Fairtrade International has unveiled a living income reference price for Arabica coffee in Uganda, part of a wider effort to increase the incomes of smallholder coffee farmers across the coffee-growing world.
The international nonprofit identified a farmgate price of 11,640 Ugandan shillings per kilo of parchment coffee ($1.388 USD per pound, as of this writing), “needed to enable Ugandan Arabica coffee farmers to earn a living.” The group also calculated a reference price of Fair Average Quality (FAQ) Ugandan Robusta coffee at 7,150 shillings per kilo ($0.853 per pound).
The price is represented as a “farmgate price” – loosely defined as the price actually received by farmers – as opposed to the FOB price, which is a common reference price in green coffee futures contracts.
This is the third major “Living Income Reference Price” (LIRP) published by Fairtrade International, following an initial release on Colombian Arabica in 2021 and one on Indonesian Arabica earlier this year.
Involved in research with various stakeholders and partners in each country’s coffee sector, the Living Income Reference Price project follows the 2018/19 coffee price crisis, where sustained low coffee prices in the international futures market further threatened the viability of coffee farming. Millions of small-scale coffee farmers.
Global prices have since rebounded to higher-than-average levels, although the global coffee market is characterized by a commodity-market-driven purchasing system that has historically been exploitative of coffee farmers, who typically bear the greatest price risk in a volatile market.
In its release today, Fairtrade International said average Arabica prices in Uganda’s coffee sector have approached or even met the new living-income reference price, which is more than double what farmers received during the price crisis.
It is important to note that the 2018/19 price crisis was not an isolated event, but part of a long cycle of extreme price fluctuations that have occurred in the free-market era of global coffee trade.
In releasing its Uganda report, Fairtrade noted that discovering the living-income value is “a journey” that requires the participation of many stakeholders. It varies by country, based on average farm size, household size, production volume, local labor conditions, and more.
As part of the Uganda project, the Dutch company has committed to maintaining a minimum living-income reference price in its dealings with Fairtrade Original Ugandan supplier Ankole Coffee Producers Cooperative Union (ACPCU).
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Nick Brown is the editor of Roast Magazine’s Daily Coffee News.