Wed. Apr 24th, 2019

The bitter taste for coffee farmers of the new price fall

The bitter taste for coffee farmers of the new price fall



The new fall in coffee prices is in jeopardy for more than 30 producing countries, most of them in Latin America and Africa, in the face of the "humanitarian crisis" that looms over an increasingly lucrative industry, but in which the growers do not achieve no longer cover production costs.

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The alarm centered the World Forum of Coffee Producers in Nairobi at the end of March, after the international price reached less than one dollar per pound, in a prolonged decline that, according to the FAO, now places it 45% below of your level in 2011.

Although the crisis is not new, in recent months it has accentuated in such a way that it has brought to mind the dramatic situation of 2001 (when it reached about 48 cents per pound), with threats conjugated against small coffee growers.

ALARM FIGURES

@ CaféforChange, a global initiative that seeks to modify the business equation for the benefit of producers and workers, estimates that for every cup in the European market, for which the consumer can expect to pay around $ 5, coffee growers will not be able to receive two cents.

"The problem is that the industry is doing very well but the coffee farmers are in misery," Guatemala's Fernando Morales-de la Cruz, founder of that platform, told Efe.

The International Coffee Organization (OIC) also believes that with what is paid for coffee consumption, which Morales estimates at 3,000 million cups a day worldwide, the activity can be sustainable.

However, the producing countries assure that the majority of the 25 million farming families do not even manage to cover production costs since the price collapse is being assumed by practically only that part of the chain.

And it is that while in 1983, the price fluctuated between 1.20 and 1.40 dollars per pound, by 2018 the average price of one pound of Arabica coffee, the highest quality, was 1.01 dollars; and on March 22 it came to be below 0.95 cents.

EXCESS SUPPLY

The United Nations Food and Agriculture Organization (FAO) has warned that the main factor associated with the current price depression is the excess supply.

Much of this is due to Brazil, the largest producer of coffee in the world and which in 2018 picked up a record harvest of 61.7 million bags of 60 kilos (+ 37%), out of a world total of about 168 million .

The Brazilian Coffee Exporters Council considers that "prices are not worrisome because they are something punctual, not structural" and that what matters is to respond to the increase in world consumption, which grew by 2.2% in 2018 and reached 165, 1 million bags.

In contrast, Vietnam, the second of the world's producers, lowered its harvest in 2018 by 3.4%, to 29.5 million bags; and Colombia, the third, reduced it by 4.5%, reporting 13.6 million bags, affected by climate issues.

FAIR TRADE AGAINST HUMANITARIAN EMERGENCY

Data from the UN indicate that coffee accounts for "two thirds of agricultural exports in Burundi and close to one third (or more) in Colombia, Ethiopia, Honduras, Rwanda and Uganda", so the price decline has had a major impact in employment, income and migration.

Faced with these effects, producers from 35 countries in Africa and Latin America have urged the industry to increase purchase prices and thus avoid "a humanitarian crisis", urging, in addition, coordinated international action.

In fact, the Honduran president, Juan Orlando Hernández, undertook a crusade since the end of 2018 to "do justice to coffee" and prevent small farmers from being forced to flee from the misery in their countries.

Honduras, the first coffee producing country in Central America, third in the Americas and fifth in the world together with Ethiopia, has asked in different forums to create an alliance to raise awareness among citizens about the importance of the "fair price" and has focused on finding the right European support, one of the main buyers of the grain.

The European Union is key because, according to @ Café for Change, it buys "41% of all the coffee exported, but today it pays for it up to 70% less than in 1983".

That is why the platform sees urgent to achieve among the governments of the purchasing countries, multinationals and other market players a formula of "shared value", which allocates 10 cents for each cup sold to finance social security and guarantee the education of the coffee families.

"The industry is concentrated in a few hands, buyers and large chains of coffee shops, who define the price and decide practically whether the children of a grower can study or not," says Morales, also criticizing the taxes imposed by countries such as Germany, giant importer, consumer, roaster and exporter of coffee in Europe.

NEW YORK OR SWITZERLAND?

The situation in Colombia has led the National Federation of Coffee Growers (FNC) to propose that the price reference of the New York Stock Exchange be abandoned and one of its own be established together with other producing nations.

According to the FNC, although the so-called "C" futures contract in New York reflected the prices of washed Arabica coffees, it is currently "much more influenced by the price of Brazil", which is going down due to its wide offer.

But @ Café for Change says that the cause of the problem is not precisely in New York, but in Switzerland, considered the first center of trade in commodities.

"The concentration of the industry, each time with fewer companies and more power, is in Switzerland, where 70% of the global purchase of green coffee is made, using a model to buy as cheap as possible and sell it as much as possible. expensive, "says Morales.

Meanwhile, for organizations like World Coffee Research the concern should go beyond the price.

"The so-called 'C' price is beyond the control of a small farmer, but his situation could improve a lot if he had more information, better access to inputs and real data on yields, droughts or pests," says Efe Hanna Neuschwande of the United States. of World Coffee Research.

Diana Marcela Tinjacá

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