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A Fight For The Truly Ideal Price Of Coffee

The International Coffee Council of the International Coffee Organization (ICO) will meet in Nairobi, Kenya, from March 25 to 29, at a moment of serious crisis in all coffee-producing regions due to the exploitative prices paid by coffee-importing nations.

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By: Fernando Morales-de la Cruz, Founder of Café For Change

Opinions expressed by Forbes Africa contributors are their own.

The International Coffee Council of the International Coffee Organization (ICO) will meet in Nairobi, Kenya, from March 25 to 29, at a moment of serious crisis in all coffee-producing regions due to the exploitative prices paid by coffee-importing nations.

Unfortunately, at the ICO, the coffee importing members do not include the United States and Canada and, usually, the European Union, importer of 41% of all coffee in the world, is represented at ICO meetings by European Commission officials with no influence on trade issues.

Switzerland, a country that is home to 70% of all coffee trading and even chairs the ICO, is also represented at the ICO by public officials with little or no authority on major trade issues. The ICO and its meeting in Nairobi are therefore of little or no use for solving the coffee crisis.

The increasingly profitable global coffee industry is controlled by a smaller number of more powerful multinationals. A concentration of these companies, in Switzerland, that are trading green coffee,  have put 25 million coffee producers and more than 125 million people living in coffee communities in a deep economic and humanitarian crisis, and in a situation of defenselessness.

The drastic fall in the price of coffee, which is not a new issue, has also had a devastating impact on the economies of the coffee-growing countries. Not only coffee growers and workers depend on coffee production. Coffee growing, like many other rural activities, has a huge economic impact on national economies and, even, in the capitals of those nations.

Coffee multinationals now pay less than one dollar per pound of coffee, a price that is 74% less than that agreed in the International Coffee Agreement of 1983. Recently, the price of coffee fell to $0.93 per lb. This amounts to only $0.36 at 1983 prices, according to the Consumer Price Index (CPI) of the United States DOL. The coffee price in 1983, agreed by the importing countries (Europe, Switzerland, United States, Canada, Japan, etc.), was $1.20 to $1.40 per lb because it was estimated that this amount could, reasonably, cover production costs in the coffee countries.

The “Ideal Price” of Coffee
The solution to the crisis in the price of coffee has been further complicated by the position taken by the National Federation of Coffee Growers of Columbia, FNC, representing the third largest coffee producer in the world, to try to set and promote internationally an “ideal price” of only $1.40 to $1.50 per lb, even below the false and unjust “fair price” of $1.40 + $0.20 premium, defended by “fairtrade”.

The “ideal price” proposed by the FNC, $1.50 per lb, is less than 42% of the price of the 1983 International Coffee Agreement. That price is “ideal” for multinationals but it is not ideal for coffee-growers or rural workers in any country in the coffee belt.

It is absolutely unfair that farmers should receive 58% less in 2019 than what they were paid by multinationals in 1983, more than 35 years ago. The production costs of farmers have increased substantially since 1983 but, on the other hand, they have also increased by tens of billions of dollars per year, in coffee-importing countries, the profits, the added value and the taxes generated for the coffee crop to be sold to the final consumer.

The multinationals estimate internally the FOB value of coffee at between $4 and $5.50 per lb., an estimate that makes a lot of sense when calculating that the price of $1.40 of the ICA of 1983, adjusted for inflation and using the CPI of the US Department of Labor, would today be $3.61 lb. After adding taxes in origin, the true cost of land, social security, pensions and education to the price of coffee of 1983, the current price should be between $4 and $5.50 per pound, as the multinationals estimate internally.

Obviously, the multinationals work with development agencies on false sustainability initiatives, and NGOs that claim to fight against poverty, even though they perpetuate it, “studying” and promoting production costs that only suit multinationals and condemn farmers and workers, and their children, to extreme poverty.

“Production costs” that also guarantee underdevelopment in rural communities so that coffee continues to be available, together with many other agricultural products, at a very low price for the developed nations.

One of the greatest challenges for coffee-growers is that most of them are poor and have no way of defending themselves against greed and the influence of multinationals in their own cooperatives and organizations, nor in their national governments and institutions.

Farmers operate locally, regionally and, in very few cases, at the national level, while on the other hand, multinationals, by their nature, operate and have economic, political and communication influence at a global  level.

It is much easier for a multinational to influence the national agricultural policy of any country, or all of them simultaneously, than for the majority of coffee farmers together. It is obvious that neither national coffee organizations nor governments have known how to, or have wanted to defend producers for decades and this is why we have reached the unacceptable reality that multinationals now buy coffee 74% cheaper than 36 years ago and farmers receive less than two cents for every cup of coffee served in developed nations.

