By Hannah Buoye

Coffee is the second most valuably traded commodity after oil, according to Robbie Jaffe, co-founder of Santa Cruz-based non-profit organization Community Agroecology Network (CAN). People in the United States alone consume 2.3 billion pounds of coffee per year, more than any other country.

In one year, a two-cup-a-day drinker of coffee will consume the annual harvest of 18 coffee trees, according to Trans Fair USA. Coffee is an international, economic, environmental and developmental issue we become involved in every time we order that white mocha with extra whip. But just one satisfying sip of that caffeine-filled drink can make the big picture hard to remember.

“There is a large disconnect between the producer and the consumer,” Jaffe said. “The juxtaposition that gets to me is that we sit up here and drink our lattes while there is a great potential bridge to be made between coffee drinkers and growers.”

Grown in the equatorial regions of the world, most coffee is traded ‘green,’ meaning beans are depulped and dried before selling. The value-adding processes of roasting and packaging are done in the consuming countries. Considering the beans’ fluctuating market value, the money coffee farmers make does not reflect the price consumers pay. For a pound of coffee beans, a farmer normally receives somewhere between $0.90 and $1.26 while the consumer shells out anywhere from $1 to $4 for a coffee drink and $7 to $14 for a pound of coffee. The price disparity between what is produced and what is consumed can be traced back to the difference between the “coffee” that is sold on the international market and the “coffee” that is sold to the coffee shop consumer.

An Integrated Approach to the

Coffee Crisis

CAN, a unique nonprofit, targets the environmental, developmental and economic issues that surround coffee production by teaching agroecological principles and the integration of alternative markets, while providing research opportunities abroad for university students and faculty.

“[CAN] is not just marketing; it’s an opportunity to do field internships, have faculty participate in research, and create long-term relationships between communities,” said Grace Voorheis, senior intern for CAN’s campus expansion campaign.

“There is potential for something really special to happen when you get people together face to face” said Ian Bailey, former CAN intern.

The Coffee Crisis and Its Economic Paradox

It is a great risk to grow coffee, yet so many developing countries depend on coffee as an export because it creates the income they need to become “developing” countries. As a crop, it is a crucial source of revenue. In times of crisis, when prices drop or markets disappear, the farmers cannot eat coffee for nourishment; they are left with a useless commodity. Still, Voorheis points out, there is a large market demand for coffee, so it is a desirable commodity to grow.

In their book The Coffee Paradox, Benoit Daviron and Stefano Ponte explain many factors that influence the popularity of this commodity and drink. Experienced as “a ‘coffee boom’ in consuming countries and a ‘coffee crisis’ in producing countries,” the “coffee paradox” is an example of a common trade dilemma in developing countries. When a commodity becomes popular and fetches a higher price in consuming countries, production increases, and demand decreases because overproduction drives prices down. With coffee, however, the price of the commodity has decreased but the price of the finished product — your latte — has increased.

Coffee, like most commodities, is subject to the boom and bust cycles of economics and production. In the 1960s, Jaffe explains, coffee prices began to stabilize with the formation of the International Coffee Agreement (ICA). The ICA was a kind of “cartel of coffee consuming and producing countries created to maintain a stable price for green coffee” said Nick Babin, a former CAN intern, citing OPEC and the control that organization has over the price of oil as a comparative example.

The Coffee Crisis was brought on in 1989, when the ICA’s regulatory structure was disrupted after U.S. withdrawal changed views toward coffee as a commodity in consuming counties.

When the United States pulled out of the ICA in 1989, the institutional framework fell apart and prices became volatile with the lack of regulation, Babin explained. In addition to the ICA’s collapse, USAID and World Bank development efforts created an overabundance of coffee production by encouraging a conversion to coffee farming in equatorial regions, like Vietnam, where coffee was not traditionally grown.

During the height of the crisis, farmers received as little as $0.40 per pound for coffee while their countries lost crucial revenue created by the exportation of coffee for development and infrastructure.

“Countries that grow coffee are largely dependent on the export and therefore became devastated when the prices dropped,” Jaffe said.

On the consuming end, coffee was just a bulk commodity until the late 80s, when the specialty market, jumpstarted by such chains as Starbucks, began to grow in popularity. While retailers and roasters were changing their attitudes toward coffee, they were also gaining profits.

Four major companies – Nestlé, Kraft, Sarah Lee and Proctor & Gamble — currently control the majority of production, packaging and distribution of coffee while 70 percent of coffee producers are small-scale farmers. Large brand names, like Folgers, reap the monopolized benefits at the consumer level, while small farmers are left receiving $0.70 a pound for coffee Starbucks will sell for $12 a pound.

Agua Buena, Costa Rica and The Coffee Crisis

When prices dropped during the Coffee Crisis, cooperatives became bankrupt and small family farms were devastated. This situation was the case for one cooperative in Agua Buena, Costa Rica.

“When Agua Buena’s local co-op, Coopabuena, which served around 400 families, went bankrupt, partly due to low prices and partly due to management, it was unable to pay farmers for a whole harvest year,” said Ian Bailey, a former CAN intern. This failure had a significant impact on both the community’s social and agricultural structures.

“The biggest response to [the Coffee Crisis] was immigration,” he continued. “People would try to sell their farm and move to the urban areas of Costa Rica; some even immigrated to the US.”

In addition to the exodus of the younger generation, the crisis incited devastating environmental practices.

