The Deadly Embrace
By Ben Gregory
and David McKnight
25 June , 2003
The tree stands in the middle
of the Orchid Reserve tended by the UCA Miraflor, a fair trade coffee
co-operative near Esteli. At first glance it looks like a normal tree.
Go closer, and you can see a huge gash at the bottom of its trunk. Closer
still, and you can actually enter, look up, and see a hundred foot chimney
towering above you. You are inside a parasite, a plant which slowly
strangled its host, taking on its shape, but reducing the original tree
For many, Nicaraguas
economy is in a similar deadly embrace. It is slowly being strangled
by the dictates of the World Bank and the International Monetary Fund.
Many countries have given in to the inducements of the international
financial institutions, either willingly or under protest. But the results
have been the same, companies and countries in the rich North living
off the South, as their people fade away.
Coffee is the latest commodity
to face a crisis. The IMF and World Bank encouraged new countries to
produce coffee. Vietnam went, in under a decade, from producing very
little coffee, to number two in the world, with the help of cash from
the World Bank. With the market flooded, prices have crashed for coffee,
70 per cent of which is produced by small farmers. Coffee prices hit
a 30 year low, whilst coffee companies reaped the benefits. Ten years
ago the world coffee economy was worth $30 billion, of which producers
received $12 billion. By 2001 it was worth $55 billion, but the producers
share had shrunk to only $7 billion.
Five giants Kraft,
Nestlé, Proctor & Gamble, Sara Lee and Tchibo buy
half the beans on the world market. They have grown richer as the 25
million coffee farmers have grown poorer. In Nicaragua coffee is fetching
60 cents a lb, whilst production costs are 80 cents. At the same time
Nestlé makes a 27 per cent profit margin on its instant coffee,
and Sara Lee 17 per cent, a huge amount compared with other food and
The squeeze is not only coming
from companies, nor on just coffee. At the moment Nicaragua is locked
into negotiations to create a Central America Free Trade Area by the
end of 2003, and a Free Trade Area of the Americas by 2005. In each
the agenda is being set by the United States. Already cheap imports
of rice and maize from the United States are undermining small farmers
food security and livelihoods in Nicaragua, affecting millions of Nicaraguas
of the National Federation of Cooperatives (FENACOOP),
expressed many of the concerns about the new free trade negotiations.
"The differences between the USA and Nicaragua are so enormous,
it would be best for both to agree to respect the other's position,
especially regarding agriculture.
Nicaragua is not looking
for access to North American markets, but rather to obtain agreements
that will permit small and medium farmers to function. We should agree
to leave our most sensitive products out of the
He highlighted the damage
free trade is doing to Nicaraguan coffee producers. Our coffee
is generally of a very high quality. As a result, some manufacturers
blend a small amount of it with a bulk of Vietnamese, low-grade, coffee.
And still call the mixture 'Central American.' This can do nothing but
damage to our commerce."
The effects of these pressures
have an all too human cost. In the summer of 2002 twenty one people
fourteen of them children, died in camps near Matagalpa, in Central
Nicaragua, set up to house starving coffee workers in the region. A
credit squeeze, partly the result of IMF policies, is forcing farmers
to sell up, and driving them off the land.
There are, however, alternatives
to this madness. There is a long established system of fair trade. Its
origins lie in the solidarity movement, which in the case of Nicaragua
promoted coffee in the 1980s as a way of supporting the Sandinista revolution.
Since then it has developed in countries around the world, now accounting
for around 200 co-operatives with 675,000 farmers, 70 traders and 350
This has made a real difference
to some Nicaraguan small coffee farmers, which make up 95 per cent of
growers in the Republic. In March 2003 Blanca Rosa Molina, a Matagalpan
coffee farmer and President of Cecocafen, one of the five Nicaraguan
fair trade co-operatives, gave her personal example of the benefits.
The fair trade price has enabled me to raise my children, send
my daughter to university and build my house bit by bit its
a very humble house and Im still building.
At around the same time members
of the seventh Welsh delegation were talking to Corina Picada, a member
of the UCA Miraflor Co-operative. Her struggle for her own patch of
land goes pack to the time of the revolution. Originally, her farm and
all the surrounding land was owned by Rene Molina, an associate of Somoza
the dictator. On the revolution he fled, and the land was parcelled
out as part of the agrarian reform.
Corina still remembers the
time she had to defend her farm during the war in the 1980s. As she
spoke to the delegation, she pointed to the hill above her farm. The
Contra [the counter-revolutionaries] were here. We dug trenches, on
the ridge just above the farm. I was there with a Spanish priest when
the Contra came. We had one gun between us, and I gave it to him, because
he was a better shot.
The hill is now covered with
banana trees, which provide shade for her coffee plants, which sit snugly
beneath them. She is still defending her community, but this time with
the help of fair trade. Unlike other farmers, the fair trade price has
enabled Corina and fellow co-op members to survive the current catastrophic
drop in price. She produces 2,500 lbs of coffee a year, fed by 2,000
lbs of organic compost, which she makes in large worm bins on her farm.
Part of the profit from her
crop is pooled with others, to fund community projects in health and
education. They are also trying to diversify the local economy, to provide
a future for the communitys young people. Theres a
problem with them leaving the land. They go looking for a better life,
but they dont find it. What is a young campesino going to do in
the city? They slip into gangs. One of the roles of eco-tourism is to
combat the desertion. They are stimulating artisan production of handicrafts.
None of this would be possible
without fair trade. But fair trade is more than this. It is seeking
to lay the blueprint for a fairer global trading system. Porfirio Zepeda,
a manager with UCA Miraflor, visited Wales in March 2002. He was in
no doubt that this lies at its heart. Fair trade is not just a
chance to get higher incomes, but also to have contact with consumers
can change the relationship between consumers and producers, and the
relationship between prices, so that it is a relation that allows us
Here in Britain, the government
rhetoric calls for fairer trade rules and stresses the need to make
globalisation work for the poor. Unfortunately its championing
of trade liberalisation and unstinting support for harsh
economic policies is hurting the very people it is supposed to be helping.
At the World Trade Organisation Britain has led the way in pushing for
a widening of the global liberalisation agenda, forcing
developing countries like Nicaragua to open up their markets
to British businesses.
Britains pursuit of
opening up protected markets in developing countries flies in the face
of any notion of fair trade and poses a deadly threat to
small producers such as Nicaraguas coffee growers.
In its recent report (Mugged
Poverty in your coffee cup), Oxfam put forward a rescue plan
to bring to an end the current crisis. However, it still does not go
far enough. In a world where power lies with governments, unaccountable
institutions and big companies in the North, or with a small land owning
elite in the South, the poor, small farmers are always going to get
squeezed. If Fair Trade has any message, then it is that a fair price
will only be achieved when a trading system is set up which pays a fair
price internationally, production is managed co-operatively at a local
level, and the giant companies are reigned in, or taken out of the equation
altogether. As Porfirio Zepeda says, the relations between consumers
and producers needs to be built on fairness, and not on profit.
A delegation from the Wales
Nicaragua Solidarity Campaign visited Nicaragua in February/March 2003.
For more information contact email@example.com
(Ben Gregory is Secretary
of the Wales Nicaragua Solidarity Campaign and author of 'Afar I see
the day is coming: Wales, Nicaragua and the future of internationalism'.
He can be contacted at firstname.lastname@example.org. David McKnight is and activist
and film maker. He is co-producer of 'Black Star, Green Room: Ghana
and the World Trade Organisation' and is currently making a film on
the effects of globalisation on Nicaragua email@example.com)