BLACK GOLD

Coffee, the second most valuable commodity after oil, is grown in more than 50 countries in a band around the equator and provides a living for more than 20 million farmers. Altogether, up to 100 million people worldwide are involved in the growing, processing, trading and retailing of the product.¹

The ICO (International Coffee Organization) estimates that 10 years ago coffee sales worldwide were worth $30bn and farmers earned $10bn-$12bn. With the spread of up-market coffee shops in western cities, sales are worth more than $70bn but farmers receive just $5.5bn ²

Following the collapse of the managed global market in 1989, coffee growers are now getting one quarter of what they were getting for their beans 40 years ago. In real terms, this is about the same as they got 100 years ago. ³

Some 20 million families in 50 countries now work directly in the cultivation of coffee; an estimated 11 million hectares of the world's farmland are dedicated to coffee cultivation There are two main coffee species: arabica which accounts for 60-65% of supply and robusta which accounts for 35%, compared to only 25% some 20 years ago.

Arabica fetches higher prices, but robusta is easier to produce, more resistant to diseases and can be grown at lower altitudes.Arabica is mostly produced in Latin America but there are also large suppliers in Ethiopia, Kenya, India and Papua New Guinea. Robusta is produced mainly in Vietnam and Brazil.⁴

The top four roasters - Sara Lee, Kraft/Philip Morris, Procter and Gamble and Nestlé - buy half of all green beans traded, and just ten companies account for 60-65% of all sales of processed coffee (2000). ⁵

Nestlé - one of the "big four" roasters - has been known to enjoy profit margins of up to 26% on some coffee brands. Oxfam has estimated that 3,900 cups of Nestlé instant coffee are drunk every second, and quoted one financial analyst describing the roasting business as "the commercial equivalent of heaven: typical profit margins in the food and drink trade are much smaller, at around 12%. Starbucks earns $24.00/lb. or more, with gross margins that likely exceed $20.00.⁶

Back in Ethiopia, the farmers who supplied their premier land, distinctive plants, cultivation techniques, and hard labor earned less than a dollar.⁷

¹ http://www.fairtrade.org.uk/pr040502.htm
² http://www.guardian.co.uk/business/2002/sep/17/ethicalshopping.globalisation
³ Co-operative Coffee report – November 2003 p.7
⁴ Consumers International Coffee Report, 2005 p.16
⁵ IBID p.16
⁶ http://www.guardian.co.uk/food/Story/0,2763,1571608,00.html
⁷ Brand Hypocrisy at Starbucks - Oxford Said Business Report p.4