Fairtrade Introduces Living-Income Reference Price for Honduras

Fairtrade International has released a living-income reference price for Honduras, designed to help inform green coffee buyers of minimum prices required to allow coffee farmers and their families to afford “decent housing, nutritious food, education, health care and other essentials.”

It is the fourth countrywide living-income reference price identified by the multinational nonprofit organization, following similar analyses in Uganda, Indonesia and Colombia.

Notably, today’s announcement of a living-income reference price for Honduras comes one day after the International Coffee Organization announced it is launching a program designed to identify living-income benchmarks in four countries, including Honduras.

None of these living-income analyses, nor others recently driven by other NGOs and private-sector actors, require buyers to meet specified prices. Instead, they tend to be presented as price discovery tools, like the Specialty Coffee Transaction Guide, designed to better inform conscientious green coffee buyers.

In a recent column for Daily Coffee News, Cory Gilman of the nonprofit Heifer International described living-income benchmarking as a kind of pass/fail proposition for buyers that can help eliminate subjectivity in sourcing and corporate sustainability initiatives. Wrote Gilman, “A benchmark can be considered a first milestone for economically sustainable remuneration.”

Recent research, meanwhile, suggests that most large buyers are unaware of how coffee pricing affects the world’s approximately 12.5 million smallholder coffee farmers, who have historically struggled to maintain profit and are subject to the volatility of the commodities trading market.

Fairtrade’s Honduras analysis applied specifically to arabica production and involved in-country consultations led by Honduras coffee leaders, NGOs and research institutions. The living-income reference price was set at 94 Lempira (or US$3.89) per kilo of dried parchment at farmgate, which translates to approximately $1.76 per pound.

The group noted that this is within the range of what most farmers were earning this past harvest season, although it is well above the historic lows experienced in the 2019 price crisis, as well as below historical norms.

Said Fairtrade, “Farmers are not able to count on the volatile coffee futures market when they make decisions about investing in farm improvements.”

Does your coffee business have news to share? Let DCN’s editors know here.