Coffee Crisis-Greed & Globalization-Drives Millions into Utter Poverty

Articles on this page:
~Shadow of Globalization
~Struggling Kenyan coffee growers wonder where all the money goes
~Hard Times for Coffee Farmers
~Low coffee prices spark job losses in El Salvador
~Exodus of rural coffee workers alarms Nicaragua

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Ariel Dorfman on Fair Trade

"Coffee is supposed to wake you up, but what of those who grow the ebullient brew for you -- those who halfway across the world do not even get a living wage for their efforts? So each time you drink your coffee, you may not be aware that the hands that have picked the beans are torn and tired and exploited. In fact, at times these hands try to cross deserts and borders and end up dying hopelessly. While we continue to sip our java. Fortunately, there's a way out of this nightmare: Fair Trade coffee certifies that the coffee you're drinking has been grown and exported without destroying the human beings that work to get you your jolt or joy. I urge anyone with the slightest sliver or hint of a social conscience or even an intimation of morality to demand that Fair Trade coffee be offered as an alternative to the coffee that means awakening for a few and suffering for so many."

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The Boston Globe

THE SHADOW OF GLOBALIZATION: The coffee connection

Thousands of miles from Boston's breakfast tables and fast-food restaurants, at the other end of a global trade network, Guatemala's farmers are barely scraping by

By Elizabeth Neuffer, Globe Staff

July 29, 2001

EL PAJAL, GUATEMALA - Behind every cup of coffee Americans drink, there is a farmer like Santiago de la Rosa laboring to produce it.

Daybreak finds him already sweat-slick and bone-weary from wielding a machete against weeds around his coffee shrubs. By 11 a.m., he chows down beans and tortillas, the same as every meal. At nightfall, he and his family crowd into two rooms with no electricity, running water, or toilet and just three wooden chairs and rickety iron beds.

His coffee beans, along with those of thousands of other farmers from around the world, make their way into iced lattes sipped at Cambridge coffee bars and the steaming cups of ''regular'' coffee gulped by harried workers at home or at fast-food restaurants throughout Boston and other American cities.

Americans will pay $2 or more for a premium cup of coffee. But de la Rosa, trapped like all small farmers at the losing end of a long chain of transactions between his coffee plants and the coffee cup, sees little of it. He's lucky to live on $2 a day.

''The problem is that coffee sells at high price there,'' said the sinewy, 65-year-old farmer, waving a hand towards the United States. ''But here we suffer.''

Poverty in the Third World is a story as old as colonial plantations and clipper ships, with generations of laborers having earned pennies to sate appetites in the First World. But at the dawn of the 21st century, a simmering protest movement has been drawing attention to the inequities in international trade, which critics say provides cheap goods for wealthy consumers but little improvement in the lives of those who produce them.

A month spent tracing the route between Boston-area coffee drinkers and the farmers who grow their coffee reveals why protesters like those who disrupted the Group of Eight economic summit in Genoa have picked coffee as a target. Since 1995, labor and consumer groups have been calling on coffee companies - particularly the Seattle-based Starbucks chain - to guarantee better wages and working conditions for farmers abroad.

Coffee, the second largest world commodity traded after oil, with worldwide sales of $55 billion, is dominated by a handful of multinational corporations that acquire beans from small producers in nearly 50 countries, all in the developing world. Most coffee companies deal only with an elite group of established brokers, even as some farmers have been trying to organize into collectives to defeat the prevailing system.

The industry is dominated by four multinational companies. Procter and

Gamble Co., Philip Morris Companies Inc., the Sara Lee Corp., and Nestle

account for 60 percent of US retail sales and 40 percent of worldwide sales. Likewise, just six multinational export firms control 40 percent of the world's coffee market.

The Randolph, Mass.-based Dunkin' Donuts, owned by Allied Domecq PLC, the world's second largest wine and spirits group, has a far smaller market share. But with 3,800 franchises nationwide - 600 in the Boston area - Dunkin' Donuts sells the most cups of coffee in America, two million a day.

