Spilling the beans
The
coffee connoisseur purchasing his coffee from one of the top food stores in
western Europe selects his speciality coffee with care. This man will tell
you that the Kafe region in Ethiopia, where coffee originated, continues to
produce coffee that is considered amongst the best in the world. He is aware
that he is expected to pay well over the odds for this 'gourmet' product -
it usually retails at a 30% premium over similar products from Latin America
- but he feels that the quality is worth the expense. And yet, what does he
know of the Ethiopian coffee growers that struggle to make a living?
Unlike cereal crops, for example, where the yield at harvest can be forecast no more than a season ahead at best, coffee forecasts have a five-year head start. Admittedly, the prediction can never be static because rainfall, pests and diseases have a major effect. This is why the futures market is so big, and so profitable for some, and why coffee is traded more times between the field and the consumer than any other crop.
Two years ago coffee fetched almost $1 a pound on the world market. Today, prices for robusta are as low as 49 US cents per pound, the lowest rate for more than 30 years, and the market value is still dropping. In Kenya, farmers received less than 7 shillings (8.8 US cents) a kilogram this year compared to 20-30 shillings only a few years ago. And yet, the price of coffee on supermarket shelves and in designer coffee bars continues to rise and profits reported by transnational companies and coffee chains are surprisingly healthy.
Elsewhere in the world the picture that emerges of smallholder coffee production
is similarly bleak. It is not only the growers that suffer: in the Chiapas
region of southern Mexico, the wages of seasonal labourers already living
on less that $2 a day have been cut, leading to mass migration: more than
500 families a week are leaving their farms. In Guatemala, where coffee has
traditionally provided the greatest amount of foreign currency, a recent newspaper
headline was reported to say 'A National Tragedy'. 
The
Guatemalan coffee association has forecast losses of up to $300m in the coffee
year from October 2000. What impact will this loss have on the 62,000 small
producers or to the Mayan Indians who are usually trucked in as pickers on
the larger plantations? An enlightened solution, perhaps, to the country's
overproduction is to burn the lower-grade coffee
as an industrial fuel but this is unlikely to spark much enthusiasm with impoverished
farmers.
The retention and destruction of stocks were amongst the topics discussed at the first World Coffee Conference, hosted by the International Coffee Organisation in London during May 2001. Attendance amongst delegates included many top level industry and development bank executives. Though no indication has been given by the Conference discussions of how it will be achieved, it is hoped that prices will eventually rise again. However, many feel that the current situation is more than just a normal commodity price trough. Mechanization is radically changing the way in which an increasing proportion of coffee is produced and it is believed that the advent of GM technology could exacerbate the situation. In addition, consumption of coffee is not increasing with the rate of production. More ingenious marketing may be required but with the added demand of globalization, smallholders need access to information that will enable them not necessarily to produce more but to provide a superior or niche product.
