Coffee producing third world countries are experiencing a dramatic slump in prices of their coffee. Now they are below half the cost of two years previous. This is little reward for the gruelling 12-hour day’s work. Many farmers are living lives of poverty and are forced to either take their children out of school as it is too expensive or leave the trade completely: The problem seems to be the level that coffee is being produced exceeds the consumption level. A recent government negotiation means that instead of regulating exports on an international level each country now is regulating their own exports.
Without complete co-operation is it unlikely to be resolved and many countries see the abandonment of the coffee sector. In comparison to this we can see the lifestyle of the western country profiteers. The large organisations such as Starbucks charge up to i?? 2. 70 for a single coffee making the profits rocket and as millions of people are willing to pay the international slump has proved to be very influential in Howard Schultz, the billionaire, Chairman of Starbucks business. In a typical cup of coffee where does the money go? i?? 1. 75 is shared out among the shippers, local traders/exporters, retailers, roasters/processors and growers.
But is it equal? Fig. 1 A chart showing the distribution of money from a cup of Starbucks coffee in percentage. In the last 5 years Starbuck company profits have tripled. Starbucks have over 4,000 branches worldwide. After criticism due to Starbucks coffee buying suppliers, they now use Fair trade certified beans in 2,300 of its outlets (but does not use them in the coffee brews for customers. ) These multi national companies are being challenged by Oxfam to provide compensation for the redundant farmers, however these pleas are unsuccessful as yet.
Population and resources is obviously important in the coffee production trade, as supply and demand is vital. Although the overproduction of coffee has lead to the slump in prices and caused many farmers to sell up and migrate. Poorly organised production and co-operation between countries. It is the demand of coffee at the lowest price of production possible that has resulted in the production of GM foods. The researchers have genetically engineered coffee so that the berries stop growing at their prime, this means that the rate of production increases and mechanical harvesting cuts down on the manual labour costs.
This “unnecessary” technology increases big companies profits in the western world and causes more small farmers to be forced to sell up. These small farmers are unable to afford the expensive GM crops so are forced into deeper poverty. Environmental degradation, this can be found in the process of GM foods and the desire to mass-produce the coffee beans. The new chemicals of the GM process can be harmful to the environment, pollution from the transport and harmful effects on the original coffee supplies which are said to have a superior quality to those of the GM variety.
Shipping the coffee once manufactured has a devastating effect on the environment, the pollution of fuels and coastal erosion and manmade monstrosities such as a large harbour to export coffee from. Loss of ecosystem diversity will be a major price to pay if the GM chemicals obliterate pests and other insects that rely on the coffee plants. This could wipe out whole food chains. It may also “contaminate the countries indigenous varieties. ” The monoculture of the coffee plantation destroys other species, deforestation of land occurs to make way for the coffee plantations, which destroys natural habitats and destroys the soil nutrients.
Deforestation can have more drastic effects the change in carbon dioxide levels in the atmosphere; this will effect the environment globally. It can affect local weather conditions and precipitation cycles will be changed throughout the country. Due to the lack of trees, shrubbery and soil holding capacity it could also lead to severe floods and this would mainly cause the smaller farmers to suffer, as their yields would never recover without the aid of chemicals and GM crops.
The future for the coffee system looks bleak, with the new commercial business of “the designer drink” the third world are producing coffee which they cannot afford to drink. Small farmers are rapidly going out of business and the continuing greed from the big companies means that they are willing to sacrifice the old methods of coffee standards and manufacture for new “advanced methods” which in the process may damage the environment, ecosystems and therefore changing weather and climate probably affecting the whole world.
This destruction of the environment makes the future generations look unwelcoming. Pollution and loss of biodiversity has a direct impact on our food chain and these may have massive consequences for the future. The biggest impact today is the disparity between the rich and the poor. Farming in the original form has deteriorated, this is the main topical issues with Oxfam proposes taxes on big companies such as Starbucks, to compensate for the loss of livelihood for the small farmers. Although this gives some the chance to get out of poverty it does not address the problem for future generations.
Family trades and industry are being lost for the mass production of cheap and fast coffee communities. The standards of coffee beans drop, and loss of labour through mechanical methods means a decrease in employment in the third world countries, such as Ethiopia. These create larger problems throughout the country and the developing world gap increases, as the rich get richer whilst the poor get poorer. There are 25 million, mainly small, coffee farmers left in the world, most of whom are growing coffee in a sustainable and organic (shade- grown as opposed to sun grown and chemical-intensive) manner.
Many of these indigenous and small farmers, who inhabit the most biologically diverse and fragile areas of the world (the mountains and rainforests of Chiapas, Oaxaca, and Guatemala for example), are trying to make a living in the face of intense economic exploitation, racial discrimination, and government repression. Because companies like Starbucks are not brewing, seriously selling, and heavily promoting Fair Trade coffee, most coffee sold today is sun- grown, plantation coffee. Only 550,000 or 2% (www.
mercola. com) of the world’s coffee growers now benefit from being part of the Fair Trade movement. We need to increase this percentage, as quickly as possible, or else indigenous and rural communities across the global South and tropical biodiversity will perish. Analysts estimate that as many as 50% (www. mercola. com) of shade-grown coffee producers in countries like Mexico will abandon production over the next few years unless market demand for Fair Trade coffee increases dramatically.