For every pound of coffee sold in the United States - which can vary from $2.69 for a 13-ounce can of Folgers to $8.49 for a one-pound bag of Starbucks beans - farmers get less than 35 cents and coffee pickers less than 14 cents, according to industry statistics.

The disparity grows for cups of coffee sold over the counter. De la Rosa's entire crop earned him $8,496 before costs last year. By the time the crop is turned into cups of coffee in the United States, its worth is about $750,000, based on industry calculations.

The reason lies in a complex system in which coffee beans can pass through as many as 15 hands between shrub and cup, with price increases along the way. In between the farmer and the exporter are multiple middlemen who mark up prices and pad profits. If farmers object, the middlemen simply turn elsewhere. If coffee is too expensive in one country, buyers simply turn to another.

This year, Vietnam has flooded the market with cheap, low-quality beans, driving prices to an eight-year low. From Guatemala to Tanzania, Mexico to Kenya, farmers who produce quality beans are losing money on their harvests as a result.

In 1999, high-quality or arabica coffee sold in New York for $1.02 a pound; in June, it averaged 64 cents.

Sinking prices have been a ''catastrophe'' in Guatemala, says Manfredo Topke Delgado, president of Guatemala's National Coffee Association, which represents 61,500 coffee farmers. Farmers are offering beans rather than cash to pickers. Fruit from February's harvest rots on bushes. Farms lie choked with weeds or abandoned.

Farther north, the price collapse has also wreaked havoc. Among the 300,000 coffee laborers estimated to have fled the Mexican countryside this spring were 14 men found dead of exposure in the Arizona desert in May. ''People are not leaving with hopes of achieving the American dream,'' said Mario Hernandez Cordoba, director of the Coffee Council of Veracruz, Mexico. ''They are going to get money to survive.''

Industry spokesmen say this is the free market at work.

''It's an excess of supply and not enough demand,'' said Celsius Lodder of the London-based International Coffee Organization. Even when prices are good, he added, ''the farmer survives. He will not become rich, but he will not starve. His level of poverty will be acceptable.''

Critics say it doesn't have to be that way. Groups like Boston-based Oxfam are calling on coffee corporations to adopt an alternative system that guarantees cooperatives of small farmers a set price - currently $1.26 a pound - regardless of what coffee sells for at the world market.

Such coffee carries the ''Fair Trade Certified'' label and sells under a variety of brand names. Consumers end up paying about the same per pound for Fair Trade coffee as for organic or gourmet beans.

So far, Fair Trade coffee has been available only on a limited basis. Starbucks, under pressure from consumers and antiglobalization protests, offers it for purchase but not in its blends. Dunkin' Donuts does neither.

''Up to this point, fair trade has not been tied to quality,'' said Julie W. Barrett, director of Dunkin' Donuts's coffee and beverages operation. ''They have a minimum price for everything. That doesn't mean, however, we won't look at them in the future.''

The company, which said it is committed to ''equitable situations'' for all in the coffee business, is considering buying some coffee directly from farmers to add to its blend, although not necessarily Fair Trade coffee, Barrett said.

Here in Guatemala, the Fair Trade movement has not reached most of the country's growers, including de la Rosa, who farms about 30 miles south of

Guatemala City.

The slump in coffee prices, coming after the ravages of the country's 36-year civil war, has harshened the lives of the nearly 6 million Guatemalans - half the population - living under the United Nations poverty line of $2 a day. In the nearby city of Cuilapas, local officials report nearly a robbery per day. Among the thieves' booty: baby bottles, powdered milk, and pans of black beans.

ON A HUMID MORNING last week at the Dunkin' Donuts across from the Prudential Center, consumers professed little knowledge of their beverage's origin.

''I just drink it. I need it in the morning,'' said Jennifer Lemire, a financial coordinator.

''I come here every morning, and I actually don't think about who grows the coffee at all,'' said Jim Jenney, an employee at Massachusetts Financial Services.

