Uganda is now the third country with a Coffee Living Income Reference Price (LIRP) calculated by Fairtrade, following Colombia in 2021 and Indonesia earlier this year. Fairtrade launched a new LIRP for coffee from Uganda on 31 October and proposed a farmgate price of USh 11,640 ($3.13) per kilo of parchment Arabica coffee and USh 7,150 ($1.93) per kilo of Fair Average Quality Robusta coffee for sustainable livelihoods.
As a global organisation with the stated aim to improve the lives of farmers while ensuring transparency and fairness, Fairtrade seeks to raise standards in the supply chain through its various programmes, one of which is LIRP. The organisation argues that a minimum price for coffee will protect farmers from a decline in what is otherwise a very volatile market.
Fairtrade called for an assembly of stakeholders in Uganda, including producers and their technical staff, support organisations, coffee researchers and industry representatives, to “jointly analyse farm economic baseline data and define realistic targets for each of the key income drivers.”
We will have to see how realistic this is against the backdrop of the controversial contract awarding an effective monopoly to the Uganda Vinci Coffee Company (UVCC), a company with no history in the industry.
Ugandan Arabica currently sells for between USh 10,000 ($2.69) and USh 11,000 ($2.96) and has even reached USh 12,000 ($3.23) in recent months, meaning that the proposed framework is within reach. The Dutch company Fairtrade Original has already agreed to pay such prices even if the market price falls.
Setting a reference price for a living wage is a lengthy process, as many factors influence the analysis. Each country has a unique coffee growing tradition that needs to be taken into account, including farm size, household size, production volume and local working conditions.
The organisation learns a lot by assessing each origin. For example, coffee farms in Uganda are traditionally smaller than in Colombia, with larger households. Production in Colombia also seems to be better because they use more organic fertiliser, which might also be possible in Uganda. Labour is also treated differently in each country.
Living income is a journey, and therefore it is important to establish long term collaboration with our partners, like ACPCU. We want to achieve living incomes for coffee farmers by paying them the thoroughly-researched Living Income Reference Price and developing projects to further improve their incomes. This way, we take the lead in bringing about the highly needed change in the coffee industry.
Lotje Kaak, Business Development Manager, Fairtrade Original
Fairtrade defines the LIRP as sufficient income to provide all household members with a decent standard of living – including a nutritious diet, clean water, adequate housing, education, healthcare and other basic needs, plus a little extra for emergencies and savings – once agricultural costs are covered.
The incentive for LIRP came after the coffee price crisis of 2018/2019, when low prices threatened the livelihoods of farmers, many of whom sold their coffee for less than the cost of production.
