coffee, fair trade and justice for farmers in the global south

A Cup of JusticeCoffee,

Fair Trade, &

Justice for Farmers

in the

Global South

The third most valuable item

traded internationally.

Coffee

Americans Like Their Coffee

Worldwide, people drink over 1½ billion cups of coffee a day.

The U.S., with just one-twentieth of the world’s population, consumes one-fifth of all the coffee.

Coffee is grown in some 80 countries

Coffee-growing countries are located fairly near the equator and generally are quite poor. The largest producers are shown in yellow on the map.

Coffee is Grown on Small Farms

About 70% of the world’s coffee is grown on farms of less than 25 acres.

Most are between 2½ and 12½ acres.

In Mexico, 90% of coffee is grown on small plots.

Worldwide, 20 to 25 million small farm households,

Many Small Farm Families Depend on Coffee

Ethiopia

Costa Rica

Nicaragua

some 125 million people, depend on coffee for their livelihoods.

http://www.sweetmarias.com/ethiopia.coffeeland.jpg

From tree to supermarket, coffee changes hands up to 150 times with costs and profits added at each step.

Farmers Get Only a Small Share of the Price Consumers Pay

They receive roughly 5% of the retail price of a package of coffee sold in a U.S. supermarket.

Small coffee farmers receive 1% or less of the price of a cup of coffee sold in a coffee bar.

1%5%

Small coffee farmers, their families and

communities are suffering

What Is Happening in the

Global Coffee Industry ?

Ethiopian coffee farmer

Prices Paid Coffee Farmers are Very Low

The price farmers receive for their coffee is at a record low, just 25% of the price in 1960.

World Price of Coffee,* 1976-2005(adjusted for inflation)

$5.24

$1.86

$0.89

$0.51$0.00

$2.00

$4.00

$6.00

19761979

19821985

19881991

19941997

20002003

per

po

un

d (

2005

$)

* Adjusted for inflation est. at 3% / year Source: International Coffee Organiz.

•An excess supply of coffee has driven

down the world price.

•A power imbalance has driven down the prices paid small

farmers even more.


An excess supply of coffee has driven down the price

There are new coffee-producing countries. Viet Nam is now the world’s second largest producer. Traditional producers are also growing more coffee toboost incomes.

Young coffee plants

Farmers try to offset the falling price by producing and selling even more. But this leads to even lower prices and earnings continue to fall.


The fall in price has especially hurt people whose small farms cannot be mechanized and who lack money for investments that could increase their output.


Coffee plantation in Kenya

Small hillside farm of shade-grown coffee

While the world price has fallen, the price charged consumers in grocery stores and coffee shops

is little changed. The “middle-men,” especially the coffee roasting firms, reap much of the benefit.


A power imbalancehas driven down the prices paid to small farmers even more. Kraft owns

Maxwell House


A power imbalance has driven down prices paid small farmers

Lacking modern transportation and withlimited options for selling their crops, small farmers often sell to local buyers (“coyotes”) who pay especially low prices.


Small farmers typically sell their crop immediately after harvest when the price is lowest because they lackstorage facilitiesand need the money.


They may have borrowed money during the growing season to buy food, meet

emergencies, or pay for other coffee-growing

items. Generally, loans are available only at

very high rates of interest so prompt repayment is critical.

Returning home from the coffee trees on the mountainside


“In selling my coffee I cannot consider the market price. I decide when to sell according to my pressing needs. Hence I will sell regardless of the price, whether it is high or low. I do not have bargaining power.” --Indonesian farmer


With little access to credit at reasonable rates, small farmers often cannot afford investments

to improve

their farming practices or diversify into other, more profitable crops.


Consequently, small farmers have difficulty competing with mechanized coffee plantations and multinational firms.

Low coffee prices and smallfarmers’ vulnerability and disadvantage mean they earn too little for their coffee.

Small Farmers Earn too Little

Developing Countries Earn too Little

A different power imbalance leaves small coffee-producing countries with too little money for their coffee.

• Just three roasters (Nestle, Kraft – Maxwell House, and Sara Lee) process 45% of the world’s coffee. • Just four companies

purchase 40% of the world’s coffee.


