It’s ten o’clock on a Monday morning and sitting next to me are the remnants of my mid-morning coffee, an addiction I share with a few hundred million people around the planet. I’m a careful junkie now. A few years ago I was necking back almost ten cups a day to stave off the boredom of a bloody awful project I was working on. The rollercoaster of jittery days and twitching sleep wasn’t sustainable – I now medicate myself with doctorly precision; three doses a day with hits when I wake, again at 10AM, and finally at 3PM.
The habit could be expensive, but I tend to get my fix at home rather than forking over cash to the soulless High Street chain pushers. I buy a pound of organic beans from the best roaster in England for about nine quid. A single shot uses between eight and nine grams, which means I get 60 hits at around 15p each. Add on about 5p for milk and water (I reckon the machine has paid for itself many times over by now) and at 20p it’s a fairly cheap cup – and a hell of a lot better than the swill Starbucks has the nerve to charge £3 for.
But even 20p is pricey for a cup of coffee when you look at what the big guns pay for their beans. The current price per pound, tracked by the International Coffee Organisation, is US$1.2660 – around 64p. With 60 hits per pound that means Starbucks is forking over 1p of their shitty £3 brews to the grower.
And again, you might think a penny to the producer per cup of caffeine is peanuts, but the current market price represents pretty much an eight year high. In 2001 it plummeted to 45c (22p) per pound – a third of what it is now. Many farmers couldn’t even afford to harvest their crops at that price. Happily, the price has clawed its way back up to a sustainable level. For now.
Which is where Fair Trade comes in. A common misconception is that it’s all about paying producers a premium for their products, but that’s only one part of the deal. For a seasonal product like coffee the essential component of what Fair Trade provides is stability. True, there is a premium paid (it’ll always be at least ten cents above the market rate), but more importantly there is a floor set below which the price will never fall. Yesterday, that floor price for Fair Trade coffee was increased to US$1.25 per pound. Which, given that the current market price is US$1.2660, isn’t too significant – but if you look at the price of coffee over time in the graph below it’s quite clear that there are a hell of a lot more years when the market price is (well) below the floor as opposed to above it. Which means Fair Trade helps producers stay in the game, their crops stay profitable, and our cups stay full. Fair Trade is a good thing.
Starbucks bought 9m kilograms of Fair Trade coffee last year and brazenly trumpeted that they were the “largest distributor of Fair Trade coffee in North America”. A lovely statement, however given their dominance in the US coffeehouse market they could probably also claim that they produce the most waste, flush the most chemicals down their toilets, eliminate the most local coffeehouses. Being the behemoth they are means they will naturally be the biggest or largest at pretty much anything they do – but of course they will attach themselves to the most market-friendly labels, of which Fair Trade is one.
What is more interesting about their claim however, is that the 9m kilograms of Fair Trade coffee that they so lovingly dispatch around the planet is in fact only 6% of their total sales volume. They are much happier (and richer) peddling non-Fair Trade wares, despite what the prominence of in-store marketing may suggest. Such cynical tokenism, playing on the sensitivities of the vulnerable consumer, in fact sustains the volatile coffee market prices that have been seen over the past few decades. Starbucks is leveraging the values and image association of the Fair Trade logo it plasters all over its stores, but enjoying the healthy profits of a coffee stock where 94% of it has nothing to do with Fair Trade at all.
So if you must suckle from the Starbucks teat, suckle Fair Trade. That would, at least, give some indication to the investors smugly laughing their way to the bank with your £3 in their pocket for a penny of coffee that their product range needs further tweaking the Fair Trade-way to keep you buying. Or, better yet, ditch the stores peddling non-Fair Trade altogether…
Great post, Matt. I also learnt on our coffee tour in Costa Rica that Fair Trade coffee is actually better quality because the pickers get paid more so they don’t rush to chuck any old bean into their basket. Do reckon that is true?
I am still struggling to find good coffee in Oxford outside of your lovely abode so I am not sure only Starbucks can be called swill. The whole town seems to be dire.
I can relate to the coffee fix. I have a sensual experience with that first double shot nearly flat white in the morning. Such a big experience for such a small drink! I almost regret cleaning teeth to go to work, because I could carry that taste for hours.
In fact, the taste and the experience are so important to me that I make sure that I pay for the experience. Fair trade is fine, but knowing that the buyer is paying above that rate for premium grade coffee is even more important. Fair trade is like setting a base price for a commodity that is grown a lot by small growers and small coops. Where is the upper end of price?
As you say, make it at home and price seems low. Buy it at a coffee shop, and the price is set more by the overheads and service costs. Either way, you are buying an experience, and that is worth making sure that the grower of specialty coffee is getting an incentive to produce the next best thing to sex.
I should have said, I live in Western Australia, have a son in the coffee business (5 Senses Coffee), and have been accused of being a coffee monster! We also visited growers and their coops in northern Sumatra recently, and the company (I am not involved except for buying beans from them) is buying direct to make sure the quality and the grower incentive match.