If you’re anything like me, one of the first things you do when you get up in the mornings is prepare a fresh pot of coffee. Again, if you’re like me, you don’t really think about the process that was involved in bringing you the coffee that you enjoy every day, where or who grew the coffee beans, where they were processed and who exactly benefits from you buying coffee-is it the producers or is it the companies that purchase the beans from producers or both.
Interestingly enough, producers of the coffee bean don’t get much for their work. In fact every kilogram that they produce is sold to companies for a cheaper price than it is to buy one cup of coffee from your favourite café, but you didn’t know that did you? I didn’t
Video Source: YouTube, Uploaded 26 April 2009
either and when I did eventually become aware of the role that coffee plays in all our lives, I thought it imperative to shed some light on what you would consider to be nothing more than a simple beverage that provides energy and enjoyment and that this very beverage, which we take for granted, provides the basis of life and survival for a country like Ethiopia.
After the Second World War much of the world was in dire need of economic, social and political assistance from the countries that emerged from the war victorious. The United States of America was more than prepared to stand up and lead the re-construction process (remember the Marshall Plan which got Western Europe back on its feet?); in doing so they led the establishment of organisations which include the World Trade Organisation together with its varied Western allies. Of course they are primarily focused on trade and although the intentions may be good in terms of support for weaker countries, the reality might be different.
The WTO established various institutions; call them building blocks if you will, to assist in the development of the global south. One of big building blocks is Western Europe and USA would provide agricultural subsidies to the farmers in the south and limit global South agricultural exports for this development to occur (this gives countries in the south the opportunity to protect themselves from excessive exporting and naturally, exploitation).
That sounds rather good, but here’s the hiccup. Not all of the countries in the global south qualified for the subsidy and conveniently enough, its countries like Ethiopia which are resource rich which do not qualify.
You see, in the instance of Ethiopia the WTO encourages global South countries not to entertain such subsidies and to open up their markets for free trade to occur effectively, to the benefit of the West.
Ethiopia is one of the greatest exporters of coffee and over sixty per cent of its export revenue comes from coffee. The best coffee in the world if from Ethiopia! Believe it or not, coffee is the second biggest commodity in the world, so assuming oil is the first biggest commodity that makes coffee a pretty good second and that also implies that the Ethiopia should be amongst one of the richest countries in the entire world but sadly, that is not the case.
The exportation of coffee by Ethiopia should in effect bring with it vast economic benefits; however this is not the case. The price of coffee is not decided upon by the Ethiopian producers but rather by the New York and European markets that do not even produce it. Although we herald “free market” the reality is that it is far from “free”. It is dominated by some big players who can twist the price to their benefit. Starbucks Coffee has a turnover of $13.3 billion and some 150,000 employees. Read about Starbucks. Although they have a “fair Trade policy” they are also at war with Ethiopia. But that is for another time.
As a result local producers of the product are forced to produce and sell their coffee at low prices (cheap labour) as there is no competition (which is essentially the exploitation of Ethiopia’s resources). The only benefactors from the exploitation are thus the multinational organisations who make billions yearly on the coffee trade while the economy of Ethiopia continues to crumble, with high unemployment, lack of adequate education and teaching resources and great poverty.
Fundamentally the WTO rules and it makes it difficult for developing countries to protect their markets, having enabled Europe and USA to have greater access to developing markets.
This would be one of the main reasons that developing countries have called for ‘fair trade’ through implementations like Trade-Related Aspects of Intellectual Property Rights (TRIPs) to make free trade free and to make products less expensive and less inaccessible to poor countries. There is a need for equity in international trade which up until now has only resulted in limited results because, let’s face it, the west really does not take Africa and her capabilities all that serious.
So, how does the coffee leave Ethiopia? Well, a number of coffee producers gather with their produce at a common area; it is here where buyers of coffee from around the world come to buy the produce. What’s frustrating about this scenario is that some coffee producers do not manage to sell their beans because the produce is auctioned (auction price decided upon by US markets) and naturally, only the finest produce will be sold and the rest, well the rest is just not good enough…
The world trade regime that has since developed post Second World War has brought along with it various positives which contribute to the many economic privileges that we enjoy today. However, while we reap the benefits of this regime, Ethiopia and her people, which are a pivotal driving force in this regime, continue to suffer.
Ethiopia is plagued by large scale poverty, vast unemployment, compromised education systems and very miserable people also because a vast amount of Ethiopian soil is only able to produce coffee and the drug KHAT which is extremely lucrative. So when there is that desperation of a decent income, there’s no moral argument as to what farmers are going to grow, do you blame them? I mean what would you decide to do if you were getting a mere $0.25 per KG of coffee that you produce while a cup is being sold for $2.90 in the US, there’s something to think about…
What remains now is the persistent call for fair trade by African economies on the West and while this call often falls on deaf ears there is hope that morality will one day trump greed and those that work the hardest will enjoy the fruits of their labour. So next time you inhale that yummy aroma of a fresh cup of coffee which is quickly followed by that warm sip, think about the hardship, the greed, the level of fairness involved in the coffee making process and perhaps you’ll appreciate it just a little more.