This cannot go on like this. It is essential to create and implement a transparent shared value system that compensates producers and workers, and also rural communities, with at least $0.10 per cup.

The true ideal price of coffee, cocoa, tea or any other product is one that allows all farmers and workers, and all their children, to aspire to be middle class, because they are the basis of an industry that generates tens of billions of US dollars in profits annually.

To all the friends of the National Federation of Coffee Growers, to the 25 million producers from all over the world, to all the organizations of coffee-growers and to the presidents and officials of the governments of coffee-producing countries, I invite you all to fight together for a truly ideal price that allows everyone from the coffee belt, and all their children and dependents, to live with dignity by growing coffee.

Neocolonialism and the exploitation of farmers, workers and millions of defenseless children and the fraudulent “fairtrade” and false certifications cannot be part of the “coffee landscape” of each chocolate bar or any other industry that presumes to operate within of the law, respecting human rights and the rights of children.

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Opinion

Enabling Healing For Rape Survivors

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On this day in 2008, the United Nations Security Council adopted resolution 1820 declaring that rape and other forms of sexual violence could constitute “a war crime, a crime against humanity, or a constitutive act with respect to Genocide”. For countries such as Rwanda, which have experienced conflict and its devastating consequences, this was a major step forward.

The 1994 Genocide against the Tutsi saw over 1,000,000 men, women and children slaughtered in a 100 days. Of those who survived, many endured torture and public humiliation, often in the form of rape and sexual assault.

Between 250,000 and 500,000 women were systematically raped, with the additional intent to infect them with HIV. The result was, approximately 67 percent diagnosed as HIV+, and an estimated 20,000 children born of these mass rapes.

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Twenty-five years later Rwandans have worked hard to pick up the pieces, and continue efforts to build a country its citizens can be proud of. A healthy foundation is now in place, upon which future generations will stand, to shape an increasingly secure, peaceful and prosperous nation. Slowly but surely, Rwanda is healing.  

For survivors of rape, who in many ways carry a double burden, the journey of healing is more complex, filled with pain that most struggle to keep buried and forgotten.

Beyond the physical damage they suffered, these women and girls – and in some cases, men and boys – continue to suffer from severe mental wounds that stripped them of their dignity, leaving them feeling like lesser human beings.

For true healing to occur, we must create and promote a conducive environment where survivors can live dignified lives, unbound by crippling thoughts and the helplessness brought about by their ordeals.

Efforts must be pooled from the highest levels of leadership to the grassroots, to establish safe spaces that allow each victim and survivor of rape to heal, reconnect and reintegrate with the right support and at their own pace.

Even more so, as survivors have to live next to perpetrators, as many of them remained in their original communities; while the most notorious, will soon be returning to their homes, after serving their sentence.

In my experience working with survivors of rape in Rwanda, I have seen first-hand the miracles that can occur when survivors’ individual healing journeys are not brushed away, forced or ridiculed, but simply enabled.

One particular story stands out in my mind, is that of Suzanne, a woman I met through my work with ABASA, an association of genocide and rape survivors.

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During the Genocide against the Tutsi, Suzanne, who was 58 years of age, was raped for several days by militia, some of whom were her neighbours. Suzanne suffered severe injuries, both physical and mental. When I first met her, she had no control of her bodily functions, let alone her life.  She had been in and out of hospitals, with no lasting solution to her medical problems.

My organisation, Imbuto Foundation, supports the women of ABASA by facilitating their access to HIV treatment and providing psychosocial and financial support. We ensured that Suzanne received quality treatment and surgery at a reputable hospital, and stayed close to her throughout her recovery. As result, she is now a strong and healthy citizen, whose experience of the Genocide is no longer a physical mark, left for all to see.

Every individual story like Suzanne’s, and that of thousands of Rwandan women raped publicly, and taken to what was known as ‘Maison des Femmes’ only to be abused by countless men, underline the vital importance of recognising rape in conflicts as a weapon of destruction.

More than that, it is a call to the international community to:

  • take bold steps by bringing to justice those who are still on the run;
  • mobilise solidarity, responsibility and resources to enable the healing and reintegration of rape victims.

For Rwanda, especially during this Kwibuka (Genocide Commemoration), a quarter of a century later, it is a call to acknowledge survivors of rape as true heroines and heroes of our history, and to strip rape of its cruel power.

For all of us, men and women, it is a call to become part of the solution.

READ MORE:

This is an opinion piece by First Lady of the Republic of Rwanda, Jeannette Kagame, looking at the importance of enabling healing for rape victims and survivors, in line with the anniversary (19 June 2019) of UN Security Council Resolution 1820, recognising rape as a war crime.

