Why do coffee farmers stay poor?
If you're interested in transforming the lives of chronically poor people (we are!) it turns out coffee is a pretty big lever that you can use.
The problem is, coffee also keeps people poor.
Why focus on coffee?Here’s why coffee matters: Anyone working in global poverty and development can tell you that agriculture is the key to raising living standards in the developing world since most of these cultures are agrarian. In countries that grow coffee, this is typically their biggest agricultural export, making it a vital source of income and foreign currency for development. Coffee is the second most valuable soft commodity in terms of total traded value on the New York Stock Exchange. Therefore, coffee is a key crop in the key sector for developing better livelihoods for some of the poorest people in the world. So why doesn’t it raise more people out of poverty? This is the coffee paradox. The issue isn’t that these countries/coffee farmers don’t generate enough value through their crops. If you listen to those farmers, many will tell you simply that the Global North has stolen it from them.
What’s the problem with coffee as a vehicle for change?You see, commodities are designed to be exploitative. They’re mostly grown in less developed countries, then exported to developed countries at prices that keep producers barely alive. It’s essentially a colonial, capitalist model where we keep producers economically enslaved to us while stock traders and processors in the developed world (i.e. roasters) reap most of the profit.
Think that’s dark? This poverty for producers is actually built into the design. Coffee, like all commodities, is an example of the well-known Dependency Theory, meaning the price for commodities will consistently decrease in real terms (inflation-adjusted) over time in order to maintain an inherent level of poverty among producers of that commodity. This has been especially the case for coffee in comparison to other commodities. The price for coffee in real terms has decreased by an average of 0.9 percent per year over the past two hundred years. This is basically local wealth being extracted from producing countries for the benefit of business activity that we control in the Global North — mostly roasting and commodity trading.
Colonialism still existsThe truth is, coffee only grows natively in Ethiopia. Almost everywhere else, the origins of coffee production involved colonizers forcing native populations to grow the commodity, often uprooting local crops and creating conditions for chattel or wage slavery. And it’s gotten worse; the share of money that goes to the producing countries (mostly farmers) has decreased from 30 percent in 1991 to just 10 percent today.
This is why we publish our annual transparency report: So you can see what we're doing about this, and check that the money goes where we say it does. We're not into guilt-driven consumption, but we are interested in changing the way we operate and being open with you about it. There's loads more coming on this topic. Read the full report here.