Coffee prices have doubled in the past twelve months mainly because of acute shortages over a lengthy period. Depressed prices forced many coffee farmers out of the trade.
In the 1970s and 1980s International Coffee Agreements between producing and consuming nations helped stabilise prices. The final accord collapsed in the early nineties and that led to major busts, acute shortages, booms and then busts again. Farmers who received shockingly low prices for their crops have been exploited. In contrast, the firms that roast coffee and the coffee chains and shops have been selling coffee at prices way above those of the farms. Yes, they have production, rental and marketing costs, but generally they have experienced a windfall of exceptional profits.
Drought and now frost have damaged crops of Brazilian farmers but they will still produce Arabica coffee. They and farmers in Columbia, other South and Central American nations, Ethiopia, Uganda and elsewhere will now benefit from higher prices. The roasters and coffee chains must take it on their chins. If they now raise prices, it would be a disgrace.
Trader Jack-The Story of Jack Miner narrates what happens in a coffee price boom
Chapter Twelve of Trader Jack is largely based on fact. What is narrated in the book has largely happened in the past few weeks. Some thirty years ago, the head of the Columbian delegation told me that the collapse of the final price stabilisation agreement would lead to poverty of farmers. Drug cartels would purchase coffee farms and plant coca, he predicted. There would be a rise of cocaine production in Colombia and other parts of South and Central America. This happened and became a sub plot in Trader Jack.
Here are some excerpts from Trader Jack and assess whether they are similar to what is happening today:
“At last, after a few stops, we arrived in Minas Gerais, north west of
Rio. Thousands of green coffee trees were on a plateau and
within a few days we visited several farms. It was early May
and the Brazilian autumn air was chilly…….The farms that I visited were small. Young and old men, women and children were picking red coffee cherries from
the trees. Other workers soaked and dried the cherries and
then extracted the green coffee beans. Mothers and kids
worked alongside each other…..
‘Shouldn’t they be at school?’ I asked.
‘Food and shelter is more important here than literacy
and numeracy,’ said Sergio, who spoke good English. ‘Life’s
hard. Power and water are erratic. Roads are bad. These
people rely on good crops and coffee prices. But crops are
unpredictable and prices are ridiculously low.’
‘I thought that the Fairtrade Foundation and other
charities help these people.’
‘They are doing their best, but Fairtrade has to spread its
money and influence. Besides coffee farmers, the Foundation
must help cocoa, cotton and other commodity producers.’
‘Doesn’t Fairtrade get them higher prices?’
‘Yes. But even though some coffee companies pay
premiums for Fairtrade coffee, prices are still ludicrously low.’…..
On the final day in Minas Gerais, Sergio took me to
his uncle Fulvio, who worked on a small co-operative coffee
farm. He lived in a tiny hut with a stone floor. The old man
was wearing a dirty cream shirt with a frayed collar and torn
trousers. Fulvio was small but upright, with taut, powerful
arms. He had deep creases on his face and looked as if he
was about eighty. I nearly fell over when Sergio told me that
he had just turned sixty five.
Fulvio, through Sergio, the interpreter, explained in great
detail what was happening to the coffee crop. There was a
drought last September, at the start of the Brazilian spring.
It rained late October, but the rain came too late.
‘Our coffee trees normally have beautiful white flowers,’
said Fulvio. ‘But the spring drought damaged them. There were fewer
flowers. The ones that managed to bloom were shrunken
and small.’
‘What have the flowers got to do with the crop?’ I asked.
‘Coffee cherries grow from each flower. So the crop was
smaller this year.’
Fulvio was worried about erratic climate changes.
Despite the drought, autumn was much colder than normal.
‘It reminds me of the terrible frost we had in the mid
seventies,’ said Fulvio. ‘At that time the autumn air was
also cool. No one believed there would be a frost, but it
happened and it was bad!’
‘If the crop has already been harvested, how can a frost
hurt it?’ I asked.
‘Frost damages coffee trees. When that happens, the
harvest in the following year is poor,’ replied Fulvio.
We drank Fulvio’s mild coffee and talked for a long while
about the dangers of droughts and frosts. A combination
would be lethal for the Brazilian crop. It was catch twenty
two for the poor peasant farmers. Yes, prices would rise, but
poor harvests meant less work. Prices had to increase and
remain high to encourage the planting of more coffee trees.
Only then would their living standards improve.
—Trader Jack-The Story of Jack Miner #by Neil Behrmann
© copyright Neil Behrmann