Iowa Public Television

 

Low Coffee Prices Persist

posted on September 6, 2002


World leaders gathered in South Africa this week to tackle the problems of global poverty and the environment. Fifty heads of state and other dignitaries attended the summit, but not President Bush. His emissary, Secretary of State Colin Powell, was jeered by protesters critical of U.S. efforts to clean up the environment and aid the poor in the developing world.

That latter category includes many subsistence farmers around the world … farmers who receive little, if any, government support and who rarely have a voice in their political system or the world market. That's especially true of the world's coffee producers.

 

The bulk of all coffee produced in the world is raised on small farms of only a few acres or less. The typical path from those farms to the consumer's coffee cup is a long one. Hand-picked arabica beans are taken to a nearby town where buyers, called "coyotes" by the coffee farmers, offer the lowest possible price. Currently that payment is estimated at 15 to 25 cents per pound, less than half of the world trading price for arabica beans. Over the past twelve months, the coffee market has consistently been below 60 cents per pound. The depressed market value continues to keep farmgate prices well below the break even point.

Once in the hands of the local buyers, the coffee moves through a long and expensive journey that includes other middlemen, shippers, creditors, brokers, processors, and distributors. Each hand that touches the coffee takes some value from the commodity, ultimately leaving little for the producer.

Rink Dickinson, Equal Exchange: "The profits are with the processors and with people who have access to the market. So, the producer has very little ability to impact the price and just has to take the price and compete on terms that don't work for the producer and don't work for the planet."

 


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