Cost of coffee.indd - RISC

actionpage: mugged
You are a team of senior executives from a leading coffee company. You are devising a strategy
to:
• deal with the crisis in the world coffee market
• respond to well-publicised criticism from campaign organisations, eg Oxfam, Fairtrade
Foundation, and particularly an Oxfam report, Mugged: poverty in your coffee cup (see
summary below).
Your proposals should include:
• how far the company should implement Oxfam’s Coffee Rescue Plan, taking into account
your need to maintain market share, profits and shareholder value
• a public relations (PR) campaign to counter accusations of increasing profits at the expense
of poor farmers, including:
- a breakdown of the groups of people you should try to reach with your message
- ideas of how you can maintain positive corporate image in the long term
• how you propose to monitor the success or failure of your strategy.
s Prepare a five minute presentation for your board of directors, producing visual aids that
will help you make your case.
Mugged – poverty in your coffee cup*
There is a crisis destroying the livelihoods of 25 million coffee producers around the world. The
price of coffee has fallen by almost 50 per cent in the past three years to a 30-year low.
The coffee crisis has become a development disaster whose impacts will be felt for a long time.
Families dependent on the money generated by coffee are pulling their children, especially girls,
out of school. They can no longer afford basic medicines, and are cutting back on food. Some
have turned to the production of lucrative drugs such as cocaine, chat or marijuana.
Beyond farming families, local coffee traders are going out of business. National economies are
suffering and some banks are collapsing. Government funds are being squeezed dry, putting
pressure on health and education and forcing governments further into debt.
The low coffee price creates a buyers’ market, leaving some of the poorest and most powerless
people in the world to negotiate in an open market with some of the richest and most powerful.
The result, unsurprisingly, is that the rich get richer and the poor get poorer.
Ten years ago producer-country exports captured one-third of the value of the coffee market.
Today, they capture less than ten per cent. Over the last five years the value of coffee exports
has fallen by US$4bn.
The big four coffee roasters, Kraft, Nestlé, Procter & Gamble, and Sara Lee, each have coffee
brands worth US$1bn or more in annual sales. Together with German giant Tchibo, they buy
almost half the world’s coffee beans each year.
* this is an edited summary of the report – Oxfam International 2002 www.maketradefair.com
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