An effort by the Globe to follow a cup of Dunkin' Donuts coffee back to the Guatemalan farmer who produced it proved to be anything but straightforward. The coffee trade remains as secretive as it was a century ago, when Guatemalan coffee became an American favorite after winning first prize at the 1915 San Francisco Exhibition. Now 48 percent of Guatemala's coffee is exported to the United States.

Once protected by quotas, coffee is now traded openly, with prices that swing wildly, driven by speculators and weather reports alike. For that reason, and those of competition, Dunkin' Donuts, like other big players in the industry, will not reveal what makes up its blend, which roasters it uses, or what countries it imports from.

In fact, few companies actually know which farmers produce the coffee they buy.

Long before coffee reaches an exporter, it is under the control of middlemen known as ''coyotes,'' often loan sharks who, with knowledge of the daily world coffee price, seize the chance to price-gouge along the way. Coyotes are officially tolerated, although there have been industry efforts to halt their influence.

Interviews with industry sources and local coyotes, all of whom requested confidentiality, pointed to Guatemala's Santa Rosa region - where the de la Rosas live - as one source for Dunkin' Donuts blend. There, on a fertile volcanic plateau 4,000 feet above sea level, amid towering stands of laurel, oak, and cedar, farmers grow a variety of hard-bean coffee that is not too acidic.

Nearly all of the coffee here is sold to Export Cafe S.A., Guatemala's largest exporter and part of the ECOM Coffee Group, the world's third-largest coffee trader and part of privately held Esteve S.A. The beans are then shipped from the Caribbean town of Puerto Santo Tomas.

From there, coffee goes to the New York-based Atlantic (USA) Inc., also part of ECOM, before being purchased by a roaster and then sold to Dunkin' Donuts. Transportation, processing, and markups for quality add to cost along the way.

De la Rosa has never heard of Dunkin' Donuts. He has never visited one of its six branches in Guatemala. He could not imagine spending 50 cents - one quarter of what he lives on each day - for a cup of coffee.

What he does know is that his coffee goes to Export Cafe. A man with a shrewd business instinct, de la Rosa once tried his hand at being a coyote. He returned to farming, however, having found the work too dangerous.

He had no choice but to return. Coffee is all de la Rosa and his family have ever known.

''SANTIAGO!'' YELLED de la Rosa's father, Antonio, rousting his son from the fields. Having hiked for a half-hour through the airless, dense forest, the 85-year-old apologized for not clambering up the steep slope his son was tilling. ''At my age....'' He smiled.

His apologies ended there. He is proud of the land. There are two kinds of coffee workers here: Those who own their farms, and those who work on coffee plantations. Antonio was born on a plantation, as was Santiago, who was put to work when he was 10. Neither would ever return.

Hidden behind high walls and often protected by armed guards, the country's 3,400 plantations are dominated by the country's landed class, many descended from Spanish and German settlers who once ruled the industry. Allied with the country's political and economic elite, plantation owners dominate Guatemala's vital coffee exports. Depending on its market price, coffee accounts for 25 to 35 percent of foreign exchange earnings here.

Theirs is world removed from those they employ. Often educated in the United States, they rub shoulders in fashionable restaurants and are easily spotted on the highways cruising in their Mercedes.

On plantations, workers are typically housed in barracks. By law the owner must provide education, access to health care, electricity, and water, although workers complain that is not always the case. During the harvest, plantations also hire migrant workers, usually indigenous Mayan Indians from the poorer north.

The plantations' reputations are as varied as coffee flavors, particularly when it comes to labor conditions. The first independent survey done last year - without the industry's aid - found that in three of the country's coffee regions, nearly half the workers were paid less than the minimum daily wage of $2.48.

Deep in the country's northwest hills, workers at the Nueva Florencia plantation have been fighting for minimum wage for the past five years. They were fired when they formed a union to demand their wages. Blacklisted on neighboring farms, they had no choice but to remain on the plantation in the one room each family was allotted. The plantation owner, who workers say will not negotiate, has since turned off their electricity, denied them water, prohibited their children from attending the plantation's school, and stopped access to health care.

