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Article by John Crabtree
You may think that the price of coffee on the supermarket shelves
only goes up, never down. But to Third World coffee growers, the
international price is at it lowest for 30 years. Many producers
carry on only because they cannot do anything else or because they
think that eventually the world price will pick up.
But this is not the case in Pite, a remote community in the far
north of Peru, close to the border with Ecuador. Its coffee farmers
have not only turned into being exporters - itself a minor
revolution for those with only tiny plots of 3-5 hectares - but are
doing so at a profit, thanks to the Fair Trade movement.
To them, Fair Trade is almost literally a matter of life and death.
With the world price of coffee at around 48 dollars per quintal
(100 lbs), Fair Trade offers them a guaranteed floor price of 126
dollars a quintal. No-one in Pite can produce coffee for 48 dollars
a quintal, once all their costs are taken into account, and these
are not the sort of farmers able to sustain losses.
Joel Correa, for one, is well pleased how things are going. Not
only is he receiving a reasonable price whereas many other
producers in the region think it's hardly worth harvesting their
coffee this year, but he has increased the yield on his plot from 1
quintal per hectare six years ago to 6-8 quintales now. He is
investing the profit he makes into a small plant to produce a kind
of raw sugar (panela) which will provide his household with some
income once the cash from the coffee harvest (which comes once a
year) is all spent.
Correa is also able to take advantage of the fact that his coffee
is organically produced, which means that it commands an extra 10
dollars a quintal on the market. To qualify as organic, coffee
production has to conform to a number of basic norms, as well as
avoiding the use of fertilizers, pesticides and other chemicals.
Many peruvian producers can qualify as organic because unlike many
colombian coffee growers, they've never had the money to buy
fertilizers.
Many farmers in the highlands of eastern Piura department are
following Correa's example and becoming members of the Central
Piurana de Cafetaleros, Cepicafé. Formed in 1995 as a
non-profit organisation, Cepicafé, now has more than 1,400
members in 35 communities stretching from places like Pite, near
Montero, in the north-east of Piura southwards into Huancabamba
province.
Cepicafé's main function is to buy members' coffee harvests
and to export it direct to Fair Trade institutions in the United
States and Europe, passing on to the producers these the advantages
of eliminating middlemen and selling coffee at a slight premium in
those markets. It also provides technical assistance to growers to
help them to certify themselves as organic producers. Furthermore,
it can provide members with credit, a scarce commodity in rural
Peru since former president Alberto Fujimori shut down the Agrarian
Bank in 1991.
Partly because of the activities of Cepicafé and organisations
like it elsewhere, coffee exports have increased in recent years,
turning coffee into Peru's single most important export commodity.
However, most Peruvians continue to sell through a chain of
intermediaries which means that they receive a reduced cut on an
all-time low price. In San Martín, for example, in the jungle
fringe to the south-east of Piura, producers currently receive from
local middlemen about 80 soles (22.85 dollars) for each quintal of
coffee, with exporters taking most of the difference between that
and the New York price.
For many coffee growers in San Martín, the answer to their
economic predicament is to turn to coca. The increase in coffee
production in San Martín had been part of a drive by USAID and
others to substitute coca with other crops, taking advantage of the
fact that in the mid 1990s the price of coca was low and the
international price for coffee was high. Since the late 1990s,
however, the trends have been the reverse: coffee prices have
collapsed and coca prices have recovered. Hectare for hectare, a
farmer can now make ten times more cash from growing coca than
coffee. Many farmers are now wary that coca production brings with
it other problems - violence, prostitution, the threat of
eradication, to name but a few - but the price differential is such
as to override such considerations.
So, it is perhaps worth remembering that when you next visit your
local supermarket, the little extra you pay to buy Fair Trade
Peruvian not only gives you great quality coffee. It keeps farmers
like Joel Correa in business and does something to reduce the
incentives to grow crops that produce drugs.
The author has recently returned from visiting coffee growers in
Piura and San Martín as a consultant for Oxfam.
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