For coffee consumers the world over, that first cup of morning Joe is “heavenly”, but behind the scenes and for many coffee producers, their situation is far from “heavenly”.
Coffee prices have slid to 12-year lows, mainly due to a record harvest crop in Brazil, the world’s largest producer of coffee, and weakening Brazilian currency.
That may be good for consumers, but it’s not for coffee farmers in developing economies who are facing poverty unless prices rise back above $1 per pound (455 grams). Many farmers are currently producing at a loss, as the price that buyers are paying for coffee today is far less than the price they were paying say 30 years ago. Reports in South America have found that a lot of farms are being abandoned, and social conditions have deteriorated.
Brazil produces around 30% of the world’s production of coffee. Brazil-sourced coffee costs less in supermarkets in the US, UK and Europe.
While the “coffee crisis” is not a recent problem, coffee producers and their representatives believe that more needs to be done to raise consumer consciousness about the coffee crisis.
Roberto Velez, chief executive officer at the Colombian Coffee Growers Federation, told Reuters: “It is today a desperate moment for the 25 million coffee growers around the world. It is a crisis beyond imagination.
“I would say millions of producers in the region are desperate right now. We need the industry and consumers to realise that this is a situation that cannot be maintained if we want the coffee industry to survive.”
In 2006, film directors Nick and Mark Francis released their documentary film, Black Gold, which looked at the coffee trade from the experience of Ethiopian coffee farmers, who were struggling to seek higher prices for their coffee beans.
Since the documentary was made 12 years, the situation has worsened for coffee producers worldwide at the hands of the big multi-nationals such as Nestle, which makes Nescafe and Nespresso, and Starbucks, the world’s biggest coffee chain – who are benefiting from the drop in coffee prices.
Nick and Mark Francis said: “Coffee is not just a drink. It’s a global commodity. As one of the world’s most traded products-second in value only to oil-the coffee industry employs millions of people around the world through its growing, processing and trading. But while the coffee trade is vital to the politics, survival and economies of many developing nations, the industry’s pricing and futures are decided in conference rooms and on stock exchange floors in some of the world’s wealthiest cities.
“Coffee price declines can be devastating for farmers abroad, but in the United States, the world’s largest consumer of coffee, such fluctuations are barely noticed. The world coffee market is dominated by multinational corporations. In an unregulated market, such large corporations were able to control the price of coffee-as they purchased more products, prices skyrocketed.
“Today, large-scale coffee importers and roasters purchase coffee futures and options in order to protect their stocks’ worth through the Coffee, Sugar and Cocoa Exchange in New York City (originally established as the New York Coffee Exchange in the 1880s), which sets coffee prices according to the New York “C” contract market.
“The price of coffee fluctuates dramatically. Weather is often a factor, as a forecast of droughts or frosts in Brazil might also forecast a coffee shortage, thus increasing the price. Most coffee is traded by speculators in New York City, who trade up to ten times the amount of coffee that is actually produced each year.”
In Colombia, there has been evidence that the fall in coffee prices is encouraging production of coca, the crop used in the production of cocaine.
Roberto Velez, chief executive officer at the Colombian Coffee Growers Federation said production of coca in Colombia was at an all-time high. He said: “You will find in some places coffee growers will now grow coffee and coca”.
The World Coffee Producers Forum – which includes producers’ associations from Africa, India, Mexico, and Central and South America – wants coffee companies to commit to buying coffee at more than the cost of production.
One of the proposals is for the growers to provide certification to coffee roasters and retailers, which would show that they were paying farmers a sufficient return. Another is for the coffee industry to inform consumers about the growers’ plight through marketing campaigns.
Rosa Medea is Life & Soul Magazine’s Chief @rosamedea