Fair Trade Responds to Rising Coffee Costs
CoffeeNetwork (New York)- American consumers are concerned about the cost and quality of the groceries they consume every day, as evidenced by the results of the 2024 U.S. presidential election. Food brands should keep this in mind as they plan for 2025, particularly when it comes to their sustainability goals, because global trade trends will have consequences for Americans’ wallets and values.
Research commissioned by Fairtrade America and carried out by the independent insights firm, GlobeScan, in 2023 found that 61% of shoppers see inflation as the most important challenge facing the world. Poverty and climate change ranked second and third, respectively.
Fairtrade America forecasts the following trends for 2025 and calls on brands to strategize around them as the New Year approaches.
High Global Commodity Prices Are Here to Stay
The history-making coffee and cocoa price spikes seen in 2024 are not anomalies. Prices for commodities grown by smallholder farmers in tropical regions hit hard by climate change will increase due to reduced supply. For American consumers, this will likely mean paying more for bananas and other produce, herbs and spices, nuts and oils, and other food items.
Smallholder farmers in these regions are unable to quickly adapt to climate change because of long-standing issues, including the exploitative underpayment of farmers, a lack of investment in aging farms that have lower production potential and rising production costs.
To lessen the sting of price fluctuations, commodity traders and food companies must invest more in the farms they source from. Only when climate change adaptation at the farm level becomes a shared responsibility across the supply chain will global market prices stand a chance of stabilizing.
Europe’s Regulations Will Redefine Expectations Globally
The European Union’s Deforestation Regulation and the European Commission’s Corporate Sustainability Due Diligence Directive have set higher bars for environmental, economic and social sustainability that food companies will need to reach to sell into Europe. Seen by many as the strictest sustainability laws created to date, both signal greater scrutiny on and enforcement of responsible corporate behavior.
Supply chains are global. Food brands will be impacted by these regulations whether they are selling in Europe or not.
Even if U.S. policy continues its inaction on corporate sustainability and social responsibility, there is growing consumer demand among Americans for more sustainable products. Millennial and Gen Z shoppers, who are positioned to have the most purchasing power by 2030, are driving this trend. Considering that consumers have ranked national governments, international entities (like the United Nations) and large corporations as the most responsible for moving the needle on human rights and environmental due diligence, brands that become early adopters can capitalize on the lack of progress from the other two groups to gain consumers’ favor and strengthen their position on the global stage.
Consumers Demand Proof
Sustainability claims are no longer enough. Building shoppers’ trust in your sustainability efforts across environmental, economic and social issues is key. This is a challenge because concern for greenwashing has grown alongside rates of general corporate distrust.
Sustainability claims must be proven, or consumer trust will be lost. In today’s environment of information overwhelm, brands must concisely, transparently and repeatedly communicate the difference they are making and be able to back up their statements with evidence and impact reporting. Companies that make sustainability a core tenet of their brand will be well positioned to capture younger generations’ business come 2030.
“No amount of isolationism in U.S. politics will protect American shoppers and their wallets from these global realities,” said Amanda Archila, Executive Director, Fairtrade America. “Every day spent denying current crises puts affordability, livelihoods, and the very land needed to feed people at risk. Many consumers have recognized that climate change is no longer an existential threat, and their purchasing motivations have changed accordingly. Now, it’s on food companies to adapt.”
Fairtrade America urges food companies to consider these factors as they reevaluate their sustainability efforts for 2025. Steps brands can take to chart a more sustainable way forward in 2025 include:
- Understand how climate change is affecting supply chains and invest in climate adaptation at the farm level
- Prepare farmers in your supply chain to be compliant with evolving sustainability laws
- Partner with Fairtrade America to source sustainable products and leverage our impact reporting and communications support
With regards to producers, Max Milward, Sustainable Sourcing Manager at the Fairtrade Foundation, made the following statement:
“The recent rise in coffee prices has sparked much-needed conversations about the realities faced by coffee farmers. While higher prices may appear to benefit farmers, they are often temporary and fail to address the challenges and inequalities faced by those at the start of the supply chain. Price hikes do not necessarily filter down to farmers, the global coffee industry is worth over $200 billion, yet less than 10% of this wealth remains in producing countries. The recent surge in coffee prices has highlighted the volatility of this market.
This volatility has a huge impact on the livelihoods of coffee producers. Sudden price surges and sudden price drops can be destabilizing for coffee farmers, making it difficult for them to plan or invest in their future. The current price hikes, influenced by extreme weather in Brazil and Vietnam and increasing global demand, demonstrate the fragility of the supply chain and the urgent need for long-term solutions.
It’s crucial to create systems that provide stability and support for farmers, enabling them to invest in their communities and build resilience against climate change. By promoting fair and equitable trade practices, the coffee industry can help ensure a sustainable and more stable future for both farmers and the wider supply chain.”
Alexis Rubinstein
