Certified Coffee: Does the Premium Pay Off?

Abstract

Coffee bean prices plummeted during the coffee crisis of the late 1990s, the result of a glut in coffee production. Prices sank from around US$1.50 per pound in 1997 to about a third that amount in 2001, according to the International Coffee Organization, the primary intergovernmental organization for coffee production. For millions of people dependent on coffee farming, the crisis brought social and economic devastation and forced many farmers to choose between immediate household needs and environmental destruction. That crisis raised alarms in Europe that contributed to the rise of Fair Trade certification for coffee, intended in part to give coffee farmers a buffer against market fluctuations. Fair Trade and other programs designed criteria for certifying the production of items ranging from organic foods and coffee to timber and pulp, with one aim being to reward better management of forests with a premium for proof of sustainable management. When farmers have a buffer against market fluctuations, they will be less likely to choose forest destruction when prices go down. Now researchers and journalists are asking whether certification is making a difference in the health of people and the forests where these products originate.