''Our rights have been violated, not just our right to work, but our family's rights,'' said Arturo Mendez, 46, as rain dripped through the holes in his corrugated iron roof. ''Our kids get sick, because we can't feed them the right food.''

Escaping the plantations' incessant demands for more hours of work per day and more workers per family - even if those workers happen to be children - is why the de la Rosa family struggled to buy a few acres of land instead. Of the 800,000 estimated child laborers in Guatemala, some 320,000 work in coffee, the majority on plantations, said Erwin Roberto Jordan Ramirez, a consultant to the International Labor Organization here.

Land ownership, however, has not guaranteed the de la Rosas wealth. Only in good years - like 1994, when coffee prices soared due to a frost in Brazil - has Santiago broken free from the cycle of debt and poverty typical of small farmers.

Unable to read or write, he swiftly calculates his earnings in his head. Last year, Santiago earned enough for each of the five family members he supports - his wife, granddaughter, grandson, daughter, and an elderly relative - to live on just over $2 a day.

This year, he will make no profit at all. It currently costs most Guatemalan coffee farmers about $90 to produce a hundred pounds of coffee. One hundred pounds of coffee will sell for about $45.

''I've been working hard for 40 years,'' said Santiago, ''and now I owe money.''

CLAP-CLAP-CLAP: One recent morning, granddaughter Maria Elizet, 13, was shaping corn flour by hand into tortilla rounds to cook over a smoky wood fire. Her brother, 12-year-old Orlin, was lugging coffee saplings in a basket on his back to the fields to be planted. There is no money to hire extra help for the farm, much less to buy meat to eat.

One reason de la Rosa is in debt is because it takes five years for coffee bushes to produce their fruit. Another is because as a small farmer he cannot export his coffee directly. He does not have the facilities to transform coffee, plucked from the shrub in cherry form, into a more storeable bean. He produces too small a volume of coffee to sell to major exporters, who buy bulk lots of hundreds of 100-pound bags, not just a few at a time.

So he is resigned to what is a typically corrupt transaction: He sells to a coyote, who underweighs his bag and undercharges him. The coyote sells the coffee to a larger coyote, who resells it to an export house.

Facing this year's lower prices, Santiago's debt will doom him to further poverty. With no cash, he cannot buy fertilizer. With no fertilizer there will be fewer coffee cherries. With less coffee to sell, he will fall further into debt. Facing high interest rates, his debts will grow.

In May, farmers like Santiago joined forces and marched on Guatemala City demanding that Guatemala's Congress take action to create a fund to give them access to cheaper credit. The government of President Alfonso Portillo has said it will ask international lending institutions for $150 million to allow coffee growers to refinance credit incurred to loan sharks or banks.

At Guatemala's National Coffee Association, there is a palpable sense of crisis. Even large-scale plantation owners grasp at slender hopes, such as recent Internet auctions; in May, one plantation sold coffee for a record $11 a pound.

Otherwise, there is talk of burning unsold low-grade coffee for fuel or selling it as compost. For now, the crisis in prices, says the association's president, Topke Delgado, must take precedence over the industry's structural problems.

''As we see it, we have to compete. The name of the game is be efficient or you're out,'' he said. ''When they ask, are you doing a terrible job vis a vis laborers, there's not much else that people can do.''

That is cold comfort for Santiago or, for that matter, his nephew, Augusto de Jesus Garcián. In coffee's hierarchy, de Jesus Garcia is at rock bottom.

He is a coffee picker, hired by the family to bring in the coffee in the harvest months from December through February. This year the family cannot afford him.

He is not sure how he and his family, living in a dirt-floored, one-room wooden shack, will survive. There are quarter-inch gaps between the wooden slats that make up his home. Augusto points to the temporary repairs he has made for this rainy season. They are an exercise in futility that demonstrates the reach of the global forces to which he is subjected. Unable to buy wood, Augusto has tacked up pieces of cardboard boxes. The cardboard is stamped ''Kellogg's Corn Flakes.''

