Transcript Slide 1

A Cup of Justice
Coffee,
Fair Trade, &
Justice for
Farmers
in the
Global South
Coffee
The third most
valuable item
traded
internationally.
Americans Like Their Coffee
Worldwide, people drink
over 1½ billion cups of
coffee a day.
The U.S., with just onetwentieth 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.
Many Small Farm Families
Depend on Coffee
Worldwide, 20 to 25 million
small farm households,
some 125
million people,
depend on
coffee for their
livelihoods.
Nicaragua
Costa Rica
Ethiopia
Farmers Get Only a Small Share
of the Price Consumers Pay
From tree to
supermarket,
coffee changes
hands up to
150 times with
costs and
profits added at
each step.
Small coffee farmers
receive 1% or less of the
price of a cup of coffee
sold in a coffee bar.
1%
5%
They receive roughly 5%
of the retail price of a
package of coffee sold in
a U.S. supermarket.
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
$6.00
per pound (2005$)
$5.24
$4.00
$1.86
$2.00
$0.89
$0.51
$0.00
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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)
* A djusted fo r inflatio n est. at 3% / year
So urce: Internatio nal Co ffee Organiz.
Prices Paid Coffee Farmers are Very Low
• 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 coffeeproducing countries. Viet
Nam is now the world’s
second largest producer.
Traditional producers
are also growing
more coffee to
boost incomes.
Young
coffee plants
An excess supply of coffee has
driven down the price
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.
An excess supply of coffee has
driven down the price
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.
Small hillside farm of shade-grown coffee
Coffee plantation in Kenya
An excess supply of coffee has
driven down the price
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.
Prices Paid Coffee Farmers are Very Low
A power imbalance
has 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 with
limited options for
selling their crops,
small farmers often sell
to local buyers
(“coyotes”) who pay
especially low prices.
A power imbalance has driven
down prices paid small farmers
Small farmers typically sell
their crop immediately after
harvest when the price is
lowest because they lack
storage
facilities
and need
the money.
A power imbalance has driven
down prices paid small farmers
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
A power imbalance has driven
down prices paid small farmers
“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
A power imbalance has driven
down prices paid small farmers
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.
A power imbalance has driven
down prices paid small farmers
Consequently, small farmers
have difficulty competing
with mechanized coffee
plantations and
multinational
firms.
Small Farmers Earn too Little
Low coffee prices and small
farmers’ vulnerability
and disadvantage
mean they earn
too little for their
coffee.
Developing Countries Earn too Little
A different power
imbalance leaves
small coffeeproducing countries
with too little money
for their coffee.
Developing Countries Earn too Little
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.
• 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.
Developing Countries Earn too Little
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.
Developing Countries Earn too Little
This amount, $112 billion, is more than
twice the international aid received
by all
developing
countries,
worldwide,
that year.
Market, San Cristobal de las Casas, Chiapas, Mex.
Developing Countries Earn too Little
Colombia
Since they
are paid so
little for their
products,
these poor
nations are
unable to
pay off their
debts, provide essential services to their
populations, and import needed items.
The Impact of Low Coffee
Earnings On Coffee Farmers and
their Communities
Sincelejo, Colombia
Nogales, Mexico
Impact of Low Coffee Earnings
Worsening poverty
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
Chiapas, Mex.
Impact of Low Coffee Earnings
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
Impact of Low Coffee Earnings
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
Impact of Low Coffee Earnings
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 provide
a vital link between small
farmers and consumers
who seek justice for small
coffee farmers.
A Fair Trade Coffee Importer
Agrees to:
* Buy coffee grown
by small farmers
organized into
cooperatives (coops).
What is a Coop?
A cooperative (coop) is a business
that is owned and democratically
controlled by
its members.
Members, CIRSA Coop, Chiapas, Mex.
What is a Coop?
A coop operates for the benefit of its
members. It does not earn profits for shareholders. It elects its own leadership and does
not
answer
to an
outside
board.
Coffee coop members, Nicaragua
A Fair Trade Coffee Importer
Agrees to:
* 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 Premium
The 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
purchase needed
equipment such as a truck
to transport coffee, or to
build a school or clinic.
Truck purchased by Mexican coop
A Fair Trade Coffee Importer
Agrees to:
* 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.
A Fair Trade Coffee Importer
Agrees to:
* 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 Trade
to Farmers and their Families
Better education, health, and opportunities
due to the social premium payment.
Higher incomes.
Greater access to
credit for investment
and other needs.
Benefits of Fair Trade
to 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 Trade
to Farm Communities
Enhanced community
opportunities such as
economic development 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.
Benefits of Fair Trade
to Farm Communities
Stronger political and economic organizations
representing farmers’ interests locally and nationally.
Better
environmental
practices
including
organic
farming.
Strengthened
indigenous
communities.
Benefits of Fair Trade
to Farm Communities
“When you buy our coffee you are not
just buying our coffee but supporting
our democracy”
-- Guillermo Vargas Leiton, coffee farmer, Costa Rica
Benefits of Fair Trade
to Developing Countries
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 out
of the country.
The Story of one Coop:
Coocafe in Costa Rica
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 system
to dry beans, eliminating the
need to cut down over six acres
of forests annually.
• Promote diversification into additional crops like
macadamia nuts, yucca, bananas, and cassava,
and help market these crops.
The Story of one Coop:
Coocafe in Costa Rica
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
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.
Fairly Traded Coffee
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.
Fairly Traded Coffee
But this was
less than 2% of
all coffee sold
here.
Fair Trade Coffee Sold in U.S.
18,000
16,434
12,000
9,332
(tons)
By 2004, sales
of Fairly Traded
coffee in the
U.S. had risen
to over 16,000
tons.
4,874
6,000
3,335
2,125
1,026
38
0
1998
Source: TransFair
1999
2000
2001
2002
2003
2004
Fairly Traded Coffee
Worldwide,
sales of Fairly
Traded coffee
grew 40%
between 2004
and 2005.
Global sales of Fairly Traded coffee,
2004 and 2005
(tons)
37,469
26,700
2004
2005
Fairly Traded Coffee
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.
Fairly Traded Certified Coffee
The nonprofit
organization
TransFair USA
certifies coffee,
tea, chocolate,
rice, sugar
and a few
fresh fruits.
WATCH FOR & BUY PRODUCTS WITH THIS LABEL
Where to Buy Fairly Traded Coffee
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 workerowned coop.
It’s Interfaith Program for faithbased organizations serves over
11,000 participating congregations
and other groups.
Where to Buy Fairly Traded Coffee
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.
Where to Buy Fairly Traded Coffee
Starbucks, Dunkin' Donuts, Procter & Gamble,
and other large corporations have also agreed
to sell Fairly Traded coffee. However,
consumers report
it is often unavailable
when they request it.
The Bottom Line:
Watch for the Fair
Trade Certified logo
Produced by
Edith Rasell
Minister for Workplace Justice
Justice and Witness Ministries
United Church of Christ
700 Prospect Ave
Cleveland, OH 44115-1100
216-736-3709
[email protected]
2006
,
God is Still Speaking