Answer to Question #208893 in Management for Palesa

Question

Added to the Fairtrade Minimum Price, coffee bean buyers must also pay a

fixed premium. What should this premium be used for?

Answer 1

Fairtrade's fixed premium is the extra sum of money over and above the Fairtrade minimum price. It's used as a one-time payment that is pooled into a communal fund which provides farmers and workers with additional money to invest in improving the quality of their businesses and community. Farmers get to decide how this premium is spent. The farmers or workers therefore utilize the premium as they deem fit to improve their own economic, social and environmental conditions. Coffee farmers are also required to spend a percentage of their premium on specific purposes i.e. environmental sustainability, quality and productivity.