Globe correspondent Marion Lloyd contributed to this report from Mexico. Globe correspondent Leila Fadel contributed from Boston.

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Struggling Kenyan coffee growers wonder where all the money goes

By Chris Tomlinson, Associated Press. AP correspondent Robin McDowell from New York contributed to this report

July 29, 2001

NYERI, Kenya -- Twice a year, farmers on the slopes of Mt. Kenya send some of the world's best coffee to market. Americans pay $12.99 a pound for Kenyan coffee, but the farmer takes home only a penny a pound.

Despite the popularity of coffee, and consistently strong profits for U.S. corporations like Starbucks, growers around the world are going broke, nowhere more so than in Kenya.

The reasons range from local corruption that has robbed farmers of precious pennies to ill-advised World Bank projects that have glutted the world market, driving down prices.

The story is told in the journey of the java bean from the Kenyan highlands to specialty coffee shops in the West, its price marked up step by step until that tall cappuccino costs $3--more than most farmers here make from coffee in a month.

Kenya is one of the oldest coffee producers, tracing the first plants back to 1893, yet represents only 2 percent of the world market. Coffee was Kenya's leading export crop before 1989, but except for some boom years in the mid-1990s, the industry has been sinking--despite its reputation and the fact that its coffee garners among the highest prices on the international market.

Because of its "bright acidity"--the industry term for tangy taste--"Kenyan coffee has always been the model of consistently high-quality coffee," said Dan Cox, president of Coffee Enterprises, an independent testing firm in the

United States.

"It's the difference between buying a Chevy and buying a BMW."

Although coffee is the world's most-traded commodity after petroleum, farmers in Kenya's coffee-growing region of Nyeri, 65 miles north of Nairobi, have been losing money on coffee for the last three years.

They can no longer afford to give their plants the care required for top-quality beans, instead choosing to plant red beans and corn between the 8-foot-high coffee bushes. Many have abandoned coffee entirely.

"Coffee is very hard work, pruning the bushes, spraying them, and you have to hire people to help you harvest," said Joseph Wahome, 27, who is planting beans and potatoes among his 120 coffee bushes. "It is not worth it at these prices."

The third-generation coffee farmer used to take pride in growing 1,500 pounds of top quality beans a year, but the corruption he sees around him has dampened his spirits.

Wahome is part of a cooperative of thousands of members and a dozen processing plants, which supplies farmers with fertilizers and anti-fungal sprays.

Wahome takes his coffee berries to a nearby factory, where the fruit is stripped away and the seeds, or beans, are fermented. After being dried in the sun, the raw beans are shipped to millers for final processing.

The cooperative takes the pale green beans to an auction run by the Coffee Board of Kenya. A sample of each lot is graded, roasted and tasted by board officials and the exporters who bid every Tuesday in downtown Nairobi.

When a lot number appears on the computerized board above the auctioneer, more than 80 exporters push buttons to make their bids. The product of six months of a farmer's life is sold in less than 45 seconds.

In recent weeks, Kenyan AA coffee has fetched an average $1.50 a pound at auction. Not long ago, exporters paid up to $10.

But after the board and the cooperative deduct taxes and fees, farmers get a penny a pound. The growers say the cooperative officials, who did not want to be interviewed, remain wealthy.

"Every year they have a new car, and we go two years without being paid," said Wahome.

Nyeri farmers say that last year some of them went to a meeting of their Riko Cooperative to demand better accounting and were met by hired thugs backed up by police. They say the thugs then beat up the organizers, set their homes on fire or uprooted their coffee plants. No arrests were reported, and the farmers haven't tried to organize since.

Phone calls to Riko's offices, as well as a visit there, failed to produce any official willing to be interviewed. But the spokesman for the Coffee Board of Kenya, charged with running Kenyan coffee's central auction system, was less reticent.

"Corruption is the biggest problem," John Checkar Irungu said. The board deducts 20 percent of the auction price for taxes and milling charges, and the farmer ends up with 10 percent, he said.

