Special growing conditions
A number of classifications are used to label coffee produced under certain environmental or labor standards. For instance, bird-friendly or shade-grown coffee is said to be produced in regions where natural shade (canopy trees) is used to shelter coffee plants during parts of the growing season.
 Shade trees in Orosi, Costa Rica
cooperatives a minimum price, though with historically low prices, current fair-trade minimums are lower than the market price of only a few years ago. TransFair USA is the primary organization currently overseeing Fair Trade coffee in the United States, while the does so in the United Kingdom.
The commodity chain
The coffee industry currently has a commodity chain that involves producers, importers, roasters, and retailers before reaching the consumer. Middlemen exporters, often referred to as coffee “coyotes,” purchase coffee directly from small farmers. They typically purchase the coffee below market price, keeping a high percentage for themselves. Large coffee estates and plantations often export their own harvests or have direct arrangements with coffee processing or distributing company. Under either arrangement, large producers can sell at prices set by the California Coffee Exchange.
Green coffee is then purchased by importers from exporters or large plantation owners. Importers hold inventory of large container loads, which they sell gradually through numerous small orders. They have capital resources to obtain quality coffee from around the world, capital normal roasters do not have. Roasters’ heavy reliance on importers gives the importers great influence over the types of coffee that are sold to consumers.
In the United States, there are around 1200 roasters. Roasters have the highest profit margin in the commodity chain. Large roasters normally sell pre-packaged coffee to large retailers, such as Maxwell House, Folgers, and Millstone.
Coffee reaches the consumers through cafes and specialty stores selling coffee, of which, approximately, 30% are chains, and through supermarkets and traditional retail chains. Supermarkets and traditional retail chains hold about 60% of market share and are the primary channel for both specialty coffee and non-specialty coffee. Twelve billion pounds of coffee is consumed around the globe annually, and the United States alone has over 130 million coffee drinkers.
Coffee is also bought and sold by investors and price speculators as a tradable commodity.Coffee futures contracts are traded on the New York Mercantile Exchange (NYMEX) under ticker symbol KT with contract deliveries occurring every year in March, May, July, September, and December.
Fair Trade Coffee
According to the International Fair Trade Association and the other three major fair trade organizations (Fairtrade Labelling Organizations International, Network of European Worldshops and European Fair Trade Association), the definition of fair trade is “a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade.”
It offers better trading conditions to marginalized producers and workers. Fair trade organizations, along with the backing of consumers, campaign for change in the rules and practice of conventional international trade.
Fair trade coffee creates a trade environment in which the coffee importer has a direct relationship with the coffee producer, excluding the middlemen. Coffee importers provide credit to farmers to help them stay out of debt with coffee traders so they can develop long-lasting trade relationships. Small farmers included in the International Fair Trade Coffee Register are guaranteed a minimum of $1.26 per pound of coffee, the “fair trade price,” from coffee importers. The free trade price of coffee rose above this minimum in September 2007, but due to recent economic events, the free trade price dropped back below this minimum in October 2008.
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