Coffee giants roast poorest
By Sam Ashman
HAVE YOU noticed a change in the price of coffee? The answer is no, there hasn't been, for you and me. Yet the profits of the big coffee companies have soared. Starbucks' profits have tripled in the last five years and rose 40 percent in the first quarter of this year. Nestl, the world's largest coffee roaster, made about 1 billion profit from coffee last year, and profits are up 20 percent so far this year.
How has this been achieved? Because the price paid to millions of people who grow the coffee has plummeted. Two years ago coffee was worth about $1 a pound. Today it is nearer 50 cents and still falling. This has halved the income of an estimated 20 million coffee growers. Who exactly are these growers?
An Oxfam report last week said that about 70 percent of the world's coffee is grown on farms of less than 12 acres. The growers are poor people in Brazil and Colombia, or in the Kafe region of Ethiopia, where the falling price of coffee is leading to food shortages. They are in Chiapas, Mexico, where wages of the indigenous peoples working on coffee farms are being cut. They are in Tanzania, where one woman told Oxfam, "How can I pay for school fees when I can barely feed and clothe my children? My children don't go to school and we starve."
Do the giants of the coffee industry give a monkey's? Of course not. "Trading profits increased and margins improved thanks to favourable commodity prices," says Nestl.
The giants of the global coffee industry met in London last week-at the Park Lane Hilton hotel. They were no doubt rubbing their hands with glee-and they want to make matters even worse. Coffee production is very labour intensive because berries ripen at different speeds and have to be hand picked.
Researchers have developed a new genetically modified coffee bean that stops growing just before it is ready to be harvested. The plan is to then ripen them all at once using a chemical spray, and harvest mechanically. The agro-chemical industry, the big coffee corporations and the big farmers will gain. Poor farmers and labourers will suffer.
Until about ten years ago an international agreement regulated the volume of coffee produced. Such agreements have been torn up by organisations like the IMF, World Bank and World Trade Organisation as "barriers to free trade". Coffee production has become a free for all. Other countries like Indonesia and Vietnam have entered the market. The amount of coffee produced has soared, the price has fallen, and millions have been pushed into desperation.
At the same time the World Bank and the IMF encourage poor countries to get locked into the world market. They encourage countries to turn more land over to producing crops to sell for cash. But when the price on the world market falls, the poorest countries have to export more to get the same amount of money.
So people go hungry while swathes of land are devoted to producing things like luxury flowers for export, or mange-tout. The mad logic of the market leads to further madness. One idea being put forward to help poor coffee farmers is to destroy the existing stocks of coffee in order to remove about one million tonnes from the market. What a waste, of coffee and people's labour!
Some people say the key to ending this awful situation is to back schemes such as "fair trade" coffee, where a greater amount goes to the grower. But, while well intentioned, the idea that the solution to the problem is for consumers to pay more is wide of the mark. The real and obvious solution is to cut the vast profits of the big firms and make them pay more to the growers.
The market produces a crazy spiral that results in profits for few and despair for millions. We need to fight for every small gain that can be made within the system. But it is the chains of the market that ultimately must be broken.