(We are continuing a mini-series on a movement I would love to see in South Africa and beyond called Coffeenism. A movement of people wanting to see excellent quality coffee become the norm instead of the exception. Read the first one here and the second one here.)
In 2016 a UK newspaper, the Guardian, reported a red-faced admission by two of the worlds largest coffee companies who together account for almost half of the global coffee market. Nestlé (Nescafe, Nespresso, and Ricoffee) and Jacobs Douwe Egberts both admitted that coffee produced using slave labour possibly found its way into their products. And the article shows that, according to the facts, “possibly” should have been replaced with “definitely” in that last sentence. They did actually buy coffee originating from farms where enslaved workers were later discovered. What a disgusting revelation in a time when it is easy to think that this inhumane practice is a thing of the past. Because, after all, the process to outlaw it throughout the whole world, as it is outlawed today, already began back in the 19’th century, thanks to the brave efforts of anti-slavery activists like William Wilberforce.
Stop the oppression of the people and the plundering of the planet
So, grimly, the coffee industry is one of the worlds industries with a good side and a very dark side.
Maybe it is human nature to follow the crowd in trusting established brands like Nestlé and Jacobs Douwe Egberts who market and present their products so well. But, as explained in more detail in a previous article, coffee has a very long and complex supply chain. So most coffee goes through multiple instances of processing and transport before being received by business and retail customers, who have no idea where or how it was produced. Not that this absolves them from guilt, though, surely companies should make an effort to find out where their products come from, and we as consumers should be holding them accountable. More on this in the next article on transparency.
The main categories of evil in the coffee industry are exploitation, slavery, and environmental harm. Let’s look at them in turn:
Effectively, what is now taking place is that these large corporations and the countries in which they operate are conveniently exporting all the human and environmental harm required to produce coffee at the currently unsustainably cheap market price. The commodity price of coffee is under R30 per kg at the time of writing, and if you realise that a kg of coffee contains over 8000 beans, which often gets picked by hand, this price is self evidently exploitative. So companies are exporting this exploitation to low income, developing nations like Ethiopia or Brazil, where struggling small-scale producers are growing most of the beans. In these countries, developmental challenges that scream for attention are many, so the negative impact of the coffee industry is just one category competing for their attention.
At the current commodity market coffee price, as much as 90% (or even more for high-value products) of the final retail value is added to the coffee outside of the exporting country. So, if you buy a bag of big brand filter coffee from a supermarket shelf at R50, as little as R6.50 of that actually reaches the exporting country. But, normally that is only the middlemen in the exporting country; so who knows how little of that actually reaches the small grower (who often gets exploited by the middlemen as well). Obviously, committing evils like exploiting workers or raping the land in a desperate attempt to maximise production is never justified, but the temptation is much greater if the growers must resort to licking the pots by the time everyone else has eaten. And it is also not surprising, then, that according to some estimates only just over 1% or about 60 cents, in our above example, will make it to all the farm labourers who stand last in line to receive something.
Slavery and child labour
Exploitation is bad but it fades in comparison to the horrors being exposed again and again on coffee farms. Examples include: trafficking people (often children) to work for little to no pay, workers are forced to live in accommodation that expose them to the elements, personal documents are confiscated, debt bondage is practiced, clean drinking water is not provided, labourers are exposed to deadly pesticides or forced to buy their own safety equipment, and the list goes on and on. These are some of the examples exposed again by a recent study by Danwatch, an independent media and research centre specialising in investigative journalism. This was also the study forcing the admission mentioned in the introduction by Nestlé and Jacobs Douwe Egberts. This specific study focussed on Brazil, but other studies have found prevalent child labour and forced labour in other countries like Colombia, Guatemala, and Ivory Coast; countries that are all leading coffee exporters. And, with so many examples, there is no reason to expect that this is not common everywhere.
Harm to the environment
Initially, all coffee was grown commercially under a forest canopy which shades the much smaller coffee plants. This made it possible to grow coffee with minimal impact on the environment since a shaded coffee farm is almost indistinguishable from a natural rainforest. This is why some people in the industry have called them agroforests. This approach has many benefits to the environment like encouraging biodiversity and birdlife but also to farmers as birds control insect pests and fallen leaves provide natural fertiliser. Not to mention other sustainable side benefits like fruit and wood to keep farmers and workers going in difficult times.
However, in the 1970’s, a hybrid coffee plant was introduced which is more resistant to fungal diseases that flourish in the damp undergrowth and produce a higher yield. However, this plant requires direct sunlight and increased fertiliser and agrochemical use. With this, a major temptation arose for coffee farmers to rather cut down natural forests to increase their coffee yield per hectare and expose waterways, people, and animals to pesticides and chemicals. These practices also risk depleting the soil and may often prove unsustainable in the long run.
