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Life Without Subsidies |
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Written by Nora Hennessy
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Tuesday, 30 November 2004 |
Public's support required to assist developing countries by purchasing fair-trade
products
As you calculate the pros and cons of producing with decoupling payment, spare
a thought for African’s coffee farmers. Coffee provides the livelihood of
millions of African farmers and their families. Some 5% to 10% of African farmers
are engaged in coffee growing and rely on this enterprise as their main source
of income. But coffee prices have plummeted in the international market since
the start of the millennium.
Uganda and coffee are inextricably linked. Coffee is the main source of income
for many households and it forms the heart of the country’s economy.
This east African country’s coffee production and export accounts for a
quarter of Africa’s coffee exports, but is still a minor player on the world
coffee market, where the estates and transnational companies in Brazil, Vietnam
and Columbia dominate.
PRICES
Prices have recovered a little in the past year back to 40 cents per pound;
but a larger Brazilian crop is now forecast to put pressure on prices.
Brazil is by far the world leading coffee producing country followed by Vietnam
as second, Colombia as third, followed by Indonesia, Mexico, India, Guatemala,
Ethiopia, Costa Rica and Uganda.
Unlike here in Ireland, Africa’s coffee farmers have no direct support
to fall back on. The sharp reduction in coffee prices has led not only to the
reduction of farm income and agricultural wages, but also to the losses of employment,
farm closures and the dramatic increase of poverty and starvation. Millions
of poor coffee farming households are facing ruin, unable to put enough food
on the table, send their children to school, or buy basic medicines.
Uganda produces the best robusta coffee in world. At the early years of independence
in 1962, the country’s economy was one of the most dynamic economies in
Africa with good prospects for growth. For thousands of farmers and their families,
coffee used to hold out hope for better futures and a way of getting out of
poverty. But, by mid 1980s and early 1990s, this hope disappeared due to the
dramatic fall of coffee prices in the international market and its effect on
farm gate prices in the country. Plummeting prices mean that producer countries
like Uganda cannot sustain spending on health and education or pay international
debts, while their national banks go bankrupt.
The share of final prices received by poor farmers for their unprocessed ‘green
coffee beans’ has fallen dramatically, from 64 per cent of the US retail
price in 1984 to just 18 per cent of that price in 2001 (Oxfam, 2002). Oxfam
research in 2002 discovered that Ugandan coffee farmers received just 2.5 per
cent of the retail price of their coffee sold in the UK. Yet meanwhile, the
international companies that dominate both trading and roasting of coffee make
giant profits. Nestlé’s operating margin on instant coffee is estimated
at 26-30 per cent of the final retail price (Oxfam 2002).
This dramatic fall of prices that poor coffee farmers in Uganda used to get
for their crop has brought about social and economic imbalances in more than
3,000,000 smallholders Ugandan coffee farmers affecting their daily livelihoods.
Africa’s coffee farmers are not only at the mercy of the multi-national
companies. They also face increasing pressure from an international community
that extols the virtues of free trade, but restricts developing countries from
benefiting from such trade by imposing import barriers.
Coffee cannot be transported across the globe without restriction. The European
Union (EU), for example, applies a range of regulations, periodically adjusted,
to control the coffee trade. All coffee entering the EU is subject to an import
duty. The higher the level of processing, the higher the tariff. A recent decision
by the EU to allow duty-free access of commodities to all least developed regions
does not extend to processed coffee.
One way in which the Irish consumer can help African farmers is through the
Fair-trade movement, which ensures a fair price to farmers in developing countries,
allowing them to make a living and send their kids to school. The higher price
Fair-trade paid to farmers can be seen as a form of support from consumers.
Coffee is a multi-million dollar industry, but the profits don’t go to
the people who actually work hard to grow the coffee beans, and carry all the
risks of failing crops or falling prices.
Go to a cafe here in Ireland and you will pay ?1.50 to ?2 for a cup of coffee.
How can a poor coffee farmer grow a kilogram of unprocessed coffee for 6 or
7 US cents, and see a spoonful sold for 2 euro?
Comhlámh is involved in promoting a fairer trade system for developing
country farmers and urges Irish consumers to purchase more fair-trade products
and support campaigns for improved import access for key exports crops, such
as coffee and tea, from developing countries.
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