The price of coffee is set by a futures exchange in New York that can sit below what it costs to grow. Almost everything else follows from that — including why paying more does not always reach the farmer.
The price is set in New York
To understand the problem you have to start here: conventional coffee isn't sold for what it costs to produce or for what it's worth in the cup. It's sold against the C price, the arabica quotation on the New York futures market.
That price moves on Brazilian harvests, financial speculation, exchange rates and weather forecasts. It does not move on what a grower in Huila needs to cover costs.
The result is that there have been periods — long ones — in which the market price sat below the cost of production in many countries. Growing coffee, in other words, ran at a loss.
What that causes
This isn't an economic abstraction: it has concrete, cascading effects.
- Rural poverty in coffee-growing areas, and an ageing sector as young people leave.
- Farms abandoned or switched to more profitable crops — in some regions, to illegal ones.
- Pressure on the environment: with no margin, nobody invests in shade, soil or water management.
- Less investment in quality, because if you're going to be paid a commodity price there's no point picking only ripe cherry.
That last point closes the loop: low prices produce worse coffee, which reinforces low prices.
What fair trade does
The Fair Trade system sets a minimum price below which coffee isn't bought, whatever the market does, plus an additional premium earmarked for community projects. It also requires labour standards, a ban on child labour and certain environmental practices.
It works as a safety net, and in years of collapsed prices it has prevented some very hard situations. But it's worth knowing its limits:
- Certification costs the producer money, which excludes the smallest.
- It only applies to coffee actually sold as Fair Trade; the rest of the harvest goes at market price.
- It guarantees nothing about cup quality: it's a social standard, not a sensory one.
The specialty coffee route
Specialty coffee approaches the problem from another direction: if coffee is bought on quality rather than as a commodity, the price stops depending on the exchange.
In practice it's paid well above the C price, sometimes several times over, because what's being bought is a specific lot from a specific producer. And since traceability is part of the product, there's a real incentive to invest in quality: it's rewarded directly.
When a coffee is bought for how it tastes rather than for how it trades, the farmer stops being a price-taker and gains something to negotiate with.
The uncomfortable question
That coffee sells at a high price at destination doesn't automatically mean the producer is paid well. Between farm and cup sit an exporter, an importer, a roaster and distribution, and the split isn't transparent by default.
Hence the industry's adoption of the term relationship coffee: buying directly and repeatedly from the same producer, at an agreed price, with a stable relationship year on year. It's the model with the best reputation currently, though also the hardest for a small roaster to sustain.
As a buyer, the useful question to ask a roaster is simple: who do you buy from, and what do you pay them? The answer needn't be an exact figure, but anyone buying directly will usually be able to reply with names.
The environmental side
The other front. Coffee can be grown in full sun — more yield per hectare, more soil depletion, more agrochemicals — or under shade, in agroforestry systems that preserve biodiversity, retain water and protect the soil.
Shade-grown coffee ripens more slowly and tends to cup better, so here quality and sustainability push in the same direction. It's one of the few times they do.
And all of it intersects with the climate, which is the structural threat: we cover it in the future of coffee under climate change.
Our approach
We select on quality and traceability, which in practice means paying above commodity price, and we favour producers with responsible growing practices — certified or not, because the cost of certification excludes many smallholders who do things properly.
What each label actually means is in the certifications guide, and what the "specialty" label implies in this article. Our coffees are in the shop.