"The problem is not with the farmer, not with the Coffee Board, but with the bad management at the cooperative," Irungu said in an interview.

The Coffee Board, while having no direct control over the cooperatives, is looking for ways to pay farmers more directly to avoid "diversions" of payments, he said. But the proposed changes have met with stiff political resistance, he added

U.S. policy is in part to blame for the crisis in coffee-producing nations like Kenya, said John Talbot, a sociology professor and coffee expert at

Colby College in Portland, Maine.

Trade liberalization efforts by the Reagan administration forced the collapse in 1989 of the International Coffee Agreement, a pact between coffee producing and consuming nations that for decades kept prices relatively high or at least stable.

At the same time, the World Bank provided Vietnam with loans to plant huge amounts of low-quality coffee. The Southeast Asian nation went from a marginal player to surpass Colombia this past year as the world's second-largest producer, behind Brazil.

Those two nations have flooded the market with robusta beans, used in inexpensive blends and instant coffees. When the price of low-quality beans fell, so did that of arabica beans, used in higher-quality blends.

The managing director of C. Dorman Ltd., the largest exporter of Kenyan AA coffee to the United States, said fierce competition among exporters and low prices have hurt. The exporter collects a 2 percent markup from the auction price.

"Of the major firms, 10 out of 20 have gone bankrupt or got out of the coffee business," said Jeremy Block, who sells his coffee through a New Jersey agent.

After the exporter buys the beans, they are loaded onto ships in the Kenyan port of Mombasa for a monthlong journey to U.S. ports.

Roasters pay $1.65 a pound, which includes agent fees and transportation and warehouse costs. Though his clients include Starbucks and Nestle, Block's agent said he made only 2 to 3 cents a pound.

The roasters spend a dollar a pound to roast the beans, which lose 20 percent of their weight in the process. Adding in warehousing, packaging and insurance costs, the roaster sells the coffee to retailers for $4 to $6 a pound. Thanks to the specialty coffee craze, retailers double or triple that price.

"The farmers have not generally seen an increase in income from the gourmet coffee boom," said Deborah James of Global Exchange, a San Francisco-based advocacy group. It campaigns to get more money for farmers in poor nations, though not in Kenya.

Seattle-based Starbucks, which reported a 38 percent increase in second-quarter profits, says real estate, advertising and labor costs add to coffee costs. It offers coffee certified by Global Exchange as meeting fair trading standards and gives $200,000 a year to help farmers in Africa and other poor regions.

Jerry Baldwin, former chairman of Peet's Coffee and Tea, based in Emeryville, Calif., says Kenyan farmers are underpaid because of a flawed system. Writing a bigger check for green beans at the auction would help only if that money made its way to the farmers, he said.

"All I know is that we're paying good money for good coffee, and the farmers are abandoning their farms. It makes no sense," Baldwin said.

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Hard Times for Coffee Farmers

By Mark Stevenson  Friday, July 27, 2001 The Associated Press

ATZALAN, Mexico -- Latin America is littered with monuments to the boom-bust history of tropical cash crops: the moldering palaces of rope-fiber growers in the Yucatan, Central America's abandoned banana plantations, the crumbling mansions of sugar barons in Cuba.

But no bust has been crueler than the current collapse of coffee prices. Few have sparked such massive displacement of small-scale farmers and crops, or posed such a threat to the environment.

The dream crop for Latin America - labor-intensive, increasingly jungle-friendly and ideal for small family plots - may now be disappearing as a way of life for hundreds of thousands of families.

"Coffee is just being allowed to fall off the bushes. It's not even worth picking," said Ignacio Rodriguez Falcon, a 59-year-old coffee farmer in Atzalan, in the lush hills of the Gulf coast state of Veracruz.

Three of Rodriguez Falcon's sons have migrated to Houston, Texas because they couldn't make a living. Six neighbors died in the Arizona desert in May as they fled the coffee bust in search of jobs in the United States.

