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The Problem Today
Coffee farmers around the globe live in poverty. This crisis doesn’t gather much attention, but as an incredibly labor intensive crop, the coffee farmers themselves carry out the most work, and receive the least.
Four giants Proctor & Gamble, Kraft Foods, Sara Lee and Nestle together control about 50 percent of the world's coffee, to give an indication of their bargaining power. They are accused of paying less money for the coffee beans they purchase, or of supporting the growth of low-quality coffee, either of which drives down the value of coffee for all farmers.
Meanwhile, these large companies pocket significant profit for the coffee that they sell. Over 90% of coffee production takes place in developing countries, while consumption happens mainly in the industrialized economies. Adding to this, the price of coffee drinks has outpaced inflation over the past 15 years.
In summary…while we can still choose the quality of coffee we wish to enjoy, large corporations reap most of the benefits, and coffee farmers live in a cycle of poverty that receives little mainstream attention.
This explains the bargaining power of multinational companies but doesn’t address the reason why coffee farmers are poor. In order to do so, we have to take a closer look. First, the countries that produce coffee have agriculture as a major sector contributing to their GDP and employ a large amount of their population. These countries are either developing or minimally developed.
A developed country like Brazil has a two-tier growth structure with the middle class growing economically at a faster pace than the lower class (farmers). There is also alleged corruption in many of these countries, pushing the poor into deeper poverty.
Education in developing countries is better than in the past, but still has a long way to go. The colonial powers that historically ruled these countries did nothing to help educate the people. So, they do what they know, which is to farm. However, the business associated with farming is beyond them at this time, further contributing to the cycle of poverty.
Oversupply of coffee beans into the market mainly from Brazil and Vietnam, make the situation even worse for farmers in all countries by affecting the price of coffee as a commodity. The coffee buyer can demand lower prices from farmers forced to accept the going rate as opposed to holding, and receiving no money at all.
In short, the coffee farmer has no bargaining power in the supply chain.
The Solution Today
There are organizations or movements today that aim to improve the situation, either for the farmers themselves or the land on which they grow coffee.
An organized social movement that aims to help producers in developing countries by managing better trading conditions and promoting sustainability. It advocates the payment of a higher price to farmers as well as higher social and environmental standards. It focuses in particular on exports from developing countries to developed countries, most notably coffee, cocoa, sugar, tea, bananas, honey etc. Fairtrade establishes a floor price for coffee, so that when you purchase Fair Trade coffee, you can be sure that a minimum price has been paid to the farmer behind that grew it.
How can you support? By looking for the Fairtrade seal on the coffee that you buy.
A not-for-profit, working with coffee-farming families to improve their lives and livelihoods. It does not sell coffee but its business supporters do. Coffee Kids helps community members to identify challenges and then partners with local nonprofits to develop projects that address the challenges unique to that area. All projects respect the cultural integrity, intelligence and ingenuity of the people they serve. Coffee Kids supports 19 projects with 16 partners in 5 coffee-growing countries. They work in Peru with 650 small-scale coffee producers, 2,000 farmers in Nicaragua, ACMUV & ADESPA associations in Guatemala, AUGE & CAMPO associations in Mexico.
How can you support? By donating to Coffee Kids, or by supporting the businesses that support Coffee Kids (including Green Mountain Coffee Roasters, DaVinci Gourmet, S&D Coffee, Van Houtte, Starbucks, and many more).
A not-for-profit, working to conserve biodiversity and ensure sustainable livelihoods by transforming land-use practices, business practices and consumer behavior. It protects ecosystems and the people and wildlife that live within them by developing and implementing best management practices and standards for commodity crops, providing incentives to farmers to meet those standards, and encouraging consumers to support farmers who are making on-farm improvements towards sustainability. It looks after the workers safety conditions, proper sanitation, health care and housing. This seal applies to numerous farms and cooperatives in Central America and Mexico, often in partnership with a local conservation organization.
How can you support? By looking for the Rainforest Alliance seal on the coffee that you buy, or by donating to Rainforest Alliance.
International Coffee Organization
Established 1963 in London, it was initiated in collaboration with the United Nations to enhance cooperation between nations that consume, distribute and produce coffee . In the most recent 2007 coffee agreement, additional objectives include encouraging members to develop strategies to help local communities and small-scale farmers to benefit from coffee production; and facilitating the availability of information on financial tools and services. The members include 38 coffee exporting members and 6 coffee importing member countries (countries in the European Union are represented by a single member, the European Union).
How can you support? Stay current with the ICO’s research so that you are aware of issues facing coffee production and its sustainability. In the US and EU, keep the pressure on your representatives to continue contributing to the ICO’s budget, supporting a staff of 25, reduced from 93 in 1989.
This is not an organized group, so much as a movement, and an alternative to Fair Trade, which itself emerged as an alternative to free trade. In a direct trade relationship, the roaster personally travels to the coffee farm, verifies that a quality standard is in place and is adequate, and sets up an arrangement directly with the farmer to purchase his coffee. Exporters and importers are still in place between the farmer and the roaster, but this gives roasters access to smaller growers that don’t want to participate in Fair Trade. It gives the roaster more control over quality, consistency and visibility, and the ability to communicate directly with his coffee-drinking customer with regards to the coffee he sells. While direct trade is increasing in popularity, there are no uniform standards, as it is not an organized group so much as a movement. It requires the coffee drinker’s trust in the roaster to conduct business in an ethical manner. As I have written in the blog, the Fair Trade seal has all but disappeared in the coffee crazy city of Portland, OR, replaced for the most part by direct trade relationships. Not only are you assured of a quality cup of coffee, but the roaster is investing in sustainability in the practices of the farmer, who is now assured of steady demand at a fair price. You win with good coffee, the roaster wins with steady quality supply, and the farmer wins ongoing demand for his crop and the opportunity to reverse the cycle of poverty.
How can you support? Buy coffee from a local roaster that promotes direct relationships with the farmers that grow his coffee. Talk to the roaster about these relationships. If you have access to them, the larger roasters that have led the direct trade charge are Stumptown, Intelligentsia, and Counter Culture. All three are advocates of direct trade coffee.
- The Oromia Coffee Farmers
- Cooperative Union (OCFCU)
- CESMACH (Campesinos Ecológicos de
- la Sierra Madre de Chiapas)
- CECOCAFEN (Coffee Cooperatives
- Central Association in the Northern Regions)
- Save The Children
- Café Femenino
- Heifer International