Coffee, claimed as the most valuable agricultural commodity and the second most valuable commodity after crude oil is grown in more than 50 countries around the equator. It is a multi-billion dollar industry and it provides a living for over 20 million farmers globally and 100 million people worldwide are involved in the growing, processing, trading and retail of the product. However, the profit does not go to the people who actually work hard to grow the beans, and the same people who face all the risks of failing crops or falling prices. Sadly, many small coffee farmers are constantly challenged by the coffee price fluctuation on the global commodity markets and being exploited by middlemen. When coffee prices fall, growers suffer an instant reduction in income. They fail to recover their production cost which has a negative impact for several years running. However, there wouldn’t be any noticeable reduction in supermarket prices of coffee. It is the reverse for giant coffee companies such as Nestle, Sarah Lee and Kraft. A fall in coffee prices means increased profits and improved margins.
Additionally, when the coffee is ready to be harvested, without the facilities to process, store or transport their crops to markets, farmers find themselves in weak bargaining positions. They fall prey to local coffee dealers. Despite the fact that it is their commodity, they have no control over the price. They take whatever price the coffee buyers offer them who then sell it to the international market. Hence many of the world’s small coffee farmers still live in abject poverty. They struggle to make a decent living, they do not have savings to support them when their crops fail or when coffee prices drop. Lack of savings and their inability to get access to bank loans at fair rates as most of them do not collateral, farmers find themselves at the mercy of loan sharks to pay for fertilizers, harvest labour and basic living cost prior to harvest.
Finally, from the harvest to the supermarket shelf, it is estimated that coffee beans change hands as many as 150 times. Paper transactions on international commodities markets account for much of this. The final price of a cup of coffee in the west will have absorbed the cost of insurance, taxes, transportation, processing, marketing, storage and much more. So, of the £1.75 or whatever price is charged for a cappuccino or cuppa coffee in London coffee shop, the grower will be lucky to receive the equivalent of 5p.