Development & Aid, Economy & Trade, Global, Global Geopolitics, Headlines, Labour

TRADE: Eco-Friendly Coffee Finds Favour With Big Business

Emad Mekay

WASHINGTON, Oct 9 2003 (IPS) - The World Bank endorsed Thursday a worldwide push for the use of eco-friendly brands of coffee that guarantee fair prices and social conditions for poor growers in developing countries as one way out of a record slump in coffee prices.

The World Bank, one of the world’s leading development organisations, also issued a report Thursday calling for stricter guidelines and policies on what can be labeled organic, fair trade, and shade-grown coffee – collectively known as "sustainable coffees".

The Bank’s study, ‘The State of Sustainable Coffee’, which surveyed 11 European markets and Japan, found that this part of the coffee market is growing significantly but warned that it still lacks policy guidance to ensure producers will continue to benefit.

Activists groups, like Rainforest Alliance, Fair Trade and Oxfam, have been pushing for large companies to sell coffee certified as "fair trade", which has higher social and economic standards for its growers than those used for traditional brands.

Sustainable coffee, a broader term than fair trade coffee, means forest preservation, habitat-protecting coffee plantations that use traditional methods as opposed to chemical-intensive, open-field, full sun plantations, which produce a higher quantity but inferior quality of coffee.

The international development charity, Oxfam, launched a campaign in September 2002 to press coffee companies – or "roasters", as they are known – to use more sustainable coffee and to pay farmers in the developing world enough to send their children to school, afford medicines and buy sufficient food.

Tensie Whelan, executive director of Rainforest Alliance, welcomed the report and said she hoped that it would herald more investments in sustainable coffee from the World Bank.

"It is really great to have everybody coming to the same page," she said.

But Panos Varangis, chief economist in the World Bank’s Agriculture and Rural Development Department, said the bank could only commit funds to sustainable agriculture in general and not specifically to coffee.

Today’s study backed views from civil society groups that say sustainable coffee could help poor producers in developing countries. The bank says the shift to sustainable coffee could be one of a number of solutions for the current coffee crisis, which saw prices going down to a record 30-year low, added the report.

After petroleum, coffee is one of the world’s most important commodities. This single crop represents more than 20 percent of export earnings for nine developing countries; it accounts for more than half of all export earnings in four countries.

Approximately 25 million farmers in more than 50 developing nations depend on coffee for their income and face economic ruin as a result of the current collapse of prices.

Farmers in developing countries, mostly poor smallholders, are now forced to sell their crop for less than the cost of production, with many in Africa and Latin America deserting their plantations altogether.

The World Bank and the International Coffee Organisation (ICO) have been working together to analyse the problems associated with the present coffee crisis.

Last year, the bank introduced the first international price insurance for small coffee producers, which gives farms a financial protection they can buy.

Now the bank says the expanding market of sustainable coffee could in fact help offset such a crisis, triggered partly by an oversupply and lower quality products from Brazil and a new market comer, Vietnam, two years ago.

"As the coffee industry experiences some of the lowest green bean prices of the past hundred years…sustainable and other differentiated coffees are among the few receiving a more substantial remuneration and showing significant growth," says the report.

Average sales growth for sustainable coffees in recent years has easily been five times greater than that of conventional coffees in most of these major markets, the report found.

By 2004, the major European sustainable coffee markets are expected to grow by 55 to 65 percent from their 1999 level, says the report.

In Japan, which is witnessing an upsurge in eco-friendly products, sustainable coffee is now popular among some of the major roasters and large retailers.

According to the report, the share of sustainable coffees in each of the 11 most important European coffee markets ranges from a low of 0.3 percent to 3.4 percent. Their 2002 market share in Japan is approximately 1.2 percent.

Although the bank said that sustainable coffee was not a panacea for the coffee crisis, it said it is an increasingly important solution that is gaining acceptance.

Many major companies are now responding to activists’ calls about the need to adopt sustainable coffee.

Consumer giants like Procter & Gamble, Dutch food retailer Ahold, U.S. food giant Sara Lee and Starbucks have all adopted sustainable coffee. Last month, P&G began selling a line of fair-trade coffee called Mountain Moonlight as part of its gourmet Millstone line.

Earlier this month, the largest food and beverage company in the United States, Kraft, which produces Maxwell House and Carte Noire brands, committed to sustainable coffee.

"Today, markets for organic, eco-friendly, and fair trade products are measured in the hundreds of millions and even billions of dollars, and are among the fastest-growing segments of the food industry," said Martin Raine, Agriculture and Rural Development Sector Leader in the World Bank’s Latin America & Caribbean Region.

Activists, however, say they want to see other major companies like the Swiss food giant Nestle, which produces the Nescafe and Gold Blend brands, follow the lead in buying sustainable or fair trade coffee.

The bank says that the move towards sustainable coffee can actually remake the difficult lives of innumerable smallholder and commercial farmers and their environment.

Reducing poverty has been an issue failed by many development plans, especially those concocted by Western-lead international financial institutions.

But according to Oxfam, Fair Trade certified coffee farmers secure a minimum of 1.26 dollars a pound for their harvest. Last month, the International Coffee Organisation composite indicator average price for green coffee was 53 cents a pound.

"Sustainable coffees can provide such benefits as improved natural resource management, fewer agrochemicals used in production, which decreases costs and health risks, and increased use of rural labour, which provides more jobs for those in desperate need," said Varangis of World Bank.