Coffee cooperatives are organizations collectively owned by their
members, mostly coffee producers and workers. Members share a common
vested interest in the coop's success for the benefit of present and
future generations. Each coop has a board of directors and other
governing members that perform administrative tasks, manage resources,
and promote safety, health, and education for all members.The Central
Piurana de Cafetaleros or CEPICAFE coop, founded in 1995, is
headquartered in Piura, Peru. CEPICAFE represents thousands of coffee,
sugar and fruit producers from more than 90 separate organizations from
regions in Northwestern Peru. CEPICAFE is basically an umbrella
organization for other producing organizations. CEPICAFE enjoys a
reputation as a strong cooperative with solid objectives for growth,
social improvements and environmentally focused practices.Recently,
Santiago Paz, co-manager of CEPICAFE and manager of Norandino
cooperative in Piura, Peru, commented about the pros and cons of Fair
Trade Certified trade practices. His perspective as a producer and
member of the coop provides interesting insights into how Fair Trade
certification impacts producers' lives on a personal level. It is also
interesting to learn how international trade negotiations affect coffee
producers' lives.Coffee prices
have been rising fast for months. This is happening worldwide as a
result of weak economic conditions and growing competition in local
markets. Fair Trade systems seek to improve economic and living
conditions for coffee workers and producers; to get a fair price for
coffee; to help establish gender equity, and to promote accountability
and transparency. These goals are very worthwhile but can be difficult
to achieve in tough economic times.We offer the best coffee price
on the market today!Fair Trade coffee coops have grown in Peru about
66% over the past 5 years but the export volume has increase by only 4%.
The result has been increased competition among coop members and a loss
to producers in Fair Trade Certified benefits.Why? Producers have not
been able to sell qualifying coffee at the expected higher prices. Coops
have been unable, for the most part, to renegotiate higher prices with
foreign importers when world prices rise dramatically because of
contractual Fair Trade System terms and practices. What happens is that
coops buy from farmer members at high current prices but sell to foreign
importers at low, set contract prices later.The result: when coops lose
money or receive less in social premiums set by the Fair Labeling
Organization (FLO), coffee producers can default on contracts, face
suspension proceedings that can be costly in penalties, or remove
leaders from their positions.The FLO system has contract pre-financing
requirements for producer coops which can be a great benefit but can
turn out to be a negative depending upon the price locked during
negotiations prior to harvest.Traditionally, within the FLO system, only
the producers get to decide when to lock in prices. The problem is that
when prices rise, members choose to sell their coffee elsewhere at a
higher price than what the coop pays. Unfortunately, the conflict arises
when the coop locks in contracts at a lower price, before the harvest,
for coffee they do not possess. This timing is a normal transaction but
can have negative consequences.In current weak and competitive market
conditions, locking in contracts based on pre-financing is not a good
deal. Renegotiating coffee prices,
after the fact, is entirely between the coffee buyers and the sellers.
Generally, this is not an easy thing to do or something coffee buyers,
with pre-negotiated prices, will welcome doing. Instead, it is more
likely they will force contracts as signed. New standards for coffee
pricing and negotiations in progress at many levels should prevent some
of these challenging pricing situations in the future.Coffee coops have
been positive for millions of people around the world and offer many
tangible benefits that individuals, alone, cannot achieve.Coops working
on behalf of their members need to do a very good job for their members,
but particularly from a financial transaction standpoint.Fair Trade is
advocacy on behalf of small producers. The FLO needs to show strong
support for the small producers. This will lend strength and greater
credibility to the cooperatives to which millions of small coffee
producers belong.Keeping the small producer viable is extremely
important in the coffee trade. Production in most coffee producing
countries comes from small farms yielding the best coffees
available.Well run coops with farmers and workers who get a fair wage
and fair benefits for their coffee production efforts will ensure
availability of great gourmet specialty coffee at affordable prices to
consumers for many years to come.I say, let's drink to that! What about
drinking a cup of delicious shade grown, fairly trade Peruvian Organic
Coffee?If you are interested you can check out the tendencies in the
prices of coffee at coffee price.
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