Tuesday, June 06, 2006

probably overstated. . .

"although there is no precise data on the amount of organic coffee produced in [nicaragua], estimates from several industry sources suggest it makes up about 10 percent of the country's annual coffee exports, or about 95,000 60-kg bags.

during the slump in world coffee prices at the start of this decade, growers were paid a premium that was high enough to compensate the reduced output and made it worthwhile to produce organically.

prices for traditional coffee have since recovered to a profitable average of around US$1.00 a pound. meanwhile, increasing quantities of organic beans on the world market have caused prices to stagnate, with some growers saying they receive as little as US$1.05 per pound. they say the 5-cent difference is not worth the effort to grow organic coffee.

during the crisis, farmers in other producing countries, especially in mexico and peru, rushed to the organic market, causing prices to flatten and premiums to drop, {co-op group official martha stella] gutierrez said.

'many people are quitting organic because it is not economically viable,' said frank lanzas, president of the matagalpa coffee grower's association, the largest grouping of farmers in the heart of the country's northern coffee highlands.

even so, organic convert {ventura] rodriguez, heading into his sixth year as an organic producer, is staying the course. he decided to switch to organic production after raw chemicals he sprayed in his field found their way into his food, sending him to the hospital with severe poisoning.

'i am not doing this for economic reasons but because organic methods are good for my health,' he said, adding he sold his 2005/06 crop of coffee at US$1.30 per pound. 'that mountain of poison i used to use i no longer need.'"

i was very skeptical reading this article, because as i think any average coffee lover can tell you, there's more and more organic coffee offered for sale. it's not as if farmers are bagging on organic full tilt.

and long-time pal oren agrees that he as a roaster/retailer sees more organic coffee too. we also have to remember that nicaragua is a relatively high-cost producing country.

with high growing costs, and a lowering price due to increasing supply, it's natural that the organic farmers are going to get squeezed. they should probably consider paying the price and doing the work to add a fair-trade certification to their organic one.

a certified organic fair-trade coffee should be worth a floor price of US$1.41.

of course the farmers themselves don't get that entire US$1.41 -- i'm told the co-ops normally take some percentage for administrative costs, often said to be around 12.5%. unless my calculator fails me, that would still leave the farmers with US$1.28, a significant premium.

but of course i can't say for certain, which brings us back to one of my niggles with fair trade -- lack of transparency. again, oren says that when he went to nicaragua and talked to farmers, he was told they actually saw only about US$0.90 of that supposed US$1.26 by the time the fees were all deducted.

that's less than commodity price! then they probably need to look also at acquiring a bird-friendly certification too.

no matter how we slice it, it's a difficult issue. (and before all you enraged fair trade supporters write in, please remember that i am a fair-trade supporter. but that doesn't mean i don't want fair trade to improve and serve farmers better!)

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posted by fortune | 8:19 AM | top | link to this | email this: | links to this post | | 2 comments

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