The report that the article in the Socialist Standard (October) is referring to Mugged: Poverty in your Coffee Cup, details why the coffee crisis has become a development disaster, and is available to download from our Make Trade Fair site (www.maketradefair.com). It details the causes for the lowest coffee commodity prices in 30 years, one of which is the oversupply of coffee by developing countries’ smallholders. In order to reduce the oversupply the Coffee Campaign advocates the destruction of least five million bags of coffee stocks, funded by rich-country governments and roaster companies. Oxfam is a non-political organisation, as we are monitored by the Charities Commision on a regular basis and our mandate is to relieve poverty.
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. Long-term prospects are grim. Developing-country coffee farmers, mostly poor smallholders, now sell their coffee beans for much less than they cost to produce—only 60 per cent of production costs in Viet Nam’s Dak Lak Province, for example. Farmers sell at a heavy loss while branded coffee sells at a hefty profit. 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. Beyond farming families, 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 scale of the solution needs to be commensurate with the scale of the crisis. Our Coffee Rescue Plan, which brings together all the major players in the coffee trade, is needed to make the coffee market benefit the poor as well as the rich. This is about more than coffee. It is a key element in the global challenge to make trade fair. The plan needs to bring together the major players in coffee to overcome the current crisis and create a more stable market.
Within one year the Rescue Plan, under the auspices of the International Coffee Organisation, should result in:
1. Roaster companies paying farmers a decent price (above their costs of production) so that they can send their children to school, afford medicines, and have enough food.
2. Increasing the price to farmers by reducing supply and stocks of coffee on the market through:
-Roaster companies trading only in coffee that meets basic quality standards as proposed by the International Coffee Organisation (ICO).
-The destruction of at least five million bags of coffee stocks, funded by rich-country governments and roaster companies.
3. The creation of a fund to help poor farmers shift to alternative livelihoods, making them less reliant on coffee.
4. Roaster companies committing to increase the amount of coffee they buy under Fair Trade conditions to two per cent of their volumes.
The Rescue Plan should be a pilot for a longer-term Commodity Management Initiative to improve prices and provide alternative livelihoods for farmers. The outcomes should include:
1. Producer and consumer country governments establishing mechanisms to correct the imbalance in supply and demand to ensure reasonable prices to producers. Farmers should be adequately represented in such schemes.
2. Co-operation between producer governments to stop more commodities entering the market than can be sold.
3. Support for producer countries to capture more of the value in these commodities.
4. Financed incentives to reduce small farmers’ overwhelming dependence on agricultural commodities.
5. Companies paying a decent price for all commodities, including coffee.
LAURA SPENCE, OXFAM (by e-mail)
The seduction of profit, the decadent thrill of destruction…
Reply: Oxfam’s interest in the plight of coffee farmers has led to it advocating the destruction of about million bags of coffee. Our response is that there can be no justification for destroying any food when millions of people are starving. To propose this is to accept and give into the logic of the money-wages-profit system.
Oxfam’s opinion that there is an “oversupply” only makes sense from the point of view of those who benefit most from the coffee industry. For them a glut may mean a reduction in profit. If coffee is seen as being oversupplied, then it is as a result of it being a commodity – an item to be sold and bought at a price. There are millions who cannot afford coffee because of its (high) price. If it were not for the price tag, it would not be said to be in excess of supply. Millions among the poor who cannot drink coffee would have had access to it. Thus, reducing supply or increasing prices or both as Oxfam suggests does only one thing – putting coffee out of the reach of more people. The answer lies not in “Fair Trade” but in No Trade, in coffee along with every other good or service ceasing to be a commodity traded on a market and being produced instead solely and directly to satisfy people’s needs. No market can ever be made to work for the poor as well as the rich.
Oxfam seeks to solve the problem of the poor farmers by calling for a Coffee Rescue Plan; a Commodity Management Initiative; and a Fair Trade to be overseen by the International Coffee Organization. The “major players” in the coffee business would be brought together to overcome the crisis and create a stable market. What Oxfam does not understand is that the coffee industry is made up of two antagonistic groups – the owners of the plantations, the factories and the distribution network (transport, communication, warehousing etc) on the one hand and the farm labourers and their counterparts in the factories on the other. The two have diametrically polarized interests. The owners want maximum profits by squeezing the workers whilst the workers are resisting the attempts at eroding their already insufficient wages. There can never be an amicable solution as long as the ownership of the means of production and distribution remain in the hands of a few. History is replete with instances of woeful failures of committees and organizations set up to try to resolve such problems. Such committees invariably turn out to be made up of the same rich owners or their cronies and their decisions are always bound to be biased. In short, there can’t possibly be harmony between fire and water.
The capitalist system inevitably breeds corrupt practices as evidenced by the recent scandals surrounding WorldCom, Xerox, Enron, Arthur Andersen, Global Crossing, Tyco and Adelphi Communications, etc. Therefore the owning classes will do anything to thwart any measures designed to impact negatively on profits. Oxfam views with concern the inability of coffee farmers’ children to have access to education, health care, etc but then any measures taken to safeguard the interests of farmers and their families that do not take into consideration the relationship of the farmers to the means of production and distribution (of coffee) is a non-starter. If ownership of these major resources remain in the hands of a few wealthy individuals, no meaningfully democratic discussions can take place.