Coffee is the second most valuable export, bringing in $55 billion per year. The coffee industry is dominated by a few key players—Nestle, Kraft, Proctor & Gamble, and Sara Lee. Farms tied to these companies often cannot recoup production costs. There is no shortage of coffee beans, so plantations compete to offer lower and lower prices to the big companies. In recent years, the supply of coffee has grown even more due to improved coffee cultivation methods in South Asia.
To stay competitive, coffee plantations are notorious for paying subsistence wages and exposing workers to unsafe conditions. Coffee beans are produced for $2 per kilo, and then sold to middlemen for about 14 cents. Large companies then buy the beans at this low price, roast them, package them and mark up the price to around $8 per pound. This “Coffee Paradox” essentially means that big companies win and local plantations lose.
Most coffee farmers struggle to support their families, and cannot afford healthcare or education. This not only worsens the cycle of poverty, but also shows that coffee farmers have no control over the practices of industries which create these conditions. In countries like Brazil, where coffee production has long been a cash crop, plantations are forced to grow lower-quality beans like Robusta that sell for cheap, instead of the high-quality Arabica beans the area is known for.
In the long run, coffee plantations around the world need to unionize and demand a fair price for their product. As consumers, buying fair trade ensures our coffee comes from plantations that treat their workers with respect and do not use child labor. Some of the proceeds from fair trade products even go back into the plantation community. Buying higher-quality Arabica beans supports long-standing industries that are struggling to compete with the cheaper alternatives.
– Stephanie Lamm