Bob Geldof is back in Ethiopia almost 20 years after the Live Aid concert that helped raise $60-million for famine victims. Now, as then, the singer turned activist wants to sound the alarm over a renewed threat of famine.
This time, a sophisticated relief effort has averted mass starvation, but some 3,5-million people still risk starvation according to the United Nation’s Children’s Fund (Unicef).
Some of the reasons for Ethiopia’s plight are well known. They include a legacy of misrule under its former dictator, Mengistu Haile Mariam, a swelling population, and flooding. Less well-known has been the devastating impact of slumping coffee prices for a country that relies heavily on coffee exports.
Coffee accounts for 54% of Ethiopia’s export revenues, with some 700 000 households depending on coffee for their livelihoods, and millions more for part of their income.
Unfortunately for Ethiopia, and for other coffee growing countries, the price of coffee beans has sunk to its lowest level in real terms in 100 years. Prices on world markets, which averaged around $1,20 a pound in the 1980s, are now around 50 cents.
The consequences have been calamitous for some 25-million coffee producers around the world. Not just in Ethiopia, but in Honduras and Vietnam, coffee growers – mostly poor smallholders – sell their beans for less than the cost of production.
”There is a development crisis, with disastrous implications for producers, across coffee growing regions,” an Oxfam briefing paper said this month.
In January last year, the European Union and the US aid development agency (USAid) warned of increased poverty and food shortages for coffee farmers in Ethiopia, with farmers having to sell their assets and cutting down on food.
Oxfam cites the case of Mohammed Ali Indris, an Ethiopian coffee farmer the aid group interviewed in March last year. The 36-year-old’s household consists of 12 people, including the children of his dead brother. Five years ago, he made about $320 a year from the combined sale of coffee and corn. This year he expects about $60 for the coffee. The corn he would have sold has already been eaten by his family.
The fall in coffee export earnings also poses serious challenges to Ethiopia’s ability to deal with HIV/Aids, which infects an estimated 3-million adult Ethiopians, or 5% of the population.
The Ethiopian ministry of health has projected that treatment for HIV/Aids alone will account for over 30% of total health spending by 2014. Inevitably, the Ethiopian government’s efforts to combat Aids will be severely hampered by the fall in coffee revenues.
Women are particularly affected because of the added burdens arising from illness in the family, and they tend to forgo treatment when families have to make choices about which family member receives treatment.
The impact of the coffee crisis is particularly acute in Africa where countries such as Burundi, Uganda and Rwanda depend heavily on coffee exports. But coffee growers over the world are also affected.
In Central America, some 400 000 temporary and permanent coffee workers have recently lost their jobs. In Guatemala, widespread ”land invasions” have been carried out by unemployed casual labourers, after small growers laid off up to 75% of their pickers in January 2002.
The crisis stems in part from a glut in coffee. Total production in 2001-02 came to an estimated 113-million bags (60kg bags) while world consumption is just over 106-million bags.
The reason for the glut lies in the rapid expansion of production in Vietnam, now the world’s second largest producer, when it barely exported coffee 10 years ago. Moreover, Brazil, the traditional coffee powerhouse, is producing more coffee because of more efficient techniques.
Meanwhile, coffee consumption is not keeping pace; coffee production has been rising at an annual rate of 3,6%, but demand has been growing by only 1,5%.
Throw into the mix the lack of bargaining power of small coffee growers against the might of the four main coffee roasters, Kraft, Nestlé, Procter & Gamble and Sara Lee, and the plight of coffee farmers is pretty grim.
The problems go further back. Until 1989, trade in coffee was regulated by the international coffee agreement (ICA) with the aim of keeping prices stable between $1,20-$1,40 a pound. But the ICA collapsed in 1989, when the US left as a member, after opposing the agreement. Prices are now determined on the two big futures markets in London and New York.
Oxfam has proposed a coffee rescue plan to be administered by the International Coffee Organisation, an intergovernmental body established by the UN in 1962.
The plan includes companies paying a decent price to farmers, the immediate destruction of 5-million bags of coffee, the creation of a diversification fund to help farmers get out of coffee, and a commitment by roaster companies to buy more coffee under Fair Trade conditions directly from producers.
They are sensible suggestions, but as usual, it depends on the will of governments and the big companies to adopt them.
There is little incentive for the companies to comply, as they are getting coffee at dirt cheap prices. But in the long run, the quality will suffer as the high cost producers get squeezed. Unless something changes, Bob Geldof might well have to make another return trip to Ethiopia. – Guardian Unlimited Â