Fight poverty: Quit drinking corporate coffee

by JulieCraves on October 15, 2008

If you are one of the 160 million coffee drinkers in the U.S., you can make a decisive, positive impact on poverty by refusing to buy coffee from, at least, Nestlè, JM Smucker, and Kraft Heinz. They sell over 30% of the retail volume of coffee in North America. Their brands include Folgers, Maxwell House, Nescafe, Gevalia, and others.

Here is how your grocery store coffee perpetuates poverty

  • Over 25 million people are directly dependent on coffee growing for a living, with another 100 million indirectly involved, including seasonal or temporary workers.
  • The majority of the coffee in the world is grown in 50 developing nations by producers that each farm less than 5 hectares of land [1].
  • Under good conditions, it costs a farmer around 30 cents (for the cheapest robusta in Vietnam) to 80 cents (for ordinary arabica from Central America; both are included in grocery store coffee) to produce a pound of coffee [2,3,4,5].
  • In 2007, even if farmers received the full market price for their coffee (and typically they do not), their profits amounted to 20 to 50 cents a pound [6,7].
  • Another way to look at it, is that only 5 to 10% of the retail price of a pound of coffee goes to the farmer [8,9,10], and the average retail price for a pound of ground coffee is well under $4.00 a pound.
  • Remember, this is a crop grown on a small plot of land harvested once a year that is probably the main source of income for an entire family.

The big multinational coffee companies perpetuate low coffee prices. Under the free market system, these four main buyers pit 25 million sellers against each other, creating a race to the bottom. They have funded and encouraged the expansion of the low-cost, low quality robusta coffee, and have spent millions of dollars developing technologies to make this bitter variety palatable. They use increasing amounts of this coffee in grocery store blends, further fueling deforestation and dragging down prices. A Wall Street journal article quoted officials from both Nestlè and Kraft as saying that they believe increasing consumer demand for coffee is the best way to help farmers, rather than paying above-market prices for their beans.

This situation is beginning to worsen, as production costs for coffee farmers around the world are rising due to the skyrocking costs of petroleum-based fertilizers, and the global credit crunch.

The International Coffee Organization notes that low bean prices fueling corporate profits cause “entire rural communities to disappear…forcing desperate peasants into everything from crime and illicit crops to illegal migration.” [3]

Why should you care about the incomes of coffee farmers?

When coffee ceases to be profitable, the coffee fields — which for a large number of small holders are a mix of coffee, food and timber trees, and native shade trees — are cleared. They may be replaced with barren cattle pasture, subsistence crops, or some other crop less eco-friendly than coffee.

There is a direct link between environmental degradation and poverty. There is also a substantial overlap between coffee growing areas and biodiversity hotspots. Deforestation in these areas has severe consequences for loss of biodiversity. Tropical forests, even agroforestry systems, sequester many tons of carbon and help buffer against climate change.

Often the only alternative cash crop is drugs. In Latin America, the crop of choice is coca, the raw material for cocaine.

Efforts to eradicate coca in the coffee-growing nations of Colombia, Peru, and Bolivia are funded by your tax dollar, to the tune of $5 billion so far. This effort has been unsuccessful, and coca production continues to rise. All of the cocaine destined for the U.S. is grown in the Andes, with 90% from these three countries. The cost of drug abuse to society impacts every single one of us.

As coffee prices fall, such as during the coffee crisis in the 1990s, some farmers simply abandoned their land. Some were forced to sell their assets, such as cattle. They took their children out of school. Child malnutrition climbed. Communities wrenched apart by the coffee crisis have not fully recovered. Many farmers that stayed in coffee continue to be in debt.

This was and is a humanitarian crisis. Thousands of impoverished coffee farmers made their way north, with many crossing the border into the U.S. to seek employment.

Can switching the coffee I drink really help?

The U.S. is one of the world’s largest coffee consumers. We can make a difference. Quit supporting the poverty and environmental destruction that cheap coffee from these large multinationals perpetuates.

Good coffee for which a fair price is paid is not too expensive for most Americans. In fact, 45% of Folgers and Maxwell House purchasers have incomes greater than $50,000 a year. Even coffee that costs $15 a pound works out to well under a dollar a cup, tastes great, helps preserve biodiversity, and provides a decent living for coffee farmers.

Drink sustainable coffee!

[1] Fitter, R. and R. Kaplinsky. 2001. Can an agricultural ‘commodity’ be de-commodified, and if so, who is to gain? Institute of Development Study Discussion Paper 380, Brighton, Sussex, England.
[2] Jaffee, D. 2007. Brewing Justice: Fair Trade Coffee, Sustainability, and Survival. University of California Press.
[3] Fritsch, P. 2002. An oversupply of coffee beans deepens Latin America’s woes. Wall Street Journal.
[4] Marsh, A. 2007. Diversification by smallholder farmers: Viet Nam Robusta Coffee. Agricultural Management, Marketing, and Finance Working Document No. 19. FAO, United Nations, Rome.
[5] Anon. 2003. Guatemala Coffee Producers Cautiously Optimistic On Price Bounce, Volcafe Newsletter, Jan. 17023, 2003.
[6] International Coffee Organization. 2008. Coffee  Market Report, September 2008.
[7] Johnston, L. A. 2007. Using a value chain approach to empowering the rural poor in Kenya,Tanzania, and Mozambique.  TechnoServe presentation to Making Markets Work for the Poor, Stellenbosch, South Africa.
[8] Talbot, J. M. 1997. Where does your coffee dollar go?: The division of income and surplus along the coffee commodity chain. Studies in Comparative International Development 32: 56-91.
[9] Talbot, J. M. 2004. Grounds for Agreement: The Political Economy of the Coffee Commodity Chain. Rowman & Littlefield, Lanham, MD.
[10] FAO. 2006. Governance, Coordination, and Distribution along Commodity Value Chains. An FAO Commodities and Trade Division workshop, April 4 and 5, 2006, Rome.

Coffee beans by Rogiro, coffee cup by Chris Campbell.

Revised on January 8, 2022

Posted in Background information,Corporate coffee

Patrick October 15, 2008 at 11:30 am

Terrific post, as always!

Stacey October 27, 2008 at 9:29 pm

I discovered Kona coffee, grown in limited areas of Hawaii by a select group of farmers. I prefer to purchase pure Kona coffee rather than buying mass merchandised blends that are mostly Arabica and claim to be Kona coffee (another way to take away from the exclusivity and profitability of Kona coffee). Most Kona coffee sold in stores is blends actually containing only around 10 percent Kona coffee.

Chris November 5, 2008 at 12:04 am

Wow… I had never thought about the impact of the coffee I drink until now. Until just recently, I have always drank the cheap stuff (sorry…didn't know!) Just recently, I've switched to more expensive finer varieties, and will continue to get them!

Julie November 5, 2008 at 6:03 am

Chris, thanks so much. As long as I know I'm getting through to some folks every so often, it's worth it. Spread the word, and let me know if there is anything useful you'd like to see here at C&C.

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