In The Times Of Globalisation
By Josh Frank
05 January, 2004
global coffee industry has endured colossal changes over the past fifty
years. Production of beans has shifted from country to country. Consumption
of the product has increased almost exponentially through huge sales
at retail outlets such as Starbucks and Seattle's Best. But not all
involved in the coffee market have benefited equally. Small coffee farmers
have suffered tremendous loss. Environmental degradation has also increased
as ancient forests have been cleared in hopes that the bare land can
be transformed into fertile ground, worthy of growing cash crops. Countries
have lost entire export industries as multinational corporations race
to purchase the cheapest beans they can find. And no country has felt
the pain of these transformations greater than Columbia.
In the mid 1970s
coffee in Columbia accounted for 50% of their legal exports. During
the global roar in the 1990s, as retail shops opened up on street corners
throughout the industrialized world, Columbia's coffee industry bottomed
out. By 1995, Columbia's coffee bean industry had suffered tremendously.
Coffee dropped from 50 to 7% of their legal exports. Thousands of farmers
fled the country, many more traded coffee for more lucrative cash crops
such as coca and opium. And now oil has replaced coffee as the number
one legal export, even though coffee farmers continue to employ the
most workers of any industry in Columbia.
Coffee prices in
South America peaked during the late 1960s to 1970s, a pound of coffee
from the fields of Columbia sold at an average of $3 per pound. But
by October 2001, the price of coffee per pound had dropped to $0.62
The Columbian market
at the time was regulated by The Columbia Coffee Federation (FNC); a
quasi labor union that represented coffee producers.
itself was founded in 1928, and quickly became the political voice for
rural farmers who had little clout and minimal access to policy makers.
Almost all coffee farmers were benefiting during these llucrative years.
Agriculture was the business to be in if you wanted to make a good legal
living in Columbia. However, the golden years didn't last long.
The FNC since the
1970s has lost its once formidable power. Global demands have fractured
the coffee community in Columbia through multiple trade factors, often
referred to as the neoliberal model. This economic model draws on the
old meaning of the word "liberal". It includes endorsing the
free-market system; deregulation of sectors, privatization, and an overall
disregard for government oversight and taxation. Now known in the US
As more and more
farmers began producing coffee beans (estimates ranged from 750,000
to 900,000 farms in 1972), prices began to steadily decline. Well over
200,000 farms were lost by the mid-1990s, as the oversupply of coffee
in Columbia reached record highs. Columbia was not alone in its over-production
of beans. In late 2001 it was reported that 60 countries produced 132
million pound bags of coffee, but the world only consumed 108 million
way during the 1980s ruled the international coffee trade. Major multinational
buyers during the eighties, Nestle, Phillip Morris, Proctor and Gamble,
raced to the bottom of the price chain. They looked to profit by buying
the most inexpensive beans they could find. Columbia was sure to lose,
as their beans are traditionally known for high quality and gourmet
flavor. Production costs were also relatively high for a third-world
country. The power of the FNC traditionally had raised the standard
of living for the estimated 560,000 coffee farmers in Columbia. Any
drop in their per pound production costs would greatly impact their
standards of living.
dictated the next winner in the coffee world. Following the 1973 Paris
Peace Accords, Vietnam quickly came into focus as a potential mass producer
of cheap coffee. Farm labor in Vietnam has always been cheap; in 1980
the average farm worker there made $0.09 a day. The climate in Vietnam
was also ideal for producing beans, and the world market was more than
ready to capitalize on these prime conditions.
would argue this is standard supply and demand economics. The world
demand was flourishing, so it was only right for buyers to seek out
the best and cheapest means of production. However, what this model
fails to recognize is the harsh effects such policies have on small
farmers in rural Columbia and elsewhere. The numbers show this neoliberal
effect with a sobering jolt.
By 1999 Vietnam
nudged its way into the top three global producers of coffee. Vietnam
tied Columbia as the second largest producer at 12 million bags per
year, trailing only Brazil. One decade prior Vietnam was a virtual no
name on the world coffee circuit.
As the neoliberal
model has created some winners, it has also produced many losers. Transnational
corporations and gourmet coffee dealers have posted record profits,
as the price per pound has slumped. The largest winners in this market
have been the retail chain Starbucks, and the largest multinational
coffee buyer Nestle. As these corporations' bottom lines fatten, rural
poverty in the countries they harvest is intensifying. International
prices on coffee have now reached a 35 year low. The last 3 years have
been the hardest on the global market, decreasing in value more than
50%. Taking into account inflation, the prices are lower than they have
ever been in history.
has $34 billion dollars in external debt. The International Monetary
Fund and World Bank dictate how best Columbia can pay back these dues.
The debt has forced the country to expand production of exports to generate
hard currency. This macro-expansion has contributed to the overproduction
of coffee beans. As the global demand for coffee has remained relatively
stable, growing only slightly since the late 1980s, the increase in
production has produced a massive oversupply of coffee beans. And unlike
the subsidized agriculture in the US, Columbia is unable to dump their
goods on other willing countries.
Under the given
model, restrictions on supply are nonexistent. No regulatory measures
are in place to halt the overproduction of coffee in Columbia. The impact
has been great, as export revenues for multinational corporations have
grown, real wage earnings for farmers has not.
As the Columbian
government fully endorsed these neoliberal measures, their culpability
in the matter goes without question. However, industrialized countries,
policy institutions, and multinationals have in effect spearheaded the
globalization pace set forth by the developing world.
Coffee beans since
the early 1900s have been primarily an export commodity. Reliance on
free-markets to dictate the flow of coffee, has been the famous Columbian
mantra when discussing supply and demand economics. The FNC has historically
monitored Columbian coffee markets, with an eye toward the industrialized
world. As the FNC allowed multinationals to dictate production, they
lost control of the coffee trade. In the past the coffee industry in
Columbia relied on the FNC for regulatory and trade measures, more than
they relied on the State. So it can be said that the FNC has acted as
a puppet State for thousands of coffee farmers in Columbia since its
inception early last century.
themselves are managed more by transnational corporations and policy
institutions, than State capacities. The development of economic transactions
across borders, particularly international borders, undermines State
authority. This in effect marginalizes the State and the FNC as an economic
player in the global community.
The neolibearl economy
encourages private entities to dictate the flow of goods and capital.
Therefore wealth and power has been transformed into the hands of private
actors, and out of the clutches of the State. Such private actors decide
who is included and excluded in global production networks. In the case
of Columbia, as the FNC and the State allowed private players to manage
the flow of coffee, the State and the FNC became more and more irrelevant
in countering the strong market force. The negative effects have been
felt tremendously by the poor rural coffee communities in Columbia.
embodies these agricultural sectors, it becomes clearer and clearer
that no governing body is wholly representing these poor Columbian farmers.
Left to the devices of neoliberal forces alone, it is unlikely that
coffee production in Columbia will again make up 50% of the legal export.
Collectively the strength of the new market is embodied by multinational
corporations and private players, not State and local authorities --
soverignty kneels to the capitalism.
will continue to control the flow of coffee at the expense of farmers
and the poor, only to provide monetary gain of the rich. All in all,
this indicates that free-market economics are powerful enough to benefit
a few, and crush the rest.
Josh Frank is a
writer living in New York. His work has appeared in Left Turn Magazine,
Dissident Voice, Counterpunch, Z Magazine, among many others. He can
be reached at email@example.com