Case study coffee - School-Portal.co.uk

April 2008 no.565 A case study of a cash crop – coffeeFigure 5: The world’s major coffee consumers (countries importing over 100,000tonnes of coffee per year)coffee prices fell by 64.5 per cent and 1990. This shift in the balance of powerwere at their lowest price for 30 GeoFile years bySeries from 26 Issue growers 3 to retailers has beenthe end of 2003. Since the Fig last 565_05 high inMac/eps/illustrator catastrophic 11 for s/smany farmers and their1997, the average price paid NELSON to producers THORNES families PUBLISHING in LEDCs.has fallen by 80 per cent. Meanwhile, Artist: David Russell Illustrationretail sales have increased from US$30 Problems for the growersbillion per year in 1990 to US$80 billiontoday.In Ethiopia’s Kafa province, MohammedAli Indris has seen his combined incomefrom coffee and corn drop from US$320a year to around US$60 for the coffee hesells. He can no longer sell his corn, as ithas to be eaten by his extended family of12:Despite the proliferation of high streetcoffee shops in recent years, overalldemand for coffee has increased little fordecades. In the USA, coffee consumptiondropped from 36 gallons per capita in1970 to 17 gallons per capita in 2000while soft drink consumption more thandoubled. New markets in, for instance,Eastern Europe, have helped to keepglobal demand from falling.Meanwhile, LEDCs, especially Vietnam,have grown more and more coffee. Thisincreasing production has led tooversupply, with too many countriesfighting to sell their crops on the worldmarket. Often they have to accept thevery low prices offered, or risk not sellingtheir coffee at all.Now, power in the world coffee systemobviously lies with the buyers:• six international trading companiescontrol more than 50 per cent ofcoffee exports• these traders sell to roasters, wheretwo companies, Nestlē and PhilipMorris, account for over half theworldwide sales.Estimates suggest global coffee revenues(i.e. the amount paid by the finalsuppliers in the supply chain, rather thanby consumers) are around US$55 billiona year, of which only US$7 billion goesto producing countries – this representsaround 13 per cent of total revenue,down from 40 per cent as recently asKeyMajor coffee importing country‘Five to seven years ago, I was producing sevensacks of unprocessed coffee and this wasenough to buy clothes, medicines, services andsolve so many problems. Now if I sell fourtimes as much, it is impossible to cover all myexpenses.’In 2002 the World Food Programmeestimated that the coffee crisis had left30,000 Hondurans hungry, and manysuffering from malnutrition. Around theworld, the problem is increasing incountries where farmers have plantedcoffee at the expense of their traditionalsubsistence crops. At the same time astheir coffee has become almost worthless,demand for food has increased the priceof imported staples.In Uganda, many families can no longerafford to send their children to school.Patrick Kayanja, head teacher at a schoolin Mpingi district, has seen his studentnumbers fall, despite reducing schoolfees:‘Parents always took cash from selling coffeebut now it is gone. Between 1995 and 1997 wehad 500 students. Last year we started with 140and ended with 54.’As school rolls drop, educationalprospects for young people decline, withknock-on effects for countries trying tofind a way up the development ladder.Less education ultimately leads toproblems such as a lack of tax revenue,environmental degradation throughover-use of farmland, and an increasingpopulation.The lack of export revenue meansgovernments have less money to spendon everything from roads and transportinfrastructure to education and healthcare. Meanwhile, a hungry population ismore susceptible to disease, placing anincreasing burden on health services thatcannot cope. In Ethiopia, the UNestimates 3 million adults are infectedwith HIV/AIDS, accounting for 30percent of a health budget that alreadyrisks being cut because of decreasingrevenues from coffee.Another consequence of the coffee crisishas been environmental degradation.Traditionally, coffee has been handpickedby experienced pickers, but largeestates now use methods such as strippickingand late harvesting. Trees aregrown closer together to maximiseprofits, meaning a decrease in the qualityof the beans and nutrients drained fromthe soil. This is often countered by theuse of agro-chemicals and fertilisers, withconsequent problems of contaminatedrun-off