Magazine article Foreign Policy in Focus

When the Coffee Crisis Hits Home

Magazine article Foreign Policy in Focus

When the Coffee Crisis Hits Home

Article excerpt

Coffee is not native to Mexico, yet since it arrived on Mexican shores in 1796, it has evolved into a central aspect of social, economic, and cultural life. Today 320,000 growers produce coffee in twelve states of the republic. From bush to brew, the coffee industry employs over three million people. Nearly 6% of the economically active population of Mexico depends on the crop for their livelihoods, and in the countryside the figure rises to a quarter of the population.

The current crisis in international coffee prices has hit rural Mexico hardest where people are poorest and living conditions most precarious. Of Mexico's coffee-growing townships, 84% register high or very high levels of poverty. In contrast to the large plantation farming common in other parts of the world, in Mexico most coffee growers are smallholders and 65% are indigenous.

Prices to Mexican producers have plummeted over the past few years and hit historic lows in 2002. Mexican coffee growers cannot break even in today's market, but the lack of other options keeps them trapped in a downward spiral. Failure to solve the current crisis could not only destroy the livelihoods of thousands of growers, but also lead to massive out-migration, cultural disruption, and serious environmental threats to some of the nation's most valuable and vulnerable regions.

The current price to the producer ranges between 28 cents/lb to unorganised growers and 41 cents/lb for members of growers' cooperatives. Costs of production vary but average around $1.00/lb.

At the same time, the crisis in producer prices has created a buyers market that offers spectacular profits to large intermediaries, particularly transnational roasters and branders. Transnational corporations have expanded their presence in the Mexican market as buyers, processors and retailers. Since Mexico exports 85% of its coffee, the sector is highly dependent on the vagaries of the international market and the interests of transnational actors.

Several factors have converged to distort the market: oversupply, a lack of product differentiation on the global trading level, defective and low quality coffee in the market and high concentration among roasting and branding companies.

The crisis in international prices has also affected the Mexican crop and its perspectives for future production. In the past two seasons, many small growers could not afford to harvest their coffee beans. The National Coalition of Coffee Organizations (CNOC) reports that an estimated 20% of last season's crop was left to rot in the fields last year. …

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