- As world market prices for coffee have collapsed, cash-needing Ethiopian farmers are increasingly turning to the cultivation of chat, a light drug that still is legal in most of the world. This is not without risks, observers warn.
The UK-based humanitarian organisation Oxfam today warns that the so-called "coffee collapse" is leading to a "global drug boom."
- Failure by the world’s biggest coffee companies to address the coffee price collapse is forcing thousands of farmers across Ethiopia into poverty, Oxfam says in a statement. With few alternatives, many farmers are ripping out their coffee plants and replacing them with chat, a drug banned in the US, said international agency Oxfam today.
Phil Bloomer, Oxfam's Head of Advocacy today said that "coffee prices are lower in real terms than they have been for the last 100 years and it is fast becoming a cash-less cash crop. Coffee companies' half hearted response to the crisis is forcing 25 million coffee farmers over the edge as well as fuelling the production of drug crops around the world."
Ethiopia, like many coffee reliant economies in Latin America and Africa, is "on the brink of collapse," Oxfam warns. In Ethiopia earnings from coffee have dropped from 70 percent (US$ 330 million) of GDP to 35 percent (US$ 165 million) in the space of just five years.
Meanwhile, official earnings from chat, an amphetamine like stimulant has doubled to almost 13 percent (US$ 58 million). Chat is considered an illegal drug in the United States, Canada, Norway and Sweden, where it had been introduced by mostly Somali immigrants.
Meanwhile, a ton of the leaves are shipped into Britain every day, on sale in green grocers at euro 5 a bushel. Somali and Yemeni communities are calling for the UK to move in line with many other western countries and ban chat and there is a petition in the north west of England urging the government to ban it. It is estimated that smuggling chat into the US from Britain has an annual turnover of euro 215 million.
Ethiopia has been the home of coffee for over 3000 years but if the coffee crisis continues, Oxfam argues that "chat could overtake coffee as Ethiopia's primary export within the space of ten years." Ethiopia is the third biggest supplier of coffee in Africa but highest producer of Arabica. Some 700,000 people rely on growing coffee in Ethiopia.
- The economic arguments for continuing to grow coffee are unconvincing, Oxfam says. In Harrar in eastern Ethiopia, farmers used to sell their coffee for just under US$ 3 a kilo, now they make little more than 86 cents a kilo.
As a result, coffee production from this region has dropped by 17 percent in the space of five years. The alternative is to grow to chat which brings in over US$ 9 a kilo. In Peru, the same is happening. Coffee sells at around 65 cents per pound, while coca, which is processed into cocaine, is around US$ 3 a pound.
Hayder Hassan, a 53-year-old farmer Oxfam works with in Deder said: "Three years ago, you could get twice as much for a kilo of coffee as you do today. I still grow some coffee on my land but if the price doesn't improve this whole hillside will soon be covered in chat. We have no factories or any other means to live here. We dream of a better price for coffee, but only the government or god can assist us."
According to Oxfam's analysis, responsibility for much of the crisis however lies at the door of the "Big Four" coffee companies; Sara Lee, Kraft, Nestle and Proctor and Gamble.
The UK organisation has analysed what the "Big Four" coffee roasters have done in 12 months to help solve the global coffee crisis. Taking four key issues, and rating the companies out of 100, Oxfam scores none of them above "failure". Two companies in particular appear not to be taking seriously the human crisis in their supply chain.
Sara Lee - at 27 percent - had "performed abysmally," Oxfam said. "The company has done little to pay coffee farmers better prices, or establish guidelines for buying coffee that ensure farmers are paid a decent price, or help farmers diversify into other crops."
- Kraft (38%) performed poorly too, the organisation found. Kraft had "failed in the past year to buy either Fair Trade coffee or ensure all their coffee meets internationally agreed quality standards. The company did however contribute to social development programs around the world."
Nestle had "fared marginally better, at 43%, having led the industry in various international meetings and supported the efforts of the International Coffee Organisation (ICO) to solve the crisis, including buying more coffee directly from farmers. But Nestle still refuses to buy Fair Trade coffee."
- Procter and Gamble (49%) has led the industry in paying more farmers a decent price and has also helped lobby the US to rejoin the ICO, Oxfam concluded. "However, it has too few guidelines on buying coffee that would ensure at least basic standards for farmers."
According to the Ethiopian government, the collapse in coffee prices has cost the country some US$ 830 million in lost export earnings over the past five years. This revenue could have helped to build the equivalent to 1250 health centres of 2000 primary schools.
- Ethiopia is the third poorest country in the world and this lost revenue could have helped the government tackle the recent famine and help the country work its way out of poverty, Oxfam concludes.
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