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Coffee farmers are earning LESS than a cent a cup for a £4 cappuccino sold in the west…

Coffee farmers are earning LESS than a cent a cup for a £4 cappuccino sold in the west…

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Gafeto Gardo a coffee farmer based in Ethiopia is considering leaving an industry his family has been in for generations as coffee prices slump. Over the past year coffee bean prices have continuously fallen and are now sitting at 29 cents a kilogram – the lowest in 13 years. “We are losing hope now, we are not reaping what we should and I am worried this will have a huge impact” said Gafeto but “coffee is our life here”.

Coffee farms have always suffered from being at the wrong end of the chain, receiving only a small fraction of the retail price of the crops they produce. Not only this but producing coffee beans is a labour intensive and costly process. Questions are now starting to be raised about whether or not growing beans is worth it at all and there are fears farmers may abandon their crops en masse.

In comparison at the other end of the chain coffee has never been hotter. With millennials growing up drinking coffee and other coffee based drinks, coffee shops are quickly developing expensive innovations with price tags reaching as much as £6.00. The industry has seen huge acquisitions as companies such as Nestlé and Coca-Cola look to get their share of a rapidly growing market.

For farmers however, this has not been reflected in coffee beans prices. Growers throughout the world are warning the West of a growing “social catastrophe” unless farmers’ incomes can be increased. A group representing growers in more than 30 countries wrote a letter to chief executives of companies such as Nestlé and Starbucks, to warn of the risk of abandoned farms leading to fuelled social and political unrest and more illegal migration.

Some companies are responding to help farmers – Starbucks, for example, has committed $20 million to help some smallholders they work with in Central America until coffee prices rise above production costs.

The latest slide in prices was mainly caused by a bumper coffee crop produced in Brazil (the world’s biggest producer). On September 18th last year the price of Arabica beans traded in New York fell to just $2.09 a kilo gram, a level not seen since 2005 and less than a third of the peak in 2011. Four months later the price is still hovering around the same.

For the 4500 farmers in the co-operative that Gafeto helped establish in Ethiopia these fluctuations and decreased prices are quickly reflected in prices at home as prices correlate closely with trends in global future markets.

Fairtrade and other rules:
The label Fairtrade has sought to improve the situation for farmers by guaranteeing a minimum price but many companies believe this is just a slightly better way of buying in an unfair system. “Coffee has been becoming more and more expensive and in higher demand for the last 10-15 years, yet coffee farmers themselves have seen no reflection of this in their wages” says one company who believes the system needs a total over haul.

Food giant Nestlé said there needed to be a collective, constructive approach across the industry to improve the lot of farmers around world.

 

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