The coffee paradox

Coffee is one of the world’s most valuable exported commodities with an estimated 1.6 billion cups of coffee consumed in the world every day. From its origins in the mountainsides of Ethiopia, coffee has come to play a significant role in Western society, stimulating intellectual thought in Continental coffeehouses, sustaining workers in the factory system during the Industrial Revolutions of Europe and North America, and bestowing cultural capital in the revived coffeehouse scene of the 1920s and 1930s. More recently, coffee has undergone what Stefano Ponte dubbed a ‘latte revolution’. Coffee bars and café chains, in which consumers can choose from an extensive range of speciality and gourmet coffees, have spread dramatically and are increasingly becoming global, expanding to traditionally tea-drinking countries in parts of Asia, such as India, China and Japan. However, the politics of coffee are complex and the history of the coffee industry also has a dark side.

Initially a jealously guarded secret of the Turkish Empire, coffee production assumed a significant role in European colonialism. The Dutch began cultivating coffee in the seventeenth century in their colonies of Ceylon (now Sri Lanka) and later Java, Bali and other islands of the East Indies, enslaving local populations as coerced labour to grow and harvest the coffee. The French first grew coffee in San Domingo (now Haiti), primarily through the forced labour of imported African slaves, becoming the world’s leading coffee exporter in the eighteenth century. Growing demand for coffee across Europe intensified coffee production in British and French colonies in the Caribbean, Central America and later Africa, and boosted the Atlantic slave trade. This highly unequal and complicated history of coffee is important in understanding the modern coffee industry, as these practices associated with the expansion of coffee production continue to shape the social, economic and ecological development of these societies. For some, there is concern that modern coffee production echoes these colonial relations, with farmers in the Global South producing coffee for consumers in the Global North having never actually tasted their own coffee.

However, coffee production has played an important role in development, with coffee exports linked to development ‘success stories’ in certain countries at particular times, such as Brazil in the nineteenth century, Colombia and Costa Rica in the 1920s, and Kenya and Cote d’Ivoire in the 1960s and early 1970s. In some cases, this success has led to further growth and diversification. Coffee is produced in more than 50 countries in the Global South and around 125 million people worldwide depend on coffee for their livelihoods. While coffee is mainly produced in plantations in countries such as Brazil, the leading coffee producer, the majority of the world’s coffee in produced by smallholder farmers, who dominate coffee production in countries such as Colombia, Mexico and Costa Rica as well as in almost all African countries. Coffee farming in Africa is dominated by smallholdings varying between half a hectare and 10 hectares in size. Although their global market share may be modest, coffee has been a significant export earner for many of the 25 coffee producing countries in Africa as well as an important source of income for smallholder farmers.

 The paradox at the heart of the modern coffee industry: a ‘coffee boom’ in consuming countries and a ‘coffee crisis’ in producing countries (Daviron and Ponte)

Global coffee consumption has remained relatively high and stable and coffee roasters have enjoyed increasing profits, but coffee producers have struggled to make a living with incomes falling below the costs of production, such as during the crisis of 2001-2005. This paradox can be explained by structural changes in the organisation and governance of the global coffee industry following the functional collapse of the International Coffee Agreement (ICA) in 1989.

The coffee crisis

Coffee was one of first global commodities to be regulated and this was relatively successful. Under the ICA regime (1962-1989), producing and consuming countries collaborated reasonably successfully to raise and stabilise coffee prices through a quota allocation system. The regime did experience some political problems, but was not clearly driven by any particular actor, with power shared between producing and consuming countries. Roasters in consuming countries were increasing their leading role through branding and advertising, but their control was limited by the quota system and by government control in producing countries over marketing and quality control systems. Government coffee boards responsible for exporting coffee, although imperfect, provided coffee producers with some protection and a collective voice, and retained control over coffee stocks.

Following the collapse of the ICA, coffee producers have experienced historically low coffee prices in 2001-2005 and again in 2013 as well as significantly higher levels of price volatility, linked not only to the end of the price stabilisation mechanisms, but also to increased speculative activity. Due to the disbandment of government coffee boards under domestic processes of liberalisation, many coffee producers have been exposed to the full volatility of this market. As demonstrated in the documentary Black Gold, the modern coffee industry has become highly unequal with a concentration of power among coffee roasters and international traders, increasingly able to dominate the market and capture the value of coffee, and a fragmentation of coffee producers with little voice or collective bargaining power. This can help to explain the paradox and has also given rise to attempts to enable coffee producers to capture more of the value of their coffee as well as to ensure they receive a stable and sustainable livelihood.