Coffee in crisis
How the market giants benefit at the expense of farmers
The global coffee market is deeply unfair. While a handful of coffee companies benefit from growing profits, there is less and less added value left in the producing countries. In view of climate change, the coffee sector is facing dramatic developments. This is confirmed by the current French study "Coffee - a success story hides the crisis". As a counter-model to this, the case studies from the cultivating countries Colombia, Peru and Ethiopia show that fair trade improves the living conditions of coffee farmers*. At the beginning of the International Green Week in Berlin (18-27 January), the Forum Fairer Handel and TransFair e.V. will present the German version of this study. The most important figures on the German coffee market are presented here: Here in Germany it is no fairer than with our neighbours.
A lucrative market from which only a few profit
Worldwide, more than two billion cups of coffee are drunk every day, which corresponds to a turnover of around 200 billion dollars per year. Europe, the United States, Brazil and, increasingly, Asia account for the largest share of coffee consumption. "However, this lucrative market mainly benefits the large roasters and coffee traders. Coffee farmers often have to make do with income below the production level," says Andrea Fütterer, Chairwoman of the Fair Trade Forum and Head of Policy at GEPA - The Fair Trade Company. The national budgets of the producing countries are additionally burdened with the social and ecological consequential costs of coffee cultivation. These include, for example, costs for the treatment of diseases through the use of pesticides or water pollution through fertilisers.
Coffee market in a state of imbalance
The figures for the German market illustrate the imbalance from the producers'* point of view: Adjusted for inflation, revenues in the production countries fell by around ten percent between 1994 and 2017. By contrast, the value added by roasters and dealers in Germany rose by 215 percent in the same period, from 2.28 billion euros to 4.9 billion euros per year.
Coffee farmers* are under increasing pressure
"If we want to continue to enjoy coffee every day in the future, the conditions for coffee farmers urgently need to be improved," Dieter Overath, CEO of TransFair, warns, also with regard to the negative effects of climate change on coffee cultivation. "This study promises difficult times for the conventional coffee sector if it does not invest in the sustainability of its cultivation," Overath warns the major players on the coffee market. Today, coffee farmers are already affected by malnutrition, for example. Migration and drug trafficking are also consequences of declining incomes. At the same time, the expansion and modernisation of coffee cultivation is leading to deforestation and an expansion in the use of chemical fertilisers. All these developments will be further exacerbated by progressive climate change.
Fair trade improves the living conditions of coffee producers*.
The case studies on coffee cultivation in Colombia, Peru and Ethiopia show that Fair Trade improves the living conditions of producers* by strengthening the organisational capacity of farmers, cushioning price fluctuations on the world market through the minimum price and giving cooperatives additional benefits from premiums for Fair Trade and organic cultivation. In particular, the combination of organic farming and fair trade is highlighted as particularly effective. In Germany, 78 percent of Fair Trade coffee in Germany is already certified organic.
Politicians are called upon to
The market share of fair-trade coffee is growing steadily in Germany, but is still only 4.8 percent. This figure makes it clear that fair trade cannot remedy the injustice of the coffee market on its own. The current distribution of power along the conventional supply chain massively favours unequal value creation. "This is why we in Germany are campaigning for the abolition of the coffee tax for fair-trade coffee," explains Dieter Overath with a view to the Federal Government. But in order for as many coffee farmers as possible to receive better conditions, there is also a need for overarching legal regulations. "For this reason, we advocate a statutory entrepreneurial duty of care along the supply chains. Companies must take responsibility for ensuring that their products are manufactured under humane conditions," explains Andrea Fütterer. In addition, it is a matter of concern in Fair Trade to increase local added value once again. For years there have been some coffees that have been processed in the countries of origin.
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