Some Latin American farmers get just 15 to 25 cents per pound for berries, half what they earned in 1999 - and most of that is eaten up by costs. The drop in world prices came just as trends like shade coffee, which allows jungle to stand over coffee bushes, were catching on.

In Nicaragua, hundreds of coffee workers - almost the entire population of three villages - began a 100-mile exodus in July to the city of Matagalpa, where they set up a shantytown in a park.

"We're in the hands of God, and dependent on the charity of good people," said Juana Morales, 36, who came with her three children.

Even Juan Valdez - the fictional straw-hatted Colombian coffee farmer who has appeared with his donkey in ads touting Colombian beans for the last 40 years - is in trouble.

The price drop has led Colombia's National Coffee Growers' Federation to cut back sharply on advertising, though it denies any plans to retire Valdez.

The crisis nearly halved Venezuela's coffee exports and sparked street protests by angry farmers. Plantations in Brazil and Colombia are getting out of lower-grade coffee and focusing on pricier beans, hurting poor nations like Kenya that specialize in high-quality coffee.

Everywhere in the region, governments are doing what little they can, with plans to buy up or destroy surpluses and handing out small aid payments.

But the crisis is likely to transform landscapes of tin-roofed homes tucked amid coffee bushes, banana trees and jungle. Farmers must cut down coffee bushes, and the lush environment they thrive in, to open up fields for planting corn or raising cattle.

"Many are already seeking permits to change their crops," said Gov. Pablo Salazar of the southern Mexico state of Chiapas, "but the environmental damage will be incalculable."

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Low coffee prices spark job losses in El Salvador

July 19, 2001

SAN SALVADOR, July 19 (Reuters) - Rock-bottom prices in the international coffee market have caused some 30,000 job losses in El Salvador, a top industry official said on Thursday.

Ricardo Espitia, head of the Salvadoran Coffee Council, told Reuters that many of the nation's 22,000 coffee growers had decided to abandon their plantations or not to harvest the next crop at all as a result of the coffee crisis.

"We are talking about around 30,000 jobs fewer" than the 130,000 permanent jobs that coffee production generates annually, Espitia said.

That does not include the 500,000 indirect jobs involved in production. In the 2000/01 harvest, 2.3 million 46 kg-bags were produced and for the 2001/02 the harvest is expected to yield as much as 2.5 million bags.

Exports in the 2000-01 harvest up to July 6 -- the season runs Oct. 1 through Sept. 30 -- have dropped 47 percent and revenue from the beans is down 66 percent for the year to date, according to official statistics.

Thanks to low prices, exports so far this season have dropped to 1.5 million 46-kg bags for a total of $205.5 million in revenue.

Espitia added that producers had only received $14 million of $50 million in government credits put aside for growers and that could cause further job losses.

The credits are used by growers to prepare their plantations and collect their harvests from Oct. 1, but depressed prices have caused many to abandon their plantations in search of alternative work. Some areas are threatened with famine.

Growers in the area of Berlin, in Usulutan province, east of San Salvador, told La Prensa Grafica daily that around 15,000 people could be on the verge of famine due to the shortage of work in the coffee plantations.

"We are in a real crisis. Some 60 percent of the plantations are abandoned. We can only commend ourselves to God," Juan Pineda, head of the Berlin coffee growers cooperative, told the newspaper.

Espitia said it was not economical for coffee growers to harvest the crop, given the low price of the bean.

"Everyone is looking for alternatives to coffee growing and ways to reduce the costs of harvesting," he said.

Espitia also criticized the World Bank's decision to promote coffee cultivation in Vietnam to help reduce poverty there, without foreseeing the impact this would have on growers elsewhere.

"The World Bank politicians provoked a surplus of production without foreseeing that the market was not going to be able to absorb this additional production," he said.

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Exodus of rural coffee workers alarms Nicaragua

By Ivan Castro

Reuters

July 16, 2001

MATAGALPA, Nicaragua -- On the road between Matagalpa and El Tuma-La Dalia, the most common sight has always been coffee plantations.

