Fair Trade for Coffee Farmers, Too
When I was growing up in Nicaragua, I used to spend my summer vacations in the beautiful mountains of Matagalpa and Jinotega, an area with some of the best coffee plantations in the country. My father would say with pride, ``Coffee produced in this region is among the finest in the world.''
Today the mountains remain as beautiful as ever, and Nicaraguans continue to rely on coffee as a main source of income. But coffee growers, who have faced difficult conditions throughout Nicaragua's tumultuous history, are coping with an unprecedented disaster. The relief organization Oxfam has documented in its new report ''Mugged: Poverty in Your Coffee Cup'' how a nearly 50 percent drop in the world coffee price in the past three years has left 25 million small-scale coffee producers in abject poverty around the world.
In Central America alone, some 600,000 coffee workers have been left unemployed in the past two years, according to a World Bank report. The plantations are being shut down as prices have plummeted to their lowest levels in a century. In Nicaragua, thousands of coffee farm workers are without food, land or hope.
The current coffee crisis must be placed in a historical perspective. The coffee exporting and importing countries created the International Coffee Agreement in 1962 to manage worldwide supply and demand, and as a result, prices remained relatively high and stable. But in 1989 the agreement collapsed, in part because the U.S. government no longer viewed a managed coffee market as vital to national security. Instead it championed the ideology of free trade, coupled with ''structural adjustment'' policies imposed on developing countries by the International Monetary Fund and the World Bank. These institutions promoted a general model of export-led growth tied to developing countries' ``comparative advantage.''
This strategy often encouraged poor nations to increase production of green coffee and other raw materials, thereby deepening their dependence on primary commodities whose value has plummeted in the global marketplace. Not surprisingly, these production increases resulted in an oversupply of coffee that has depressed prices to record lows.
A decade ago, coffee-producing countries were receiving about $10 billion of a $30 billion annual retail market. Today, exporting countries' share has shrunk to less than $6 billion, while the value of the annual coffee retail market has nearly doubled, to $55 billion.
Who is getting ever-larger portions of the coffee bounty while everyone else is going hungry? The world's biggest coffee companies: Procter & Gamble, Kraft, Sara Lee and Nestle. Meanwhile, millions of poor coffee growers have been left in economic ruin.
The system must be changed. I urge coffee companies, governments, international institutions and consumers to join me in supporting Oxfam's campaign to alleviate this humanitarian crisis. The campaign calls for these actions:
- The ''Big Four'' coffee companies should demonstrate their commitment to addressing the crisis by paying farmers a decent price. Companies should review and overhaul their core sourcing practices and, as a down payment, immediately commit to buying at least 2 percent of their coffee on fair-trade terms. Fair-trade certification guarantees that farmers receive a minimum price of $1.26 per pound ($1.41 for organic beans) -- a far cry from the meager 20 to 30 cents per pound they receive now.
- The United States and other coffee-consuming countries should provide political and financial support to resolve the oversupply problem, including monitoring coffee quality and destroying lowest-quality coffee stocks. The United States should rejoin the International Coffee Organization to contribute to multilateral efforts to address this global crisis.
I applaud the House of Representatives and the Senate for having passed resolutions that call on the United States to ''adopt a global strategy to respond to the current coffee crisis.'' In the next session they must take meaningful action to support a sustainable solution to this crisis.
- International institutions such as the World Bank and the United Nations should develop a long-term strategy to tackle the problem of commodities pricing, provide additional debt relief, and support a major international stakeholders' conference on the coffee crisis next spring.
The price of coffee is a matter of life or death to millions of small-scale producers throughout the developing world. Free trade has left them in economic ruin. The time has come to make the coffee trade fair.