Monday, May 19, 2003

Anyone fretting over the state of the global economy today surely must be a heavy coffee drinker. General Glut being an avid coffee hound, I take particular note of a special meeting of the International Coffee Organization today in London to address the farmgate price squeeze in the coffee market which has been unrelenting since 1997. World coffee markets are a good example of the plight of commodity producers world-wide, whether in Africa or Southeast Asia or North America. Terms of trade for commodity producers tanked around 1980 and have only grown worse since then. The answer for commodity producers in the face of falling prices is of course to become more efficient than the next guy and produce more in order to generate the same amount of profit in a deflationary situation. Throw in an oligopolistic market structure and a World Bank which assists countries like Vietnam in flooding the market with low-quality beans, and you get coffee farmers and their families "on the brink of starvation".

If you drink coffee, the first thing to do is declare a preventive strike on all forms of instant. *Never drink instant coffee!* Instant is made from the lowest quality beans which drive down prices worldwide. Second, give up Folger's (Proctor & Gamble), Maxwell House (Kraft) and Nestle and instead make an effort to buy fair trade coffee. Dean's Beans is a personal favorite of the General's. The fair trade price is US$1.26 per pound. This price gives producers a fair return on their investment and their labor as well as provides them with something extra for luxuries such as health care and education for their children, as well as, oh I don't know, a roof that doesn't leak. World composite coffee prices haven't seen that level since early 1998. That means five long years of suffering, five years of exploitation by the coyotes, five years of fat cats in the US and Switzerland getting rich off of the exploitation of some of the poorest of the poor.

In March 2003 world market prices stood at just under US$0.50 per pound. Dean pays US$1.41 per pound (for organic coffee). Go Dean!


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