By Mario Osava
RIO DE JANEIRO, May 17 2001 (IPS)

Today’s bottomed out coffee prices highlight the difficulties, under the current terms of global trade, of promoting the development of poor countries that are dependent on farm exports.

The price of coffee on the international market currently hovers around 50 cents a pound (0.453 kg), which means a 132-pound (60-kg) sack fetches about 66 dollars.

To “allow us to just get by, without getting rich,” we would need a price of around 120 dollars a sack, Hercilio Amaral, secretary-general of Brazil’s National Coffee Council, told IPS. His organisation represents the nearly 250,000 coffee-growers in that South American country, the world’s leading exporter of coffee.

Prices much higher than that, as occurred five or six years ago, lead to a flooded market. The high prices seen back then prompted Vietnam to plant more and more coffee, one of the causes of today’s overproduction.

Stable production and prices are a seemingly impossible goal for a commodity that is exclusively produced in poor tropical countries and consumed mainly in the wealthy industrialised North.

The poorest countries, in Africa and southeast Asia, can withstand the collapse in prices, because “they also pay very low wages, as skimpy as 10 dollars a month,” in this sector in which labour represents the biggest costs, said Amaral.

That would explain the failure of the retention plan agreed by the Association of Coffee-Producing Countries (ACPC) a year ago, under which members were to hold on to 20 percent of exports in an attempt to shore up prices.

Few members have respected the agreement, while an almost twofold rise in sales by Vietnam have led it to displace Colombia as the world’s second-largest exporter.

In London, the ACPC agreed on measures aimed at bolstering prices Wednesday, while a three-day World Coffee Conference, organised by the International Coffee Organisation, opened Thursday.

Another factor conspiring against coffee-growers is the domination of the market by a handful of transnational corporations, which control around two-thirds of the market, and whose decisions have a major impact on prices.

Processers, distributors and retailers in the industrialised North turn a tidy profit on coffee sales, Amaral pointed out, adding that a cup of coffee in a cafe in Europe costs around 170 times the value paid to a farmer in Brazil.

In a report released ahead of the World Coffee Conference, the British-based humanitarian organisation Oxfam says producers receive just seven percent of the final retail price of a cup of coffee, while the rest goes into the hands of processors and retailers in rich countries.

The 60 percent plunge in prices over the past three years has accentuated the disparities, since business corporations in industrialised countries have seen their share of the profits increase, while the prices charged consumers have remained steady, according to Oxfam.

Meanwhile, the social problems facing poor countries that export unprocessed coffee beans have been aggravated.

The solution would be to incorporate added-value, through grinding and roasting, but the financial conditions, infrastructure limitations and costs in those countries mean that is not an option, said Amaral.

The disparities are even more glaring when you consider that countries without a single coffee bush, like Germany, are big exporters of coffee, said Rubens Ricúpero, secretary general of the United Nations Conference on Trade and Development.

In 1999, Germany accounted for nearly nine percent of the world’s coffee exports, said Ricúpero, a former Brazilian finance minister, who noted that the European country imported 13 million sacks of raw coffee at low prices, and exported four million sacks of roasted beans and instant coffee.

Amaral said coffee is an attractive crop for poor nations, because it generates a large number of jobs. In Brazil, a country of 170 million, the coffee-growing sector provides a steady livelihood for some four million people, counting the families of coffee-growers and the workers living on their farms year-round.

In addition, millions of seasonal jobs are created during harvest time. A crisis that hit Brazil in 1984, for example, left nearly two million people without that source of income, according to the secretary of the National Coffee Council.

With respect to the retention plan, Amaral acknowledged that compliance was difficult for countries lacking the necessary infrastructure.

Countries like Vietnam and those of Africa do not even have storage facilities with the special conditions needed to keep coffee beans in good condition, he explained. Besides, they are too poor to slash exports, he added.

Against that backdrop, only an unlikely shift in the international terms of trade would enable producer countries to earn acceptable prices that would effectively contribute to their development.

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