Now there's a new element: small groups of people walking through the rain toward uncertain futures. A rural exodus, provoked by a crisis in the coffee industry, now threatens to overwhelm urban centers in northwestern Nicaragua.Hundreds of unemployed coffee workers and their families live in provisional housing, and at least six children have died from hunger in recent weeks, according to local press reports.

In the eye of the storm is the town of Matagalpa, the self-styled ''capital of Nicaraguan (coffee) production,'' about 90 miles north of the capital city of Managua.

``We had work until December,'' said Francisco Rivera, one of the thousands of coffee workers who have emigrated to urban areas in search of work.

Rivera, 22, traveled about 25 miles to Matagalpa with his two young children and dozens of other farm workers. Most have found temporary lodging in open sheds and city parks, where dozens of children suffering from malnutrition and diarrhea sleep alongside their mothers on improvised beds of cardboard.

The rural exodus is stark proof of the crisis that now plagues Nicaragua's coffee industry. Low world prices, a lack of credit and poor weather have nearly brought the coffee industry to a standstill in this part of the country.

``We want to work so we can eat,'' Luisa Espinosa told Reuters.

Espinosa, 32, a veteran of harvesting and pruning work on Nicaraguan coffee ``fincas'' or plantations, joined the desperate diaspora to Matagalpa.

She and her seven offspring are part of a group of 260 people, almost half of them children, who now live in an open shed next to a Matagalpa park. Neighborhood and religious groups send them food whenever possible. The situation is much the same farther north in the city of El Tuma-La Dalia, about 114 miles north of Managua.

``The situation is alarming, like nothing before in this city's history,'' said Socorro Mendoza, vice mayor of El Tuma-La Dalia.

A small coffee grower herself, Mendoza said about 12,000 coffee workers have lost their jobs in her municipality alone, because finca owners are unable to pay for the maintenance of their coffee plantations.

``There's work, but there's no money,'' said Mendoza. Dozens of coffee growers are facing bankruptcy because of their indebtedness, she said. As a result, production in the area has slowed to a near standstill.

``People are emigrating to population centers, and what they do is come and get even poorer,'' said Mendoza, who called for government and international aid to reactivate coffee production in the region.

LARGEST COFFEE-GROWING AREA HIT HARDEST

Although the department of Matagalpa has suffered the worst during the current crisis, the neighboring department of Jinotega also has high rates of unemployment, hunger and delinquency, said Eduardo Rizo, a deputy in the National Assembly who also is a coffee producer.

Jinotega and Matagalpa, both in northern Nicaragua, lie in the heart of the country's coffee-growing region. The two departments have about 138,000 acres (56,000 hectares) of coffee under cultivation and produce about 60 percent of the national harvest.

In 2000, Nicaragua exported about $169 million worth of coffee, but the lack of bank credit has led to a work stoppage on most fincas. The country's more than 30,000 coffee producers are demanding refinancing of their debts, which total about $116 million.

Problems are even worse for the more than 29,000 small- and medium-sized growers who produce this poor Central American nation's major export crop.

NATIONAL PROBLEM REQUIRES ACTION

``We're talking about more than 5,000 people,'' who since January have arrived in this city, said the mayor of Matagalpa, Sadrach Zeledon.

He said support from nongovernmental organizations is needed to help confront the crisis.

Zeledon said several mayors in the departments of Matagalpa and Jinotega have agreed that a national emergency plan is required to provide coffee growers with financing.

Fredy Torres, one of Nicaragua's biggest coffee producers, told the local press that he initially thought the rural exodus had political roots, but then he met several of his former workers in Matagalpa who asked him for work.

``That proved to me that these people weren't put there by anybody, that it was a spontaneous event,'' said Torres. ``At some point (a similar exodus) is going to take place in the rest of Nicaragua's departments.''

Torres complained about the apathy of the financial system in dealing with the problem. If the authorities and private banks fail to make financing available to coffee producers, he said, there will be no way to avoid economic disaster.