Exporters in coffee-producing (usually poor) countries sell their coffee to international buyers and roasters. These large multinational firms seek to pay as little as possible.

http://images.google.com/imgres?imgurl=http://www.wjye.com/Images/Contests/MAXWELL%2520HOUSE.jpg&imgrefurl=http://www.wjye.com/&h=182&w=183&sz=29&hl=en&start=1&tbnid=Zpv0Yi26OP6EvM:&tbnh=95&tbnw=96&prev=/images%3Fq%3Dmaxwell%2Bhouse%26svnum%3D10%26hl%3Den%26lr%3D%26sa%3DN

http://www.saralee.com/


If prices for the 10 most valuable agricultural commodities exported by developing countries (coffee is one of these) had risen since 1980 only enough to keep pace with inflation,

then exporting countries would have received $112 billion more in 2002 than they actually did.


This amount, $112 billion, is more than twice the international aid received

by alldeveloping countries, worldwide, that year.

Market, San Cristobal de las Casas, Chiapas, Mex.


Since they are paid solittle for their products, these poor nations are unable to pay off theirdebts, provide essential services to their populations, and import needed items.

Colombia

The Impact of Low Coffee Earnings On Coffee Farmers and

their Communities

Nogales, Mexico

Sincelejo, Colombia

In Mexico, “as a result of the decline in farmers’ income, about 20% of children were taken out of school and [farmers] were unable to afford clothes, shoes, basic medical attention, and repayment of credit.”

-- Mexico: Coordinadora Nacional de Organizaciones Cafetaleras

Impact of Low Coffee Earnings

Worsening poverty

Chiapas, Mex.

Loss of Farms

Farmers can lose their land, forcing families to move to cities where living conditions may be inhumane and jobs are scarce.


Indonesia

Brazil

Neglect of Coffee Trees Cuts Future Income

Farmers may leave their communities to look for other work. Coffee trees are neglected, reducing the quality and quantity of future years’ beans, and future income.


Neglected, diseased coffee tree

Migration

Farmers may leave their country, seeking work elsewhere. Tens of thousands of Mexican coffee farmers have left their land,


leaving behind grieving families and weakened communities. Some

come to the U.S. without documents.

U.S.-Mexico border

What Can Be Done ?

Fair Trade, not “free” trade,will improve the lives of

coffee farmers

Fair-trade importers providea vital link between small

farmers and consumers who seek justice for small coffee farmers.

http://store.gxonlinestore.org/deansbeans.html

* Buy coffee grown by small farmers organized into cooperatives (coops).

A Fair Trade Coffee Importer Agrees to:

A cooperative (coop) is a business that is owned and democratically controlled byits members.

What is a Coop?

Members, CIRSA Coop, Chiapas, Mex.

A coop operates for the benefit of its members. It does not earn profits for share-holders. It elects its own leadership and does

What is a Coop?

Coffee coop members, Nicaragua

not answer to an outside board.

* Pay a fair price currently set at $1.21 a pound or pay the world price, whichever is higher; and

Pay a 5 cent per pound “social premium;” and

If organic, pay an additional 15 cents a pound.


The Social PremiumThe social premium of 5 cents per pound is paid to the coop, not to farmers.

Coop members decide how this money is to be used: for example, to

Truck purchased by Mexican coop

purchase needed equipment such as a truck to transport coffee, or to build a school or clinic.

* Purchase coffee directly from farmer coops, eliminating many “middle men” and

opportunities for exploitation,

providing higher prices for farmers.

Warehouse, CIRSA Coop, Chiapas, Mex.


Farmers get a Larger Share of the Price Paid by Consumers

A simplified market (follow the green lines) means fewer middle men and more money for farmers.

* Develop long-term relations with a coop. This encourages investment since farmers

know they will have a strong, ongoing market for their

coffee.

* Offer credit of up to 60% of the coffee’s sales price in

advance of the harvest.


Benefits of Fair Tradeto Farmers and their Families

Better education, health, and opportunities due to the social premium payment.

Higher incomes.

Greater access to credit for investmentand other needs.

Benefits of Fair Tradeto Farmers and their Families

Stable incomes that enable farmers to risk experimenting with other techniques and crops that might have a higher payoff.

Increased self esteem.

