[Futurework] Coffee anyone?

[Ed Weick]

American politicians are currently very busy trying to figure out what to do about some twelve million illegal migrants currently in the country. The overwhelming majority of these people are from Latin America. Why did they feel they had to leave their home countries to find work in the United States? Probably because they can no longer make a living at home. On my blog a few days ago, I marveled that Mexico, the mother of all corn, was now importing corn from the US. Mexican producers could not compete with highly subsidized American farmers. Then there is coffee. When I was in Costa Rica a couple of years ago, everybody seemed to be growing it on small ten acre plots and – at least where I was – processing and marketing it via local cooperatives. But were they making enough to get by? Here’s one take on the matter: It may be hard to understand how coffee growers are going hungry, when Americans willingly pay up to $4 for a steaming latte — but not if you look at the economics. ... "From that price, around one cent will go back to the grower," says Gabriel Silva of the National Federation of Colombian Coffee Growers. ... There are two reasons: Vietnam has been flooding the market with low-quality beans, and the four companies that control the world market have been pushing prices lower. ...In 1997, Colombian growers were paid $3.80 for a pound of coffee. This year, they've been getting 70 cents. (http://abcnews.go.com/WNT/story?id=287548&page=1) And here’s another: The problem began with the fall of the Berlin Wall. For years, a worldwide coffee agreement had kept prices artificially high to prevent the development of pockets of poverty that would be susceptible to communist takeover. When the agreement collapsed, the markets opened up and prices began to vary widely. Countries such as Vietnam and Brazil sharply stepped up production. Vietnam's output has soared from fewer than 2 million 132-pound bags a year in the early 1990s to 14 million bags, making it the world's second-largest coffee producer, behind Brazil. This year, worldwide coffee consumption is expected to equal about 105 million bags. ... But coffee producers are expected to harvest 10 million more bags than that. Worse, coffee-growing countries already have 40 million surplus bags stored up. ... The huge oversupply has allowed the coffee traders and big corporations to offer ever-lower prices to farmers for coffee, but the savings have not been passed on to consumers. ... The price paid to coffee farmers for a pound of coffee has dropped 75 percent since coffee briefly peaked at $1.81 per pound in May 1997. The difference has meant more profits for companies such as Procter & Gamble, Nestle, Sara Lee and Philip Morris, which together control about half the coffee market. (Despite Starbucks' ubiquity, the amount the company buys accounts for only about 1 percent of coffee purchases.) Ten years ago, coffee-producing countries got about one-third of every dollar spent on coffee. Now, they get less than 8 cents. http://www.post-gazette.com/world/20021028coffeeworld2p2.asp So, if you can’t make a living growing coffee, there are a few other things you can do. You can abandon agriculture and migrate to the city and become part of the slum population. Or, in places like Columbia, you can grow coca and produce cocaine for the American market. Or you can put together whatever savings you have, hire a coyote and get yourself to the US, where the money is. But there really aren’t very many options. Ed

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