According to Bailey, “People just took out all their coffee and converted it to pasture to graze cattle. Cattle grazing, not necessarily a better financial option, takes a lot less labor, allowing the farmer to go make money somewhere else, while still having the income from the cattle.”

For farmers reliant on coffee and reluctant to abandon their conventional agricultural practices, the drop in prices forced them toward more ecologically devastating methods of earning a living. These methods yielded more coffee in the short-term, but created more problems in the long-run.

Agroecology and Networks

Steve Gliessman, Environmental Studies faculty and co-founder of CAN, took a sabbatical in 2001 and returned to Agua Buena where he had previously owned and operated a farm. Visiting at the height of the coffee crisis, Gliessman saw the struggle to organize co-ops and obtain better prices for the coffee paralleled through out Central America. When he saw the need for a network of coffee growing communities and a change in coffee production, he began to organize CAN.

CAN works with five Central American communities, two in Mexico and one in El Salvador, Nicaragua and Costa Rica. Inspired by traditional Mayan agricultural practices, Gliessman believes that a focus on the sustainable principles of agroeclogy will not only help produce better coffee but will restore the country’s natural landscape and improve community solidarity.

After Agua Buena’s Coopabeuna cooperative collapsed, a group of 40 families got together to form their own co-op, this time dedicated to sustainability and lasting community relationships in addition to increasing market value and price return.

“Farmers can’t afford the switch to organic to increase the price of their coffee,” said Joey Smith, a former CAN intern who now works for Food First in Oakland. “But they’re willing to find alternative farming methods that do not use pesticides and herbicides and monoculture because it is their land and they want to keep it healthy.”

The co-op decided to adopt sustainable farming practices to recuperate from the damage done to soils by conversions to pasture land and create a better network to support the community in future times of crisis, explained Roberto Jimenez, a local farmer and long time partner with the CAN internship program. His coffee is now shade-grown, incorporating other food producing tress, such as bananas, which enhance soil quality and provide edible produce. The coffee gains nutrients from the leaf-matter that falls, accumulates and decomposes into fertilizer around the coffee plants. In addition the trees provide important habitat for birds.

Speaking to a room full of UCSC students last month, Roberto explained the challenges of changing from conventional to more ecological practices.

“It is difficult because to produce in an ecological fashion you have to have a change of consciousness,” he said. “In the past we grew conventionally with out shade or protection of the land.”

CAN: Direct Marketing

Unlike voluntary labeling, such as Fair Trade and Organic, coffee sold through CAN retains a link to the community it came from.

The idea of having voluntary labeling, like Fair Trade and Organic, explains Julie Guthman, professor of community studies at UCSC, is to provide a price premium in the market that will allow producers of a commodity to improve their agricultural practices and livelihoods.

“The label says you abide by a set of practices and the consumer will recognize that and you get that return as the farmer,” Guthman said.

Guthman, Jaffe and Voorheis had a main critique of fair trade: while the labeling does cuts out middlemen in producing countries, it isn’t doing anything to change the structure in consuming countries.

“There are already large Agroindustry players, such as Starbucks, that reduce what the label means,” Guthman said.

On a community level it is potentially dividing communities, creating more work because of compliance and dissent between cooperatives. Another concern raised by Guthman is that the labeling is only going to apply to certain people and certain commodities, like coffee, bananas and chocolate.

“[Voluntary Labeling] is a narrowly-scoped way of improving lives of peasant farmers in the third world,” Guthman said. “However, it is making people consider and make decisions based on the entire food system.”

The biggest concern is whether or not the money is getting to the producers.

Voorheis explained that fair trade does bring more money back to the community, improving “community resources,” like health centers, but there is hardly any individual family or farm improvement.

“With CAN, you can actually have the direct relationship,” Voorheis said. “Farmers receive 85 percent of the profits, get higher returns, and can invest more into the co-op and its infrastructure.”

Through CAN funds, Joey Smith pointed out, Coopepueblos was able to purchase an “ecological processing plant,” which is smaller than the previous one and also uses reclaimed water to reduce waste.

About 20 percent of the co-op’s beans are sold through CAN’s direct market. Roberto stressed on his visit that if they could increase that number to 50 percent, they could put the income toward more infrastructure investments, potentially fulfilling their long-term goal of having a cooperative-owned and operated roasting facility.

As Bailey pointed out: “CAN is only one part of what the cooperative sells; it helps to pay the electricity bills, keep the co-op office open, et cetera. But there is still a lot more to do.”

CAN hopes to expand its market and sales. Voorheis and others are targeting university dining services on other campuses through student and faculty awareness, stressing the academic opportunities and ultimate social change that could come from getting such large institutions to buy coffee directly from farmers. Currently, the UCSC community consumes around 450 pounds per month of CAN coffee.

CAN: Internships

Internships also bring money into the community, as Smith and Bailey both point out, and the experience is rewarding for both the students and the community.

Smith was unaware of the “interconnectivity of issues” until he spent some time in Agua Buena and observed the coffee crisis and environmental degradation around the community.

“Protecting the rainforest and biodiversity is not a separate issue from how people live or are treated,” he said.

Interacting with the community through interviews conducted for his research project, Smith was able to improve more than just his Spanish.

“I wanted to talk to people about how to do a good project,” Smith continued. “It was great to hear the theories I was learning in the classroom in the mouths of the community members.”