Unfortunately the world’s small shade-grown coffee producers, many of whom are indigenous people, are being forced out of business and off the land by a ruthless global coffee cartel determined to drive down the prices paid to coffee farmers and monopolize and control the world coffee market supply process forcing their industrial, plantation model of sun-grown coffee on the entire world. Conclusion In the short term, investing in socially responsible companies offers neither shelter from stock market tempest or guarantees of better performance.
However, in the long run, sustainable companies will receive the rewards of its present efforts. We all know that finance is about anticipating the changes in the market and identifying those companies that will be the leaders in the future. From this point of view, the investment or the diversification through sustainable or socially responsible companies is financially consistent and rational for the investment manager, and, at the same time, it responds to a rapidly increasing demand from private and institutional investors.
Proof of the increasing interest in sustainable investments is the growing number of equity indexes that are being established for both purposes of benchmarking socially responsible funds and stock-picking. This is a clear sign that investment managers are aware of growing market opportunities. Beginning last year, Starbucks became the object of protests and boycotts concerning the use of genetically modified ingredients, including milk products containing the genetically modified growth hormone, rBST.
They were also urged to promote and sell more Fair-Trade coffee than they already were. In response to the concerns of their customers, as well as the activist community, Starbucks established a comprehensive set of policies and practices. In the absence of US regulations for defining and labelling genetically modified products, Starbucks has adopted the Australia-New Zealand Food Association (ANZFA) food labelling regulations, which are the most stringent labelling regulations in the world today.
They continue to review their non-beverage products and will make modifications or substitutions as appropriate and economically feasible so that all of their products would not require labelling under ANZFA regulations. In October 2001 Starbucks announced the expansion of its existing Fair Trade program by agreeing to purchase 1 million pounds of Fair Trade coffee over the next 12 -18 months (www. mercola. com). They have agreed to brew Fair Trade coffee as the “Coffee of Day” on a monthly basis in all of their stores in North America beginning May 2002.
They have also expanded their Fair Trade offerings to colleges and universities. Starbucks has developed comprehensive guidelines for sourcing coffee through an incentive-based pilot program that addresses environmental, social and economic concerns. The goal is to continually increase the percentage of their coffee supplies that meet these stringent criteria. In addition, Starbucks has: (www. mercola. com) Conducted a test of pastries made with organic ingredients in select markets in Seattle and Oregon, which resulted in customer acceptance of both the quality and taste of these products.
Introduced organic milk as an alternative milk ingredient in all their company-owned stores in the U. S. Completed a supplier review for all beverage ingredients and products Conducted meetings with concerned citizens and NGOs, such as the FLO, to better understand their position on the issue of GM materials and Fair Trade coffee Food and agriculture companies that wish to do business in a global economy are faced with an increasing array of international regulations governing the growing, production and selling of agricultural products.
Likewise, the demands of NGOs, shareholders, customers, governments, media and other stakeholders have led to a dramatic growth in vendor codes of conduct and other external performance standards. In response, some food and agriculture companies are adopting international standards and certification schemes that address numerous environmental and social concerns. They are engaging with environmental, human rights and development organizations to implement, monitor and certify compliance with these largely voluntary codes of conduct.
And they are increasing the transparency of their operations, policies and practices to broaden the trust of their constituencies and encourage fair, ethical business practices. SAN is an agricultural certification program jointly managed by the Rainforest Alliance and a network of Latin American partner organizations (http://iisd1. iisd. ca/susprod/principles. htm). SAN develops guidelines for sustainable tropical agriculture, specifically in the production of bananas, coffee, cacao, oranges, sugar cane and flowers.
While not intended to be a substitute for government regulations, SAN certification programs such as the ECO-O. K. and Better Banana Projects help improve environmental and social conditions in tropical regions by developing and implementing best management practices and standards for commodity crops, providing incentives to farmers to meet those standards, and encouraging marketing industries and consumers to support farmers who are making on-farm improvements toward sustainability.
I have found the coffee industry to not be sustainable, the system will not provide for future generations in the third world and may cause problems out of the people’s control leading to a mass of severe weather conditions, poverty and with this the spread of disease. The ecosystems will be in danger and natural coffee beans replaced. The western world may benefit in the short term, with billions of pounds being spent to compensate for the rapid growth of the coffee demand. Coffee is already being over produced with the new technology and more efficient machinery more and more will continue to be exported.
This will lead to a huge surplus that is beyond the western control. With new medical research into the effects of coffee on your body and new healthy alternatives, how long will the trend be popular for? The obsessive greed of multi corporations may take over, if nothing is done about compensating and accommodating the poorer countries this will lead to major irreversible problems throughout the globe.
Bibliography http://eerc. ra. utk. edu/ccpct/sustaindefn. html(Brundtland 1987) Definitions and concepts http://iisd1. iisd. ca/susprod/principles. htm IUCN/UNEP/WWF.Caring for the Earth: A Strategy for Sustainable Living. (Gland, Switzerland: 1991). Paul Hawken. The Ecology of Commerce. (New York, New York: Harper Business, 1993), p 144 What is the WBCSD? http://www. wbcsd. org/aboutus/index. htm02/01/03 STARBUCKS CAMPAIGN Taking The GE Food Fight Directly To The US Marketplacehttp://www. mercola. com/2001/mar/14/index. htm 02/01/03 Sustainability and Performance: What the Leading Indicators Actually Tell Us http://community. cgey. com/focus/fcd/sustainability/en_index. jsp20/12/02 Analysis for a sustainable enviromentwww. stat. psu. edu/~gpp/PDFfiles/TR2000-0801. pdf.