The Coffee Crisis
Since coffee is commodity like oil, it traded in the same way oil is, on the exchange, and by contract. While other methods of buying coffee do exist, the reality is that the contract price on the exchange sets the standard.
And the reality of the coffee commodity market is that prices are frighteningly low. So low that farmers cannot make a living. A common estimate is that to grow coffee generally may cost US$0.90 a pound. But the price on the market recently has stayed about US$0.68 a pound.
And prices have plunged lower than this during the last three or so years of this world-price depression known in the trade as the “coffee crisis.” Worldwide, estimates hold that as many as 25 million people have been hurtled into poverty by the coffee crisis. That’s equal to the population of the entire state of Texas.
For example, in Colombia, coffee sent the farmer’s children to college for decades. But now, it hardly pays to grow coffee. In fact, many farmers have either cut back their trees to wait for prices to bounce back, or are looking at bankruptcy and the loss of lands that have been in their families for many years.
In these cases, the farmers may even consider just abandoning the land altogether. That’s sad enough, but what happens to the coffee workers and their families when this occurs?
In Nicaragua’s Matagalpa coffee region, aid workers have estimated that as many as 20,000 former coffee pickers and workers have lost their jobs, homes, and income. Now they live under plastic tarps along the roadside and beg for food, according to reports by press agencies like Reuters.
In Colombia, according to press reports from papers as diverse as the Washington Post and the Financial Times, farmers have looked to save their lands and the jobs of their skilled workers by converting their farms to the production of illegal drugs. The slopes on which coffee grows are also the perfect environment for opium poppies – the basis of heroin – as well as coca, the basis for cocaine.
Nestor Osorio, the head of an important coffee group, the International Coffee Organization (ICO), told the press in April of this year that he personally saw aerial photographs of former coffee farms replanted with coca. News service Knight-Ridder reported this month that Andean cocaine production had increased by 6,500 acres.
But these aren’t abstract facts. We see the results of the coffee crisis in these profound and unexpected ways here in our own country. In the United States, our government has spent billions in Colombia fighting the war on drugs. Obviously, the coffee crisis is an important component to be considered in this complex situation.
Increases in illegal drugs in our communities isn’t the only way the coffee crisis affects us unexpectedly. International aid organizations estimate that the economic losses from the coffee crisis have cost as many as 500,000 agricultural jobs in Central America and Mexico.
Particularly in the Mexican coffee region of Huatusco, job losses have been severe, forcing men to leave their families and cross illegally into the United States to search for work. Many desperate coffee workers have silently melted into our underground economy.
But not everyone survives the dangerous trip. Last year the story of 11 such men found dead in a boxcar in Iowa made headlines. Those coffee workers who have made it north may never go home again, leaving families permanently separated. Thus the new term used in Mexico: “coffee widow.”
And the reality of the coffee commodity market is that prices are frighteningly low. So low that farmers cannot make a living. A common estimate is that to grow coffee generally may cost US$0.90 a pound. But the price on the market recently has stayed about US$0.68 a pound.
And prices have plunged lower than this during the last three or so years of this world-price depression known in the trade as the “coffee crisis.” Worldwide, estimates hold that as many as 25 million people have been hurtled into poverty by the coffee crisis. That’s equal to the population of the entire state of Texas.
For example, in Colombia, coffee sent the farmer’s children to college for decades. But now, it hardly pays to grow coffee. In fact, many farmers have either cut back their trees to wait for prices to bounce back, or are looking at bankruptcy and the loss of lands that have been in their families for many years.
In these cases, the farmers may even consider just abandoning the land altogether. That’s sad enough, but what happens to the coffee workers and their families when this occurs?
In Nicaragua’s Matagalpa coffee region, aid workers have estimated that as many as 20,000 former coffee pickers and workers have lost their jobs, homes, and income. Now they live under plastic tarps along the roadside and beg for food, according to reports by press agencies like Reuters.
In Colombia, according to press reports from papers as diverse as the Washington Post and the Financial Times, farmers have looked to save their lands and the jobs of their skilled workers by converting their farms to the production of illegal drugs. The slopes on which coffee grows are also the perfect environment for opium poppies – the basis of heroin – as well as coca, the basis for cocaine.
Nestor Osorio, the head of an important coffee group, the International Coffee Organization (ICO), told the press in April of this year that he personally saw aerial photographs of former coffee farms replanted with coca. News service Knight-Ridder reported this month that Andean cocaine production had increased by 6,500 acres.
But these aren’t abstract facts. We see the results of the coffee crisis in these profound and unexpected ways here in our own country. In the United States, our government has spent billions in Colombia fighting the war on drugs. Obviously, the coffee crisis is an important component to be considered in this complex situation.
Increases in illegal drugs in our communities isn’t the only way the coffee crisis affects us unexpectedly. International aid organizations estimate that the economic losses from the coffee crisis have cost as many as 500,000 agricultural jobs in Central America and Mexico.
Particularly in the Mexican coffee region of Huatusco, job losses have been severe, forcing men to leave their families and cross illegally into the United States to search for work. Many desperate coffee workers have silently melted into our underground economy.
But not everyone survives the dangerous trip. Last year the story of 11 such men found dead in a boxcar in Iowa made headlines. Those coffee workers who have made it north may never go home again, leaving families permanently separated. Thus the new term used in Mexico: “coffee widow.”
posted by Anonymous at 1:12 AM
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