Published on October 23rd, 2015 | by I Am Awake0
The real price of coffee
Do our purchasing habits have a real impact on people in faraway lands? The answer is yes, and few products are better evidence of this than coffee.
The little red fruit that produces coffee is the base of something far wider-reaching than a drink: in many cultures, it is a social act. It is also a lucrative business: coffee is the most consumed brew in the world and in a trade which is worth $71billion annually, according to Fairtrade España.
Unlike other crops for export, most of coffee’s production corresponds to small farmers: 25 million farmers produce 80 per cent of coffee consumed in the world. This plant employs 100 million people and is, for some countries, its main source of foreign trade.
Coffee is also a metaphor to the inequality which leaves the international division in a global capitalist system. As Eduardo Galeano wrote in his book Open Veins of Latin America: “coffee benefits those who consume it a lot more than those who produce it. In the United States and Europe, it generates income and jobs and shifts large capital; in Latin America, it pays starvation wages. “
The truth is that the chain of production, distribution and commercialization of coffee shows a radical inequality between the negotiating power of countries who cultivate and export it and those who distribute, commercialize and consume it.
A study by the International Assessment of Agricultural Knowledge, Science and Technology for Development (IAAST) shows that coffee for which is paid $0.14 to a producer in Uganda costs $42 to an English café. The price is multiplied 300 times and, according to the same study, the large leap is seen in the distribution phase: from $2 when it leaves from the factory, already processed, it costs over $25 in the supermarket. The result: millions of small farmers in misery, while the industry remains under the control of large multinationals like Sara Lee (Marcilla), Nestle (Bonka) and Kraft/Philip Morris (Saimaza)
Apart from the pressure to cheapen their costs, the small coffee farmers are plagued by the unpredictability of international coffee prices which rise and fall not depending on the demand, but from market speculation. If this situation affects all commodities, the consequences are particularly serious in the case of coffee, because cultivation takes between two and four years to bear the first fruits and, once it does, guarantees the harvest for twenty years.
The injustice of this model is, in large part, due to the disconnection between producers and consumers which leaves the oligopolistic distribution sector with great bargaining power and, therefore, the bulk of the profits.
The good news? It is easy to access fair trade networks who work on the ground with small producers and ensure that they get a fair price.