Higher quality coffee (that earns a higher price) due to training provided by the coop.

Benefits of Fair Tradeto Farm Communities

Enhanced community opportunities such as economic develop-ment projects, schools, health clinics, sanitation facilities, clean water, and fuel-efficient stoves. Strengthened communities with less poverty, more stability, and healthier and more educated community members.


Stronger political and economic organizations representing farmers’ interests locally and nationally.

Better environmental practices including organic farming.

Strengthened indigenous communities.

“When you buy our coffee you are not just buying our coffee but supporting our democracy”

-- Guillermo Vargas Leiton, coffee farmer, Costa Rica


Increased export earnings to pay off debts to banks and international organizations and to purchase needed imports.

A better fed, healthier,and more educated population.

A more stable population without excessive migration within or outof the country.

Benefits of Fair Tradeto Developing Countries

Coocafe is a coop in Costa Rica that began selling fair trade coffee in 1989. It has grown to over 3,500 farmer members and their families.

The Story of one Coop:Coocafe in Costa Rica

Coocafe has used its social premium to:

• Purchase a processing plant to de-pulp coffee beans that uses 80% less water.

• Purchase a solar energy systemto dry beans, eliminating theneed to cut down over six acres of forests annually.

• Promote diversification into additional crops likemacadamia nuts, yucca, bananas, and cassava,and help market these crops.


Coocafe, has also provided:

• almost 1,000 scholarships for farmers’ children to attend secondary school and university.

• helped maintain local primary schools.

• purchased land for 25 landless families.

Learn more at www.Coocafe.com


http://www.coocafe.com/social.htm

Fairly Traded Coffee

The first Fairly Traded coffee was imported into the Netherlands in 1973 from Guatemalan small-farmer cooperatives.

Thirty years later, 200 coffee cooperatives representing

nearly 700,000 farmers, and more than 70 traders and 350 coffee roasters are part

of the Fair Trade network.


Over 30% of all Fairly Traded coffee sold in the world is purchased in the U.S.

It comes from 84 co-ops and hundreds of thousands of farmers in 18 countries.


By 2004, sales of Fairly Traded coffee in the U.S. had risen to over 16,000 tons.

But this was less than 2% of all coffee sold here.

Fair Trade Coffee Sold in U.S.

381,026

2,1253,335

4,874

9,332

16,434

0

6,000

12,000

18,000

1998 1999 2000 2001 2002 2003 2004

(ton

s)

Source: TransFair

Global sales of Fairly Traded coffee, 2004 and 2005

(tons)

37,469

26,700

2004 2005


Worldwide, sales of Fairly Traded coffee grew 40% between 2004 and 2005.

Certified fair-trade coops produce seven times more coffee than fair trade buyers purchase. They cannot sell all their coffee to fair trade purchasers.

So we need to expand sales of fairly traded coffee.


The nonprofit organization TransFair USAcertifies coffee, tea, chocolate, rice, sugar and a few fresh fruits.

Fairly Traded Certified Coffee

WATCH FOR & BUY PRODUCTS WITH THIS LABEL

There are a number of Fairly Traded coffee traders and roasters.

Coffee, tea, and cocoa may be purchased through the UCC-Equal Exchange Coffee Project (www.ucc.org/justice/issues/coffee-project/)

Where to Buy Fairly Traded Coffee


Equal Exchange is the oldest and largest fair trade organization in the U.S. and is itself a worker-owned coop.

It’s Interfaith Program for faith-based organizations serves over 11,000 participating congregations and other groups.

Global Exchange has links to a number of sources of Fairly Traded coffee. (www.globalexchange.org)

To find a grocery store near your home that sells Fairly Traded products including coffee, go to TransFair’s online locator at www.transfair.org.


Starbucks, Dunkin' Donuts, Procter & Gamble, and other large corporations have also agreed to sell Fairly Traded coffee. However, consumers report it is often unavailablewhen they request it.

The Bottom Line:

Watch for the Fair Trade Certified logo


Produced by

Edith RasellMinister for Workplace JusticeJustice and Witness Ministries United Church of Christ700 Prospect AveCleveland, OH [email protected]

, God is Still

Speaking

coffee, fair trade and justice for farmers in the global south

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