Coffee Workers Face Ruin as Market Collapses

by Sanjay Suri

The sacks were dumped at the stock exchange to symbolize the collapse in world coffee prices. The picture event was organized by Oxfam as a part of its "coffee rescue plan" to demand that a decent price be paid to coffee farmers.

Oxfam says 25 million coffee farmers in 45 countries are facing economic ruin, and many are going hungry because of collapsing world prices. Oxfam's global campaign aims to force corporate giants who dominate the $60 billion industry to pay a better price. Oxfam's campaign is particularly targeting the largest four companies -- Kraft, Nestle, Sara Lee and Procter & Gamble -- who buy nearly half the world's coffee crop.

Only about 5 percent of the money that coffee generates reaches the poor farmers, Oxfam says. "They know there is terrible human suffering at the heart of their business and yet they do virtually nothing to help," says Oxfam's Campaigns Director Adrian Lovett. "It's time to shame them and change them."

The campaign has brought some talk of change. Nestle, the Swiss multinational announced earlier this week that it is prepared to take steps to halt the fall in the price of coffee beans. The announcement followed several weeks of negotiations with Oxfam representatives.

NestlŽ says it will consider a return to an agreement similar to the quotas system introduced in 1962 to prevent overproduction and keep prices stable. The agreement broke down in 1989 when the U.S. backed out. But none of the other major companies have supported this move. A spokeswoman for Kraft said only that the situation should be improved by stimulating demand.

Oxfam welcomed the Nestle offer. "It is a good sign that they agree with us that action needs to be taken," Eliot Whittington from Oxfam told IPS. "But we would like to see action, not just talk of action."

The crisis has come about after several bumper coffee crops in Brazil and huge production in Vietnam. Average prices for coffee beans have fallen by half over the past three years to about a dollar and ten cents a kilogram.

Within this price the farmers can expect to receive on average only 14 cents for a kilogram of unprocessed green coffee beans. A cup of coffee in a London coffee house sells for three to four dollars.

Prices have fallen below the price of production in many countries. "This is lower than the price in the Depression," says Nestor Osario, president of the International Coffee Organization (ICO) in London.

The ICO which represents the coffee producing countries says the consequences have been catastrophic for countries such as Kenya and Vietnam.

It estimates that overproduction had led to a stockpile of 40 million bags. It has proposed removing poor quality beans from the market to cut excess supply and to bring up prices.

Oxfam is backing that move. It says destruction of 5 million bags of coffee of 60 kilograms each could bring prices up 20 per cent within a year. Oxfam wants developed countries to pay the $140 million this will cost. The move will bring benefits worth $1.2 billion, it says.

The ICO is holding a meeting in London next week to discuss the price crisis. Oxfam says the meeting can be effective only if it gets enough support from political and business leaders. So far the indifference of the coffee companies has been matched by the complacency of major governments, it says.

"How governments and companies react to this crisis is the acid test of whether globalization can be made to work for poor people," Lovett says. "We were told to be patient and that the free market would eventually work. We're still waiting as the rich get richer and better at making excuses. Enough is enough. Twenty five million people need action now."

The crisis has consequences for the consumer. At the present low prices farmers are letting the quality of the coffee fall, says an ICO spokesman. Some of the coffee now finding its way into the market contains stuff "not recognizable as coffee," he says.

Oxfam aims to bring consumer pressure on the big coffee companies. Its campaign will seek to educate coffee drinkers about the "injustice in the cup" which gives farmers less than production costs while making billions for the coffee multinationals.

Sophia Tichell, senior policy adviser at Oxfam, says the fact that the big companies have been ignoring the end of the supply chain "seems remarkably short-sighted because there is plenty of evidence that consumers are interested even if companies are not."