The Tip Jar-Two Words That are Well Worth the 10 Cents They Cost Us

Tuesday February 18, 2014 // By Matthew Moseley

Could you imagine starting a business in which you’re losing money on every sale?  No, probably not.  It just doesn’t make sense to work all day to produce something that actually costs you money instead of making money. Right?

Well, this is the predicament of many coffee farmers worldwide.  Between the falling price for coffee and increased production costs due to pests and environmental conditions, farmers are often faced with the harsh reality of negative profits.  Though this low price for coffee may seem appealing, is it fair that for every cup of coffee you drink the people who grow and process it have pay money out of their own pocket?

Let’s Be Fair

That’s where the idea of Fair Trade Certified came from.  Although we all have heard of Fair Trade, what does it actually mean?  A Fair Trade Certification ensures that a minimum price was paid which is high enough to allow the farmer to turn a profit as well as a 10 cent premium, per pound, that will be directly invested into equipment, training, and development among these farmers. This is good for us as well as the farmers.

Let me explain;  though we see a higher cost as a bad thing for us, in the long run it will do nothing but good for us a coffee consumers.  If prices are too low to even make a modest profit, why would anyone continue to work to produce something? They won’t and this is becoming  a common trend where coffee prices have fallen too low for farmers to be able to afford growing those plants.  Instead, farmers will begin growing another crop that is actually profitable to them. This results in a reduced supply of coffee across the globe.  

The conclusion of this cycle will be prices that are extremely high.  This increased cost will not translate to higher quality or any other factors that consumers will enjoy; instead, it will be completely attributed to lack of supply compared to overall demand.  In the long run, paying the incremental cost of Fair Trade certified coffees and teas will insure that we not only have a sufficient supply in the future, but also, a price that we are able and willing to pay.

Further, the current system does not incentivize farmers to increase quality.  Why would you invest more money to create a better product if you are already losing money with current costs?  It doesn’t happen.  That’s another benefit to the Fair Trade system; since farmers are making more money they are willing to invest and experiment with crops in order to earn more per pound than the market floor price, minimum. This will result in an increased coffee quality at every price point.   

What Should We Do About It?

These two self-serving reasons should be enough to convince anyone to sell or buy Fair Trade products; however, some problems still exist.  Many are not fully aware of the benefits of Fair Trade products and assume it’s merely a tactic to sell goods at a higher price.  Though these fears can be warranted, as consumers we will tend to favor a company that is sustainable and ethical in its practices.  That means that as consumers we are responsible to “vote” with our dollars for goods produced with socially and environmentally sustainable methods.  In order to do this, we must be aware of which products are properly certified and which ones are taking advantage of the ethically responsible movement.

Businesses the takeaway for you is that if you serve, or wish to serve Fair Trade coffees and teas, then be sure that you are educating your staff well enough to convey the actual value of them to consumers.  Studies have shown that people are willing to pay more for and consider Fair Trade products as higher quality than their alternatives. So, it’s worth to you as a business owner and more importantly it creates a more sustainable future in your industry while increasing everyone’s quality of life.  If you want more information about Fair Trade certification or how it works take a look at “Let’s Talk Fair Trade” or visit the Fair Trade USA website.

Now it’s up to you, do you think Fair Trade certified products are worth the price?