LET US PUT the sad story of the plight of coffee growers into perspective, just so that you know what you are looking at when Starbucks this week offers 'fair trade' coffee as its 'coffee of the week'.
The roots of this story lie in Vietnam, where government officials decided in the late 1980s that the way to make their economy grow and to generate foreign exchange at the same time was to become one of the world's biggest coffee producers.
They succeeded. Vietnam has become the world's second-largest producer after Brazil. As the first chart shows, coffee production in Vietnam rose 20-fold between 1989 and 2001. For contrast, along the bottom of the chart you can see the record of production in Indonesia, previously the Asian country with which you would associate coffee, hence the older colloquial term 'java' for coffee.
The second chart shows you what happens when governments get into a market for reasons of national policy and pay no regard to supply and demand balances. From a peak of more than US$3 in 1997, coffee prices fell to 40 cents a pound by late 2001 and coffee growers were reduced to poverty.
The Vietnamese government has now belatedly learned its lesson. Vietnam is to take 20 per cent or 100,000 hectares of its coffee plantations out of production. That production had begun to slump anyway last year and the result has already become apparent in the market. The price of coffee has risen back to about 60 cents a pound.
But you may have noticed throughout the period of slumping coffee prices that the price you paid for a cup of coffee has not come down much. Prices in the supermarket and at the coffee counter are controlled by four big roasters, Kraft, Nestle, Proctor & Gamble and Sara Lee. The roasters paid the growers less and the difference went to their shareholders.
This finally induced several socially active groups led by Oxfam International to launch campaigns urging the roasters to pay the growers enough to allow them a decent living and to urge consumers to buy coffee for which the growers had been paid more. Some of these initiatives have also emphasised organic growing of coffee.
