Background
COFFEE
Right now over 25 million coffee growers and their families face starvation due to the international coffee crisis. Why such poverty? Over the past three years, the price of coffee has fallen almost 50 percent, and now hovers near a 30-year low.
Coffee is grown in more than 50 countries around the globe. Many of them are developing nations that depend on coffee as their chief export. But their entire economies are collapsing with the market as a result of plummeting coffee prices. Taking inflation into account, families are earning less growing coffee today than their ancestors did 100 years ago.
The global coffee crisis has been brought on by a worldwide oversupply of coffee that allows coffee corporations to buy beans at rock bottom prices. These prices are so low that they don't even begin to cover farmers’ costs of production.
"...the collapse of world coffee prices is contributing to social meltdowns affecting an estimated 125 million people—from Central America to Africa." Wall Street Journal
Hundreds of thousands of farmers and their families are hungry. Children leave school to work or because their parents can no longer afford school fees. They go without health care, fuel, new clothing, and other necessities. Growers are selling off their assets or abandoning their land to look for work elsewhere. Other farmers have lost their land all together and are homeless and in debt. The World Bank states that more than 600,000 coffee workers in Central America are now unemployed.
The situation is even worse in Ethiopia. In 2001, Ethiopia was granted $58 million in debt relief—yet the country’s coffee income during that same period dropped from $257 million to $149 million. The government has lost twice the revenue to the coffee market as it has received from debt relief.
Case in Point: family farmers in Central America
Coffee has been one of the most important products for the Central American economy for decades, and a high proportion of the coffee produced in Central America is considered of the best quality in the world. Central America produces around 12 percent of the world's total supply, and although it is not the main source of income, coffee represents from 5 to 23 percent of total export revenues.
Coffee is very important not only for income generation but also for employment generation—approximately 1.5 million rural laborers worked in coffee during the 2001-2002 crop cycle. The situation is especially critical for the rural poor; the majority of coffee producers are smallholders living in remote rural areas who depend on coffee for cash income to survive.
Coffee Rescue Plan
Despite the dire situation facing coffee growers, there are some alternatives. Oxfam America and the Oxfam International Make Trade Fair campaign have developed a number of policy recommendations to address the coffee crisis, including:
- the destruction of stockpiled beans to reduce the supply;
- helping growers to diversify into other crops;
- encouraging coffee companies to commit to buying only coffee that meets quality standards; and
- increase their purchase of Fair Trade Certified coffee.