When I was growing up in Nicaragua, I used to spend my summer vacations in the beautiful mountains of Matagalpa and Jinotega, an area with some of the best coffee plantations in the country. My father would say with pride, "Coffee produced in this region is among the finest in the world."
Today the mountains remain as beautiful as ever, and Nicaraguans continue to rely on coffee as one of the country's main sources of income. But coffee growers, who have faced difficult conditions throughout Nicaragua's tumultuous history, are coping with an unprecedented disaster. The development and relief organization Oxfam has documented in its new report "Mugged: Poverty in Your Coffee Cup" how a nearly 50 percent drop in the world coffee price in the past three years has left 25 million small-scale coffee producers in abject poverty around the world.
In Central America alone, some 600,000 coffee workers have been left unemployed in the past two years, according to a recent World Bank report. The plantations on which they work are being shut down as prices have plummeted to their lowest levels in a century. In Nicaragua, already the second-poorest nation in the hemisphere, thousands of coffee farm workers are without food, land or hope.
The current coffee crisis must be placed in a historical perspective. The coffee exporting and importing countries created the International Coffee Agreement (ICA) in 1962 to manage supply and demand on the world market, and as a result prices remained relatively high and stable. The United States played a lead role in establishing the ICA because it recognized that coffee is critical to maintaining political and economic stability in dozens of developing countries.
In 1989 the agreement collapsed, in part because the U.S. government no longer viewed a managed coffee market as vital to national security. Instead it championed the ideology of free trade, coupled with "structural adjustment" policies imposed on developing countries by the International Monetary Fund and the World Bank. These institutions promoted a general model of export-led growth tied to developing countries' "comparative advantage." This strategy often encouraged poor nations to increase production of green coffee and other raw materials, thereby deepening their dependence on primary commodities whose value has plummeted in the global marketplace. Not surprisingly, these large production increases have resulted in a global oversupply of coffee that has depressed prices to record lows.
Little more than a decade ago, coffee-producing countries were receiving about $10 billion of a $30 billion annual retail market. At present exporting countries' share has shrunk to less than $6 billion, while the value of the annual coffee retail market has nearly doubled, to $55 billion.
And who is getting ever-larger portions of the coffee bounty while everyone else is going hungry? The world's biggest coffee companies: Procter & Gamble, Kraft, Sara Lee and Nestle. Meanwhile, millions of poor coffee growers have been left in economic ruin.
The system must be changed. I urge coffee companies, governments, international institutions and consumers to join me in supporting Oxfam's campaign to alleviate this humanitarian crisis. The campaign calls for the following actions:
* The "Big Four" coffee companies should demonstrate their commitment to addressing the crisis by paying farmers a decent price. Companies should review and overhaul their core sourcing practices and, as a down payment, immediately commit to buying at least 2 percent of their coffee on Fair Trade terms. Fair Trade Certification guarantees that farmers receive a minimum price of $1.26 per pound ($1.41 for organic beans) -- a far cry from the meager 20 to 30 cents per pound they are now generally receiving.
* The United States and other coffee-consuming countries should provide political and financial support to resolve the oversupply problem, including monitoring coffee quality and destroying lowest-quality coffee stocks. The United States should rejoin the International Coffee Organization to contribute to multilateral efforts to address this global crisis.
I applaud the House of Representatives -- led by Reps. Sam Farr (D-Calif.), Benjamin A. Gilman (R-N.Y.) and Cass Ballenger (R-N.C.) -- and the Senate -- led by Sens. Patrick J. Leahy (D-Vt.), Christopher J. Dodd (D-Conn.) and Arlen Specter (R-Pa.) -- for recently passing resolutions that call on the United States to "adopt a global strategy to respond to the current coffee crisis." Now that this legislation has passed unanimously in both chambers, Congress must take concrete and meaningful action in the next session to support a sustainable solution to this crisis.
* International institutions such as the World Bank and the United Nations should develop a long-term integrated strategy to tackle the problem of commodities pricing, provide additional debt relief and support a major international stakeholders' conference on the coffee crisis next spring.
The price of coffee is a matter of life or death to millions of small-scale producers throughout the developing world. Free trade has left them in economic ruin.
The time has come to make the coffee trade fair.
The writer is a human rights advocate.