New Internationalist Issue 271
COFFEE - THE FACTS
Coffee is the world's favourite stimulant - and second most heavily-traded commodity.1 Yet the 20 million people who produce it live in extreme poverty.
INSTANT PROFIT 2
Nine-tenths of the price you pay for your instant coffee goes to the powerful companies who ship, roast and retail the product. Just one-twentieth reaches the people whose lives are spent growing and harvesting it.
MARKET MADNESS 3
'Futures' markets are intended to secure the price of commodities in advance. In practice they are highly speculative. Prices can move very quickly, partly because of the huge amounts of money involved. Such short-term fluctuations make it difficult to plan, invest in, or earn a reliable living from coffee production.
On the London Commodity Exchange during 1994 a tonne of Robusta coffee-bean 'futures' for delivery in January 1995 would have cost you:
CASINO CAFE 4
The price of coffee is subject to wild price fluctuations on the international market. Small producers often have to sell when their harvest is ready and with little or no choice of buyer.
Price: When the price is high large numbers of bushes are planted. Three years later these start producing, causing a glut and a price slump. As a result no new bushes are planted, causing a shortage and a price rise.
Weather conditions: Frost (1975 and 1994) or drought (1984) sometimes damage the huge Brazilian coffee crop (20% of the international market) causing the international price to rise sharply.
SOUTHERN PRODUCERS 4
Coffee grows only in the tropics - between Cancer and Capricorn. It is grown largely by small farmers who have little or no capital to fall back on. Their governments usually face huge international debts, which force them into exporting regardless. So these countries desperately compete against each other in exportable cash crops such as coffee. This competition and consequent over-supply drive prices down.
Three-quarters of world production is of the milder, higher-quality Arabica variety produced largely in Latin America and traded through New York; the remaining quarter - stronger and more suitable for 'instant' coffee - is Robusta, produced largely in Africa and traded through London.
NORTHERN CONSUMERS 5
Everyone drinks coffee - but 70% of total coffee production goes onto world markets and is imported by countries in the North which control the market.
Top coffee importers (% of total):
STARVED OF CHOICE 6
The coffee market is one of the most concentrated in the world - controlled by a few giant manufacturers and retailers. In the UK - where supermarkets are among the most profitable in the world, and 87% of the coffee sold is 'instant' - just two multinational food companies, Nestlé and Kraft, account for 78.7% of all retail instant-coffee sales.
Caffeine is found in tea, soft drinks, pain and headache pills - and coffee. Coffee has the most caffeine of all the beverages: a single strong cup brewed directly from ground beans contains the minimum dose (150 milligrams) needed to stimulate the nervous system. In the short-term, moderate doses of 150-250 milligrams allay drowsiness and fatigue and postpone the onset of sleep. Larger doses impair performance, especially where delicate co-ordination is required. Excessive use of 500-600 milligrams (4-5 cups) a day can cause anxiety and restlessness.
When scientists in the US tried out drugs on spiders to see what happened to their webs, caffeine had a more severe effect than marijuana, making it impossible for the spider to spin more than a few random threads.
1. After oil and ignoring narcotics
2. The Coffee Chain Game, Oxfam
3. London Commodity Exchange
4. International Coffee Organization, London
5. Trade Yearbook, Vol47, FAO, 1993
6. Coffee Matters, Nestle UK, 1993
7. Drug Abuse Briefing, ISDD, London, 5th edition, and New Scientist, 20, April 1995
Research by Emma Dandy
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