What's that in your coffee?
 Huge profits for the big coffee companies,
poverty and misery for coffee farmers.
Article by Justin Coburn – Central America and
Mexico Program Coordinator, Jeff Atkinston –
Trade Campaign Coordinator and Bruce Francis
– National Campaigns Coordinator.
MEXICO
Diego and Maria Perez pick coffee in Chiapas, Mexico.
© Justin Coburn/Oxfam CAA
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"Coffee is our only source of income, and now we
have basically nothing." So says Diego Perez, an
Indigenous farmer from Chiapas, Mexico. In 1997,
he received around $5.25 per kilo for his crop.
Today the price is about $1.25 – the lowest ever.
The collapse of coffee prices on world markets
over the last five years has plunged an estimated
25 million poor families into financial crisis.
As a result, Diego and his wife Maria have had
to take two of their girls out of secondary school,
as they can no longer afford the modest fees.
Their 16-year-old son has moved to the city in
search of work. Diego and Maria are concerned
that like so many Indigenous people, he will be
forced to live on the margins where violence and
crime are common. "If they cannot find work,
then what will they do?" Diego asks. "At least
before we could earn an income from the
coffee. We worked the land and we stayed
together. But not now things have changed.
Maybe my sons will never return to the land."
GUATEMALA
| What is Fair Trade Coffee?
Fair trade coffee is purchased: for a fair price; above the cost of production;
using long-term contracts that allow for production planning and sustainable
production; using payment policies that allow for local social and economic
development; from plantations that pay their workers a liveable wage and allow
them access to unions and basic services; and from plantations that use no
child labour and adhere to minimum environmental standards.
You can purchase fair trade coffee (and tea) from Oxfam Shops around Australia. As yet there is no fair trade accreditation system in Australia,
so you must research for yourself whether other coffee you buy is fairly-traded.
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The situation is even more dire in Guatemala,
where around 98 percent of the seven million
Indigenous people have no land, or not enough
to support their families. Of Guatemala's eleven
million people, more than two million rely on
jobs in the coffee industry to survive.
The coffee crisis has already thrown hundreds
of thousands out of work. For many large
producers, the coffee is simply no longer worth
harvesting. Wages on the remaining plantations
are below survival levels, as Oscar Guevara,
mayor of Chiquimula, explains. "Last year, the
owners of the coffee plantations were paying
25 quetzales ($6.00) per day, but now the people
are earning between 10 and 15 quetzales ($2.50
to $4.00) per day, which is not enough for one
person to survive on, let alone their children."
The crisis first hit in September 2001, when
delayed rains led to a poor harvest of corn,
the staple food. Without corn, and without
income from work on the plantations, tens
of thousands faced starvation. Worst-affected
were the families who stayed behind when the
men went searching for work. Local hospitals
were overwhelmed with malnourished women
and children. In March 2002 the same happened
in neighbouring Honduras – 30,000 people
were without food and hundreds of children were
hospitalised. Many fear that without international
action, the region faces a catastrophe.
ASIA PACIFIC AND BEYOND
Coffee is a major income source for millions in
our own region. Vietnam and Indonesia are the
world's second and fourth largest exporters,
East Timor relies almost entirely on coffee for
precious export income and Papua New Guinea
is also a significant exporter.
Between 1996 and 2001, Asia Pacific coffee producing
countries fought a losing battle. Despite
increasing production by around 65 percent, coffee
income fell by around $3.4 billion – double the
total annual Australian aid budget to the region.
It was a disaster for Indonesian growers. Jama'in,
a 52-year-old farmer from Panggung Island,
recently told The Jakarta Post that drought and
the drop in prices have meant thousands of local
coffee farmers can no longer afford to eat rice.
In Ethiopia, the coffee crisis is exacerbating food
shortages that could eclipse even the 1984
famine: to find out more.
TAKING ACTION ON THE GROUND
In Mexico and Guatemala, Oxfam Community
Aid Abroad supports farmers through coffee
cooperatives, which aim to get them fairer prices
for their crop. Guatemalan co-operative I'jatz
helps small-scale producers switch to organic
coffee, improve their crop quality and reduce
processing costs. I'jatz also provides loans,
assists in the organic certification process and
helps farmers find new markets.
Thomas Ajcot joined I'jatz in 1997, so is faring
better than most. "To have the coffee certified
as organic you have to build drains around your
land to stop chemicals coming onto it," he says.
"And you need to make the organic fertilisers.
This is what they taught us in I'jatz. Now we
are being paid $4.40 per kilo." Thomas and
his family still struggle to make ends meet, but
many earn even less. The real issue is the gap
between the price paid to farmers – around
$1.12 cents a kilo, and what the big coffee
companies sell it for – about $20.66 a kilo.
HOW DID THE CRISIS HAPPEN?
This woman works eight hours a day drying coffee
at the Haro coffee cooperative, Ethiopia.
© Martin Wurt/Oxfam CAA
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The main factor is oversupply caused by market
deregulation. Until 1989, the International Coffee
Agreement kept prices between $4.40 to $5.30
per kilo, and each coffee-producing country had
an agreed "fair" share of the market that it could
only exceed if demand exceeded forecasts.
In 1989, the US withdrew from the agreement,
and the market became unregulated. The World
Bank and others encouraged Vietnam to move
into coffee and by 2000 it was the world's
second biggest exporter. Oversupply caused
prices to plummet below the average cost of
production. Many small-scale farmers have
invested heavily in coffee growing and cannot
afford to switch crops. European and US trade
subsidies have also meant many alternative
cash crops are not an option.
But if prices are so low, why do consumers pay
more for our cup of coffee than ever before?
At the other end of the supply chain, the big
four coffee roasters – Kraft, Nestlé, Procter
& Gamble, and Sara Lee – are making record
profits. Nestlé, for example, makes around
26 percent profit on instant coffee.
OXFAM'S COFFEE RESCUE PLAN
In September 2002, Oxfams around the world
launched our Coffee Rescue Plan, which aims
to immediately bring prices above the cost of
production, and eventually bring supply back
into line with demand. The Plan – already
supported by coffee-producing countries –
requires the big four roasters to pay farmers a
decent price, to only buy crops that meet basic
quality standards, and to buy more fair trade
coffee. It also calls on governments to help
some farmers start growing different crops.
But it will only work with backing from the
companies and rich country governments,
and it must be complemented by measures
to address long-term rural underdevelopment.
WE NEED YOU!
Most of us drink coffee – it is our business if
the coffee we drink is sending poor farmers into
financial crisis. The Rescue Plan will only be
adopted if wealthy governments and companies
feel the weight of public opinion. We have made
some progress already: the International Coffee
Organisation and the World Bank have called
a special coffee conference in May. However
there is resistance to increased regulation and
transparency in coffee trading.
Oxfams around the world are mobilising
support for the campaign. There are many
ways you can take part:
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