COFFEE IN THE GLOBAL ECONOMY

For many developing countries coffee is a vital source of export. Currently 110,000 km² of the world's farmland are used for the cultivation of coffee and approximately twenty million families work directly in the cultivation. ''Coffea arabica'', primarily grown in Latin America, and Coffea robusta, primarily grown in Africa and Asia, are the two prominent species of coffee harvested in the current coffee industry.

Contents

Commodity chain for the coffee industry

Coffee labor conditions

Fair trade coffee

Coffee and the environment

References

External links

Fair trade organizations

Commodity chain for the coffee industry

The coffee industry currently has a commodity chain that involves producers, middlemen exporters, importers, roasters, and retailers before reaching the consumer^[1]. Middlemen exporters, often referred to as coffee "coyotes," purchase coffee directly from small farmers¹. They typically purchase the coffee below market price, keeping a high percentage for themselves. Large coffee estates and plantations often export their own harvests or have direct arrangements with a transnational coffee processing or distributing company. Under either arrangement, large producers can sell at prices set by the New York Coffee Exchange. These large plantations generally pay workers extremely low wages, typically two to three dollars a day, and offer poor working conditions.
Green coffee is then purchased by importers from exporters or large plantation owners¹. Importers hold inventory of large container loads, which they sell gradually through numerous small orders. They have capital resources to obtain quality coffee from around the world, capital normal roasters do not have. Roasters' heavy reliance on importers gives the importers great influence over the types of coffee that are sold to consumers.
In the United States, there are around 1200 roasters. Roasters have the highest profit margin in the commodity chain¹. Large roasters normally sell pre-packaged coffee to large retailers, such as Maxwell House, Folgers, and Millstone.
Coffee reaches the consumers through cafes and specialty stores selling coffee, of which, approximately, 30% are chains, and through supermarkets and traditional retail chains. Supermarkets and traditional retail chains hold about 60% of market share and are the primary channel for both specialty coffee and non-specialty coffee. Twelve billion pounds of coffee is consumed around the globe annually, and the United States alone has over 130 million coffee drinkers.

Coffee labor conditions

Though working conditions vary on large coffee plantations, it is very typical to see wages and settings comparable to those in "sweatshops"¹. Like many migrant farm workers, many of those employed by these large plantations sleep in temporary shelters with rows of bunk beds, they cook, wash and bathe from the same water source, and are not provided with adequate health care, even though in most situations it is legally-mandated. Many rights provided by countries' labor laws, such as minimum wage, safety requirements, and freedom to form a union, are not typically enforced on these plantations.

Fair trade coffee

According to the International Fair Trade Association and the other three major fair trade organizations (Fairtrade Labelling Organizations International, Network of European Worldshops and European Fair Trade Association), the definition of fair trade is "a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade"^[2]. It offers better trading conditions to marginalized producers and workers. Fair trade organizations, along with the backing of consumers, campaign for change in the rules and practice of conventional international trade.
Fair trade coffee creates a trade environment in which the coffee importer has a direct relationship with the coffee producer, excluding the middlemen^[3]. Middlemen prohibit relationships between importers and roasters and promote coffee's extremely unstable market. Coffee importers provide credit to farmers to help them stay out of debt with coffee traders so they can develop long-lasting trade relationships. Small farmers included in the International Fair Trade Coffee Register are guaranteed a minimum of $1.26 per pound of coffee, the "fair trade price," from coffee importers.

Coffee and the environment

:''See main article: Coffee and the Environment''
Originally, coffee farming was done in the shade of trees, which provided natural habitat for many animals and insects, roughly approximating the biodiversity of a natural forest Natural History of Costa Rica, , Daniel H. (Editor), Janzen, University of Chicago Press, 1983, . These traditional farmers used compost of coffee pulp and excluded chemicals and fertilizers. They also typically rotated crops and cultivated food alongside their cash crops, which provided additional income and food security.
However, in the 1970s and 1980s, during the "Green Revolution," the US Agency for International Development and other groups gave eighty million dollars to plantations in Latin America for advancements to go along with the general shift to technified agriculture. These plantations replaced their shade grown techniques with sun cultivation techniques to increase yields, which in turn destructed vast forests and biodiversity.
Sun cultivation involves cutting down trees, and high inputs of chemical fertilizers and pesticides. Environmental problems, such as deforestation, pesticide pollution, habitat destruction, soil and water degradation, are the effects of most modern coffee farms, and the biodiversity on the coffee farm and in the surrounding areas suffer.
As a result, there has been a return to both traditional and new methods of growing shade-tolerant varieties. Shade-grown coffee can often earn a premium as a more environmentally sustainable alternative to mainstream sun-grown coffee.

References

1. www.globalexchange.org
2. www.ifat.org
3. www.coffeeresearch.org

External links

★ Black Gold - PBS site for an independent film accusing the coffee industry of not giving producers a fair deal

★ Black Gold: The Official Site

★ www.coffeehabitat.com

Fair trade organizations

★ www.fairtradefederation.org

★ www.fairtrade.net

★ www.transfairusa.org