Cost of coffee.indd - RISC

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3 The Corporate Watch website has a detailed report on Nestlé. The BBC Radio 4 programme Face the Facts reported on the destruction caused by Nestlé’s water bottling activities in Brazil and the US on 22 July 2005. Swiss church and campaigning organisations are holding a tribunal into Nestlé’s trade union busting activities in Colombia and other corporate crimes on 29 and 30 October 2005. 4 Nestlé’s 2005 coffee report states: “Nestlé recognises that Fair Trade is a useful way to raise consciousness about the coffee issue and for individual consumers to express their solidarity with a group of coffee farmers in the developing world. However, if on a broad basis, coffee farmers were paid Fair Trade prices exceeding the market price the result would be to encourage those farmers to increase coffee production, further distorting the imbalance between supply and demand and, therefore, depressing prices for green coffee. Worldwide, the Fair Trade movement accounts for less than 25,000 tonnes of green coffee. Nestlé’s direct purchasing accounts for 110,000 tonnes of green coffee per year. This system enables the farmer to retain a greater portion of the price paid by Nestlé, therefore improving his income.” Note that Nestlé’s claim about buying direct does not indicate it is paying a fair price for the coffee. The farmer would receive a greater portion of the price paid by Nestlé even if the company paid less than commercial market rates. 5 According to Nestle’s 2005 coffee report, the global Fair Trade coffee market is 25,000 tonnes. Nestle compares this to the 110,000 tonnes it buys direct. The 110,000 tonnes represents 14% of Nestle’s green coffee purchase, according to the report. Therefore, 25,000 tonnes, the entire global Fair Trade market would represent just 3.2% of Nestle’s coffee business. 6 Excerpt from FLO Trader Application Evaluation Policy 6.2.5 Bringing FLO Fairtrade into Disrepute FLO reserves the right to exclude traders that engage in behaviours that, even though are not directly related to Fairtrade transactions, are so bad that FLO’s association with the trader would seriously undermine the legitimacy of FLO Fairtrade in the minds of consumers. FLO shall take into consideration any relevant information it receives regarding the trader from FLO National Members and others. To justify denial of the application, the behaviour would have to be severe and the trader has not taken any measures to rectify the situation. In some cases, this criteria may cause the applicant to take corrective and preventative action. FLO therefore takes a rehabilitative approach to traders, and will respond to any criticism of their acceptance in this manner. Therefore, where the applicant has engaged in serious and repeated; • predatory commercial practises that resulted in disadvantage to producers, • fraudulent product labelling; or • contravention of core ILO covenants - Covenant 87 Freedom of Association and Right to Organise, 1948 - Covenant 98 Right to Organise and Collective Bargaining Convention, 1949 - Covenant 100 Equal Remuneration Convention, 1951 - Covenant 111 Discrimination, 1958 - Covenant 29 Forced Labour, 1930 - Covenant 105 Abolition of Forced Labour Convention, 1957 - Covenant 138 Minimum Age Convention, 1973 - Covenant 110 Plantations Convention, 1958 - Covenant 155 Occupational Safety and Health Convention, 1981 for which it has not taken any measures to rectify, then the application may be denied. The test is intentionally made difficult in order to prevent spurious denials of trader applications. All FLO Trader Contracts shall provide that the trader shall not engage in any of the above activities that might bring FLO Fairtrade into disrepute. source: www.babymilkaction.org 66
appendix 8: robbing coffee’s cradle gm coffee and its threat to poor farmers Scientists have found a way to keep plantations ahead in the receding coffee market. A GM coffee is being developed that will make all coffee cherries on a bush ripen at the same time. This will lower labour costs. It will also create an absolute dependency on chemical companies for a harvest. Plantations may be in a position to survive such developments. Smallholder coffee farmers are not. GM ripening-control coffee is an example of a genetic use restriction technology, known as GURTs – a type of genetic modification used to control a plant’s normal traits, or functions, such as sprouting, flowering and ripening. GURTs plants have a normal trait switched off and require the application of a chemical to trigger a genetic ‘on’ switch to make the function appear again. Without the chemical the trait does not appear. The list of likely problems that will follow GM coffee is long and has serious implications for smallholder farmers. Increased poverty, hunger, dependence on