By Anindya Bhattacharyya
Downloading PDF. Please wait... Issue 1947

The price paid for that caffeine buzz

This article is over 17 years, 2 months old
We begin a series on commodities that shaped history with a look at coffee
Issue 1947
Just a drink?
Just a drink?

Starbucks and the other coffee houses have invaded nearly every high street.

The industry is dominated by a handful of multinational companies that exploit the labour of some 25 million small farmers around the world.

For every £2 we spend on coffee, only 10p gets into those farmers’ hands. And that proportion is diminishing as free trade rules bite even further into their meagre living standards.

Coffee was first grown in East Africa and the Middle East — legend has it that it was discovered when an Ethiopian farmer noticed his goats getting energetic after eating coffee beans.

The Dutch were the first big European power to get into the coffee trade. They introduced coffee to their Indonesian colonies in the early 1700s. Peasants were forced to grow a certain amount of coffee on their plots and sell it at a fixed low price to the Dutch colonists.

However, the Dutch soon faced competition from French colonists, who started cultivating coffee on Caribbean plantations in the first half of the 18th century.

Unlike the Dutch, the French used slave labour on huge plantations and soon began to dominate the world coffee market.


But the fortunes of the French slave drivers were rudely interrupted in 1791 when Toussaint L’Ouverture launched the first great slave revolt in Haiti. This virtually halted Haiti’s coffee production, jacking up global prices and opening up breathing space for rival producers.

Even when Haiti returned to large scale coffee production some 50 years later, the children of former slaves were unwilling to work on the hated plantations.

At the beginning of the 19th century, coffee was a luxury good. This situation would be radically transformed over the next 100 years as coffee became a mass market commodity, produced mainly by the new nation states of Latin America.

The coffee trade was intimately tied to the emergence of capitalism’s key financial institutions. The Lloyd’s insurance market in London was originally a coffee house. Merchants met to strike deals while consuming this exotic and fashionable beverage.

In fact British capitalism profited greatly from the coffee trade, despite not being directly involved in production. Instead capitalists made their money indirectly through supplying slaves to plantations, insurance to ships and financing to coffee merchants.

The emergence of this international market fundamentally altered the balance of power in the coffee trade in favour of importers. The New York Coffee Exchange was set up in 1882 by importers to prevent producers from banding together to drive up prices.

Fixed price

Today, the coffee market is almost entirely deregulated, and almost entirely controlled by four multinational companies — Kraft Foods, Nestlé, Procter & Gamble and Sara Lee.

These companies process, distribute and market coffee as a standardised retail good sold to us for a relatively constant price.

But the fixed price we pay in shops and bars masks wildly fluctuating prices for coffee on the global commodity markets. And these prices have been on a general downward trend during the last decade, when the market was forcibly deregulated by the International Monetary Fund and the World Bank.

The result is that the multinationals make huge profits from coffee while the 25 million people who grow coffee for a living are forced into an ever more precarious and poverty stricken situation. Around 70 percent of coffee is still grown on small farms in Latin America, Africa and East Asia.

Moreover, international financial institutions are using Third World debt to force countries to turn over more and more land to producing cash crops such as coffee.

The result is overproduction, and an ever-increasing grip of the global market on these countries’ economies.

Awareness of these problems has risen, thanks in no small measure to the campaigns run by some campaigning non-governmental organisations. But as the history of coffee demonstrates, this injustice is linked to the nature and history of the capitalist system itself.

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