What has been done?
Efforts are being made by some governments like that of Brazil, the largest exporter of coffee, to, for example, rescue enslaved workers, or uphold environmental standards, but a lot still needs to be done. Governments seem to be so swamped, pressured by conflicting interest groups, and under-resourced, that it is left to the industry to make the most difference. After all, it is only industry insiders like buyers who actually have enough eyes on their prize, the coffee itself, to exhaustively investigate where it comes from. However, governments of coffee importing countries should also not avoid their responsibility to assist their often struggling trade partners.
In November 1988, coffee appeared in stores in the Netherlands, with a badge: “Max Havelaar.” Max Havelaar was a fictional character from an influential 1881 novel decrying the exploitation of small farmers by the Dutch colonial forces at the time. That label turned out to be the worlds first Fairtrade certification mark. Some Local Fairtrade Organisations are, in fact, still called Max Havelaar in some European countries. This was the first of hundreds of certification schemes, which attempt to give people a choice to buy ethically sourced coffee and other products. But allow me to discuss only Fairtrade and one other, Rainforest Alliance, since they are the most important for the coffee industry.
I remember first hearing about Fairtrade (FT from here) when it was enthusiastically promoted after a show by the lead singer of one of the most famous bands in the world, Coldplay. Perhaps this, and total global FT sales of over 115 Billion rands in 2015, gives some indication of the profile and fame of what has become the most notable approach to try and combat the above evils in the coffee industry. FT has also expanded to other vulnerable industries like that of chocolate, cotton, and so on.
The main approach used by the Fairtrade Labelling Organisation to try and uplift poor coffee growers is the setting of a minimum price that must be paid by buyers of FT certified coffee. Additionally, to be certified as FT, farms also have to adhere to certain labour and environmental standards.
After almost thirty years of the existence of FT, we now have enough data to evaluate whether FT is a potential answer to the evils in the coffee industry. Sad to say, as commendable as the intentions behind FT might be, a growing consensus of studies are showing that the positive effects of FT on coffee growers are negligible and could even cause coffee growers to be worse off. One economist, Bruce Wydick, summarises the data and categorises it under 10 reasons FT is not working, at least for the coffee industry.
Some of the concerning problems he mentions are that the cost to obtain the certification which offsets any price benefit from FT coffee for the grower and that the FT setup attracts bad quality beans. This is because FT buyers pay a minimum price but the FT demand is not big enough to buy up all the FT certified growers’ beans. Therefore, they dump only their worst beans, which potentially would have sold below market value, into the FT system and sell their beans of more competitive quality on the open market.
Also, according to Wydick, the FT system is simply not designed with consideration of the necessary economic principles to make it work for the coffee industry. If you are interested in economics, one problem is that the price floor set by FT artificially drives up the coffee supply, because growers expect a better price, but demand for FT certified coffee is limited. Also, the overall demand for coffee is highly inelastic, meaning the coffee price is driven down sharply, even by a small oversupply. So, ultimately, coffee growers overall are further impoverished, not uplifted.
This is perhaps one of the factors leading to a world bank prediction that coffee prices will again fall in 2017 due to oversupply.
Rainforest Alliance (RA from here) is a less established alternative certification to FT, but perhaps somewhat better thought through. RA, which also certifies various other crops from cocoa to beef, says their most important focus is on reducing deforestation by requiring that a minimum tree canopy cover be maintained where farms coexist with natural forest. However, RA also enforces some labour standards. While RA certified coffee does not set a minimum price, certified producers normally do get a premium price for premium quality coffee. The organisation also assists growers to improve their farming practices and quality through initiatives like training. The approach is one of driving up the price naturally through a focus on quality and ethics. Thankfully, RA’s approach has shown some evidence of improving conditions for growers, economically and otherwise.
Unfortunately, the downside is that the price received by coffee farmers, even with RA certification, can still be unsustainably low when the market price slumps. There are also more issues I will discuss in the next article about transparency.
Is there a better way?
The picture is bleak. These evils must be eradicated before we can develop a coffee culture and industry we can celebrate as Coffeenists. Woefully, shed blood flows downstream in the coffee supply chain right to end consumer and I am sure you, like me, do not want it on your hands. And, the governmental and certification measures above have not given adequate answers, so what can be done?
Thankfully, there is a better way for Coffeenists to support and to drive the trend of increasing morality in the coffee industry. But first, we must look at one reason why many approaches to improving the morality of the coffee industry have been so ineffective, namely, transparency. We’ll discuss this in more detail in our next article. In the conclusion of that article, I will give a suggestion for the furtherance of both morality and transparency in the coffee industry.
 Interestingly, reducing deforestation was fifth on Wydick’s list of ways to reduce poverty, as rated by a group of 16 development economists.