into rivers, including theAmazon in Brazil.In many countries, traditional plantingof coffee trees with shade crops helped toconserve the soil and forest cover andprovided important habitats formigrating birds. With industrialconcentrations of sun-grown coffee inmonoculture stands, as found in Brazil,these environmental benefits are beinglost.The future: unsustainableproduction, or niche markets?It seems obvious that, withoverproduction leading to oversupply,and many farmers being forced to acceptless money for their beans than it costs togrow them, the future of coffee as a viablecrop for LEDCs is unsustainable. Someproducers have managed to restore areasonable standard of living byconcentrating either on niche markets,such as the highly sought after BlueMountain blend from Jamaica, or oncoffee sold under the Fair Trade banner,where buyers in MEDCs guarantee adecent price for the crop (Figure 6).Fair Trade coffee has becomeincreasingly important since it was firstintroduced into the Netherlands in 1973.Geofile Online © Nelson Thornes 2008

April 2008 no.565 A case study of a cash crop – coffeeFigure 6: Selling the benefits of Fair Trade coffeefarmers will be forced to give up growingcoffee, and millions of the world’spoorest people will have continued tosuffer because of the pursuit of profit bythe rich world.ReferencesDaniels, P., Bradshaw, M., Shaw D. andSidaway J. (2001), Human Geography:Issues for the 21 st Century, PearsonEducation, Chapter 9.Francis M. and Francis N. (2007), BlackGold, Dogwood Pictures.Oxfam (2003), Mugged: Poverty in yourCoffee Cup, Oxfam Publishing.Wild, A. (2005), Black Gold: A DarkHistory of Coffee, HarperPerennial.Source: www.humanbeanscoffee.comBy 2005, nearly 200 coffee co-operatives,representing 675,000 farmers, wereinvolved. Sales growth of Fair Tradecoffee has been much higher than that ofcoffee overall. Fair Trade guarantees aliving wage for farmers, and promises tobuy their coffee for a number of years,increasing stability and encouragingthem to invest their profits. Farmers atthe Oromiya Coffee Farmers CooperativeUnion in Ethiopia gain 70 percent of the export price of their coffee,compared with only 30 per cent for thosefarmers selling coffee on the open marketin Kafa province.Fair Trade coffee has benefits for theenvironment, with most of the coffee stillbeing shade-grown. It also provides amoral argument against those TNCsexploiting the market. The globalStarbucks brand has been quick to seethe potential of Fair Trade, and hascommitted to buying 74 per cent of thecoffee it uses at fixed, long-term prices toensure stability for farmers.Fair Trade is obviously important formany farmers, and its importance islikely to grow over the coming years. Asmore and more farmers becomeinvolved, however, there is a fear thismarket will also become oversaturated.Fair Trade on its own will not cure thecoffee crisis.A radical rethink is needed to restore thebalance between the growers and thebuyers. Oxfam has suggested destroying5 million bags of the lowest quality coffee(at a cost of US$1000 million), to stopmarket saturation and increase prices. Ithas also called on roasters and traders tocommit to paying growers a decent pricefor their produce to ensure an adequatestandard of living.Ultimately, however, it seems there aretoo many people involved in coffeeproduction, and a reduction in howmuch is grown is also needed. ManyLEDCs will need help in the form of aidand redevelopment grants to convertland used for coffee. Donor countrieswill have to be generous with theirmoney and recognise that a seriousproblem exists. If nothing is done, manyF ocusWeb sourcesen.wikipedia.org, news.bbc.co.ukwww.coffeeresearch.orgwww.eduweb.comwww.fairtrade.org.ukwww.fas.usda.govwww.globalexchange.orgwww.ico.orgwww.koffeekorner.comwww.maketradefair.comwww.nationalgeographic.comwww.rombouts.co.ukwww.oxfam.orgwww.usinfo.state.govQuestions1. What are cash crops, and why are they important to (a) MEDCs, and (b)LEDCs?2. With reference to a specific example, such as coffee, describe the stages inthe production of a cash crop from planting to public sale.3. Describe and explain the differences in the worldwide distribution ofcoffee producing and coffee consuming countries.4. What problems are being caused by the crisis in coffee productionworldwide? What is being done, or could be done, to solve these problems?You should refer to both MEDCs and LEDCs in your answer.Geofile Online © Nelson Thornes 2008