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Coffee companies under fire as millions face ruin
Press release from Oxfam, Date: September 18, 2002
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MILLIONS of people in 45 coffee-growing countries are facing economic ruin – and many are going hungry – due to collapsing world prices. Oxfam today launches a global campaign to tackle the coffee crisis and force the corporate giants who dominate the $60-billion industry to pay farmers a decent price.

The “Big Four” roasters – Sara Lee, Kraft, Procter & Gamble and Nestlé – buy nearly half the world’s coffee crop and make huge profits. “They know there is terrible human suffering at the very heart of their business and yet they do virtually nothing to help. It’s time to shame and change them,” says Oxfam International Executive Director Jeremy Hobbs.

With coffee prices at a 30-year low, new Oxfam research warns of economic breakdown and worsening misery for 25 million producers. The International Coffee Organisation – which meets in London next week (Sept 24-27) – could begin to solve the crisis but only if it gets enough high-level support.

The agency says that rich country governments have neglected to help. “It’s inconceivable that our political leaders are unaware of a humanitarian crisis that is affecting so many people. It’s a scandal that there is no real debate, no help and no answers,” Mr Hobbs says

The campaign comes at a time when people are getting angrier that the rich are getting most of the benefits of globalisation at the expense of the poor. “How governments and companies react to this crisis is the acid test of whether globalisation can be made to work for poor people,” Mr Hobbs says.

Oxfam’s “Coffee Rescue Plan” includes destroying surplus stocks, trading only in quality coffee and paying farmers a decent price. Governments, companies and producers should manage the market to ensure supply doesn’t overshoot demand and support producers to process their crops so they can get more money. Aid should also be spent helping farmers find alternative livelihoods.

“We were told to be patient and that the free market would eventually work. We’re still waiting as the rich get richer and better at making excuses. Enough is enough. 25 million coffee farmers need rescue now,” Mr Hobbs says.

The new Oxfam report says:

  • The global market is oversupplied by 540m kilograms of coffee each year; 8% more coffee is being produced than consumed.
  • Roasting companies are using more poorer quality coffee beans than ever before thanks to new technologies such as steam cleaning.
  • Ten years ago, poor countries’ export sales were worth a third of the total coffee market. Today, it is just 10%.
  • Coffee farmers are getting, on average, 24 cents a pound while consumers in rich countries are paying roughly $3.60 a pound – a mark-up of 1500%. Coffee now costs more to grow and pick than it does to sell.
  • Millions of families in four continents who are dependent on coffee are going hungry. They can’t afford school fees for their children or pay for medicines. The first to suffer are women and children. Some farmers are turning to growing coca instead.
  • Disaffection and public disorder are growing. Joblessness and economic migration is worsening.
  • The benefit of aid and debt relief is being severely undermined as entire country economies are decimated (in some Central American countries coffee income has fallen by 40%; Ethiopia’s coffee income dropped by $110m compared to the $58m it is set to save in debt relief this year). The value of coffee exports to producer countries has fallen by $4 billion in five years.

18 September 2002
Coffee companies under fire as millions face ruin

MILLIONS of people in 45 coffee-growing countries are facing economic ruin – and many are going hungry – due to collapsing world prices. Oxfam today launches a global campaign to tackle the coffee crisis and force the corporate giants who dominate the $60-billion industry to pay farmers a decent price.

The “Big Four” roasters – Sara Lee, Kraft, Procter & Gamble and Nestlé – buy nearly half the world’s coffee crop and make huge profits. “They know there is terrible human suffering at the very heart of their business and yet they do virtually nothing to help. It’s time to shame and change them,” says Oxfam International Executive Director Jeremy Hobbs.

With coffee prices at a 30-year low, new Oxfam research warns of economic breakdown and worsening misery for 25 million producers. The International Coffee Organisation – which meets in London next week (Sept 24-27) – could begin to solve the crisis but only if it gets enough high-level support.

The agency says that rich country governments have neglected to help. “It’s inconceivable that our political leaders are unaware of a humanitarian crisis that is affecting so many people. It’s a scandal that there is no real debate, no help and no answers,” Mr Hobbs says

The campaign comes at a time when people are getting angrier that the rich are getting most of the benefits of globalisation at the expense of the poor. “How governments and companies react to this crisis is the acid test of whether globalisation can be made to work for poor people,” Mr Hobbs says.

Oxfam’s “Coffee Rescue Plan” includes destroying surplus stocks, trading only in quality coffee and paying farmers a decent price. Governments, companies and producers should manage the market to ensure supply doesn’t overshoot demand and support producers to process their crops so they can get more money. Aid should also be spent helping farmers find alternative livelihoods.

“We were told to be patient and that the free market would eventually work. We’re still waiting as the rich get richer and better at making excuses. Enough is enough. 25 million coffee farmers need rescue now,” Mr Hobbs says.

The new Oxfam report says:

The global market is oversupplied by 540m kilograms of coffee each year; 8% more coffee is being produced than consumed.

Roasting companies are using more poorer quality coffee beans than ever before thanks to new technologies such as steam cleaning.

Ten years ago, poor countries’ export sales were worth a third of the total coffee market. Today, it is just 10%.

Coffee farmers are getting, on average, 24 cents a pound while consumers in rich countries are paying roughly $3.60 a pound – a mark-up of 1500%. Coffee now costs more to grow and pick than it does to sell.

Millions of families in four continents who are dependent on coffee are going hungry. They can’t afford school fees for their children or pay for medicines. The first to suffer are women and children. Some farmers are turning to growing coca instead.

Disaffection and public disorder are growing. Joblessness and economic migration is worsening.

The benefit of aid and debt relief is being severely undermined as entire country economies are decimated (in some Central American countries coffee income has fallen by 40%; Ethiopia’s coffee income dropped by $110m compared to the $58m it is set to save in debt relief this year). The value of coffee exports to producer countries has fallen by $4 billion in five years.
The “Big Four Roasters” are extremely profitable, with margins estimated at between 17% to 26% on billion-dollar coffee sales. However, Oxfam says their business strategy is increasingly risky. Coffee quality is falling because farmers don’t have the money to take care of their crops. The companies have made savings but have done next to nothing to help the poor farmers who find themselves at the wrong end of the corporate supply chain.

“Our campaign aims to give the companies a sharp reminder that people who drink their coffee care about the well-being of those who actually grow the crop,” said Mr Hobbs.

Oxfam also criticises the World Bank and the International Monetary Fund for a “stunning policy failure” in encouraging countries into export-led growth without warning them about the potential of catastrophic price falls. Poor countries are stuck with selling cheap raw materials which others turn into highly profitable processed goods.

Please contact MATTHEW GRAINGER, Oxfam International Media Officer, for any press inquiry: +44-(0)1865-313705 matt.grainger@oxfaminternational.org

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