Small farmers are losing their shirts over the latest coffee-bean bust.
Put in hard numbers, that’s about 100 million people — both farmers and their dependents — in 40 countries across the tropics who have seen their incomes cut by two-thirds in this decade.
The reduction in coffee-bean prices is due to several factors, including overproduction, climate change, failing fair-trade standards, and a lack of stable pricing for coffee farmers.
Coffee bean prices approached $3 a pound back in 2011, but have since plunged to less than $1 per pound.
That’s less than the actual cost of production for many of the small farmers who grow the bulk of the premium coffee consumed around the world.
Since many nations have pegged their economies to coffee beans, this drastic drop in prices has ripped apart countries such as Honduras, where the collapse has sent tends of thousands of migrants north.
The last time this happened, from 1989 to 1994, coffee-dependent Rwanda lost 80 percent of its export earnings, devastating the regional economy and creating an atmosphere of fear and anxiety that experts say helped trigger the horrific genocide of Tutsi peoples by ethnic Hutus.
Worldwide, as their debt accrues and livelihoods dwindle, smallholder farmers are abandoning their farms — or, in some Latin American nations, turning to the coca leaf.
What’s up, Starbucks?
Although industry-leading coffee retailer Starbucks said it would donate $20 million to support farmers in Mexico and Central America, critics say the company has not demonstated that the money has been distributed.
Last year Starbuck’s annual profits exceeded $4 billion.
Starbucks has also been criticized for “fairwashing” — claiming that their beans are sustainably sourced and that small farmers in places like Honduras benefit from “fair trade.”
The reality appears to be that producers who sell to Starbucks don’t really get paid above the market despite engaging in a range of sustainable and environmentally friendly practices that make their beans superior.
Farmers who are are financially devastated by this situation often end up selling their tiny plots of land for a few thousand dollars — in Central America, that’s just enough to pay a human trafficker to get them and their families into the United States.
Global climate change has also affected coffee production, creating the ideal conditions for the crop-destroying blight coffee rust — la roya. It’s a calamity for small farmers that don’t have the capital to pay for crop fumigation.
Climate scientists have said that over time, as much as 50 percent of the land currently used to cultivate coffee will become unworkable by 2050, foretelling an ever-deepening crisis for coffee producers.
Advocates in the coffee industry have called for helping affected farmers switch to other crops that can survive new climate conditions.
They also want to see an end to overproduction, which would require new policies and controls on speculation.
Critics of the coffee industry also want greater accountability around fair-trade production and certification, and called on major importers such as Starbucks to switch to certified fair-trade producers.