Fair Trade Social Premium and Organic Differential for Coffee to Increase

Oakland, CA (March 21, 2007) - TransFair USA is pleased to announce that the Fair Trade Labelling Organizations International (FLO) Board has approved an increase in the Fair Trade Social Premium for coffee and the Organic Differential for certified organic coffee by $.05/pound each. The decision is the result of an extensive multi-stakeholder consultation that included input from growers, industry, external experts and FLO national labeling initiatives from 19 countries.

The Social Premium will increase from $.05/pound to $.10/pound for all Fair Trade coffee, bringing the total price for non-organic Fair Trade coffee to $1.31/pound. The Social Premium, paid by buyers in addition to the Fair Trade Minimum price, is a key and unique feature of the Fair Trade system. Farmers and farm workers decide democratically how to invest it, in projects ranging from infrastructure improvements to health initiatives to scholarship funds. Raising the Social Premium delivers additional impact directly to farmers on the ground, increasing funds available for use in developing their communities.

The Organic Differential will also rise by $.05/pound, from $.15 to $.20, bringing the total price for organic certified Fair Trade coffee, including the premium, to $1.51/pound. The increase in organic minimum pricing reflects the rising cost of organic production and compliance, as well growing market demand for organics.

These changes will be implemented for Fair Trade coffee contracts signed after June 1, 2007. The Fair Trade Coffee Minimum Price will remain unchanged at this time, at $1.21/pound, but will be reviewed again in October 2007.

Fair Trade standards and certification are designed to empower farmers and farm workers to lift themselves out of poverty, invest in their communities, and develop the business skills necessary to compete in the global marketplace. The Fair Trade standards include minimum price guarantees, social premiums for community investment, safe working conditions, and environmental protections.

Definitions

Fair Trade Minimum Price:
The Fair Trade Minimum Price is a guaranteed price intended to cover the Cost of Sustainable Production (COSP). If the international market price rises above the Fair Trade Minimum Price, the Fair Trade price becomes the market price plus the Fair Trade Social Premium. Many Fair Trade farmer groups are currently receiving more than the Fair Trade minimum price due to market conditions and quality initiatives: the average total price paid per pound by U.S. companies for Fair Trade coffee in 2006 was $1.48.

Fair Trade Social Premium:
The Social Premium is a separate and additional payment to producer groups for investment in social and economic development in producer communities. Producer organizations decide democratically how to spend the Fair Trade premium funds, and are accountable to FLO-CERT for their use.

Organic Differential (in coffee, previously called organic premium):
The Organic Differential is an additional economic incentive paid to Fair Trade producers whose production is certified organic. The Organic Differential aims to cover the additional costs of producing Fair Trade coffee that is also certified organic, and is paid on top of the Fair Trade Minimum Price (or market price, whichever is higher), and in addition to the Social Premium.

FLO Standards Committee:
The Standards Committee is comprised of representatives of FLO stakeholders (labeling initiatives, producers and traders) as well as external experts, and is responsible for approving international Fair Trade Standards. Fair Trade Standards are set in accordance with the requirements of the ISEAL Code of Good Practice in standards setting.