something?

                        Originally posted by askthecoffeeguy link=1179628700/15#23 date=1182421125
                        I for one would like to know who are these rogue operators that i keep hearing about
                        About a month ago, not 25 metres from your cafe, in the Union House building, there were any number of places that are using coffex and will charge an additional $0.20 for FT coffee.

                        Cheers,

                        Luca

                        Comment


                        • #27
                          Re: Fairtrade coffee - Q & A

                          Originally posted by askthecoffeeguy link=1179628700/15#23 date=1182421125
                          I for one would like to know who are these rogue operators that i keep hearing about
                          Originally posted by askthecoffeeguy link=1179628700/15#23 date=1182421125
                          Where is the evidence of this so-called ‘gouging’ on behalf of retailers
                          You said yourself youve seen the evidence.

                          Originally posted by askthecoffeeguy link=1179628700/15#23 date=1182421125
                          I know of a couple of places locally which were charging an extra $1.00 per cup on top of their base operating prices for a FT product, that was costing them less than their non-FT house blend

                          Comment


                          • #28
                            Re: Fairtrade coffee - Q & A

                            Tempestv8, Not to do with coffee just the eggs, I think it comes down to ethics. With free range eggs you know that the life of the hens are going to be better. There life span is massively increased they dont spend their days couped up in a tiny cage, they generally (organic) arent fed crap to pop out more eggs and antibiotics to keep them alive longer, they dont have there beaks cut off so they (if they survive this part) dont injure themselves out of bordem. Some brands are dear but the larger companies are only maybe a $1 dearer (farms are bigger, quality food isnt as cheap) and NEARLY everybody can afford that.

                            Andrew

                            Comment


                            • #29
                              Re: Fairtrade coffee - Q & A

                              Originally posted by Andy Freeman link=1179628700/15#24 date=1182429486
                              Rainforest Alliance  (RFA) coffee is a scheme that educates and promotes sustainable faming practice and carries no where near the same fees or promises.  A farm needs to meet management criteria to be RFA certified, not just pay a licence fee.  Their Annual reports are freely downloadable and show 2% management expenses, 6% spent on fundraising/advertising and 92% spent on the program of education and training.  Reasonable figures I would have thought.
                              Not to mention that Kraft Foods, Dowe Egberts, & Lavazza are the biggest sponsors of Rainforest Allaince.

                              Isnt it these companies who helped engineer the over-supply and under-valuaing of the coffee comodity in the first place?

                              Comment


                              • #30
                                Re: Fairtrade coffee - Q & A

                                Originally posted by askthecoffeeguy link=1179628700/15#23 date=1182421125
                                Where is the evidence of this so-called ‘gouging’ on behalf of retailers
                                You said yourself youve seen the evidence.

                                Of which I went on to say that most of these places no longer even sell FT coffee, because no-one is prepared to pay for it at these prices.

                                Comment

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