chemical companies and loss of business loom large for them. Significant losses of earnings and increased foreign debt await their countries. There is no doubt that ripening controlled coffee was developed for plantations regardless of its impact on smallholder farmers. Dr Tewolde Egziabler from Ethiopia agrees and says, “Small farmers will be squeezed out of the market with GM coffee. It’s a shift from a labour intensive to a capital intensive system, from small farmers to large farmers.” If GM ripening-controlled coffee comes to market a number of effects are likely. Impacts on smallholder growers include: • those who rely on picking coffee for their income, many of whom are struggling smallholder farmers, will suffer as plantations take up mechanised harvesting and reduce their workforce • as smallholder farmers are unable to compete, they will sell up to larger concerns and move to poor urban centres to survive and plantations will grow • it will be even harder for smallholder farmers to compete as plantation outputs increase and global coffee prices drop further. Wider impacts of GM coffee include: • when smallholders are driven out of business, countries like Uganda, Ethiopia and others will then lose crucial export earnings while their foreign debts rise • social unrest may increase in coffee growing areas as incomes decrease and survival becomes more difficult – Uganda reports increases in robberies and suicides when prices are lowest • farmers growing GM coffee will become dependent on agrochemical companies for their harvests • an increasing proportion of coffee will be chemically treated as plantations use significant amounts of chemical inputs – notably herbicides, insecticides and fungicides • the high diversity of wild coffee species, important to developing new strains and natural strength in cultivated varieties, will be eroded and may be lost • monocrop plantations vulnerable to disease and environmental degradation will have unpredictable long-term productivity • the biodiversity that integrated forest systems protect will be threatened or lost; if genetic contamination of natural coffee trees occurs, those farmers will become dependent on chemicals for their crop as well • Genetic Use Restriction Technology (GURTs), already subject to international condemnation, will gain a stronger hold in global agriculture • high quality natural coffee may become unavailable to consumers as the smallholder farmers who produce it go out of business. 67
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credits devised, written and design
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“ A company that adopts and imple
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the instructions What you need - ge
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glossary bluewash The ploy used by
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coffee file Coffee: adaptation of A
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8 the story of coffee D the coffee
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wet method D requires the use of re
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200 Robusta coffee market 1986-2005
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drinker roasted, ground, instant CO
Page 20 and 21: 16 key ideas ◆ ◆ ◆ ◆ ◆
Page 22 and 23: Profit margins are high - Nestlé h
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Page 28 and 29: aim a fair price? ◆ To analyse th
Page 30 and 31: ◆ Although in The coffee cycle Ne
Page 32 and 33: s Analyse the photos used and the o
Page 34 and 35: ◆ ◆ Real costs A supply and dem
Page 36 and 37: aim how fair’s fair? ◆ To explo
Page 38 and 39: actionpage: how fair’s fair? s Re
Page 40 and 41: 1990 european fair trade associatio
Page 42 and 43: Actionpage: Pros & cons 38 PROS Gua
Page 44 and 45: aim fair marketing ◆ To analyse t
Page 46: Actionpage: Logo ® 42
Page 49 and 50: actionpage: press release Statement
Page 51 and 52: appendix 1: the coffee crisis The I
Page 53 and 54: demand sides in which the coffee cr
Page 55 and 56: demonstrating that traditional shad
Page 57 and 58: appendix 4: co-op’s fairtrade cof
Page 59 and 60: appendix 5: mugged introduction The
Page 61 and 62: women earn less, work longer, have
Page 63 and 64: appendix 6: rescue plan A Coffee Re
Page 65 and 66: Consumer governments 1 Provide poli
Page 67 and 68: joining forces we believe that we w
Page 69: of shortfalls that occur (see Nestl
Page 73 and 74: appendix 9: behind the mask the rea
Page 75 and 76: • change the law to enable people
Page 77 and 78: Fair Trade in Action - KS 3-4 Fairt
Page 79 and 80: ackground reading* Behind the mask:
Page 81 and 82: useful contacts Anti-Slavery Intern
Page 83 and 84: International Coffee Organisation w
Page 85 and 86: isc Reading International Solidarit
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