First Lady of the Republic of Rwanda, Jeannette Kagame. Picture: Supplied

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Why Now Is The Time To Invest In African E-commerce

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Although Africa is all too often viewed by investors and the public at large as being the “dark continent”, more often than not, they are letting prejudices and misconceptions cloud their judgment about some of the most exciting investment destinations available. In 2018 alone, six of the ten fastest growing economies in the world were in the African continent.

This prejudice is compounded by the natural tendency for investors to invest in what they know best and are most familiar with, which is often what is in their own country. Globalization has, however, made markets more interconnected, and distance is becoming less of the obstacle it once was.

The continent is blessed with strong demographics, considerable natural resources, and increasingly, a more stable political and investment environment for multinationals to operate within. Even traditional hindrances such as poor infrastructure can be viewed as a potential opportunity, particularly in the area of financial services and e-commerce.

READ MORE | Fewer Billionaires, Poorer Billionaires On African Continent In 2019

Jiji, is the largest classifieds business marketplace in Nigeria, it was started from scratch five years ago, by a group of seasoned e-commerce professionals. With a market of 200 million people, Nigeria provides enormous upside should a business take off. The horizontal classified business model (any online business using http) does, according to Goldman Sachs, offer one of the most attractive investment models in the world, along with search engines and social networks.

It’s not hard to see why it’s such an attractive model, when the “winner takes it all” model is applied, in certain markets, the number one online classifieds controls over 80% of market share. The size of earnings opportunity equals 6 b.p. of the national GDP with 60% of long-term EBITDA margin. It is also an asset-light business model that requires minimal investment in heavy machinery and ensures high cash flow conversion.

The potential upside to the classified business model is particularly evident in a market such as Nigeria that has a young population of just over 200 million people. Nigeria is a mobile-only country (where 90% of traffic is on mobile web and is rapidly shifting to apps) with high and growing Internet penetration. In Africa, classifieds provide the ideal platform for e-commerce, as it enables people to buy and sell both second-hand goods and new ones.

Over the course of the last five years, Jiji has become the largest classifieds marketplace in Nigeria. The platform has just over 6 million unique active monthly users and more than 50,000 professional sellers listing over one million items. In 2018, the Jiji app was rated number one by Android users in the Nigerian shopping category, it is currently the highest rated app in Nigerian e-commerce.

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Having cemented its leading position in Nigeria, the team have set their sights on expanding into new African markets, and recently decided to redirect OLX users in Nigeria to Jiji and to acquire OLX businesses in Kenya, Ghana, Uganda, and Tanzania. After the transaction is completed, Jiji will have a presence in five markets, with 300 million people.

In a couple of years, Jiji’s monthly audience is expected to cross the threshold of 10 million users which will make it one of the largest classifieds by traffic. Jiji’s ambition is to build the biggest Africa-based classifieds business, creating a new retail experience for Africa’s fastest-developing countries with a combined population of 300 million.

The deal will allow OLX users in these countries to benefit from Jiji’s market-leading products and services. OLX’s reach combined with Jiji’s own proprietary search and delivery algorithms, will give users a radically streamlined experience and ensure the experience of buying and selling goods more convenient and transparent than ever before.

Africa has in the past been viewed very negatively by potential investors and businesses in general, however, as technology breaks down barriers to accessing finance and supply chain infrastructure the potential opportunities have never been greater.

READ MORE | How Nigeria Can Attract And Keep The Right Kind Of Foreign Direct Investment

This combined with greater access to the internet and mobile phones provides imaginative entrepreneurs and businesses a chance to rethink traditional business models and create different systems that cater to the needs of this young, diverse and commercially underserved region.

The team at Jiji recognize the potential benefits and opportunities that this region has to offer, only time will tell if other foreign investors recognize the upside African economies have to offer.  

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Opinion

Over The Rainbow: 25 Years Of Freedom For South Africa

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South Africa survived colonialism followed by apartheid, and most recently, a new pandemic, HIV/AIDS. While we are living through the aftermath of the old order, the words often attributed to Italian philosopher, Antonio Gramsci, could not be truer: “The old is dying and the new struggles to be born. Now is the time of monsters.”

The dragons we need to slay are clear. We have unacceptably high levels of poverty, youth unemployment, child illiteracy and nutritional stunting. All of which are systematically undermining the next generation’s ability to enjoy freedom.

That said, these are but the more visible aspects of our life together. There are others – the more subtle, social dimensions.

In 2019, non-racialism – the bedrock of the new South Africa – struggles to find relevance in the public imagination in light of the disillusionment many experience in the new political dispensation. It remains devoid of substantial weight and consequence.

Its original purveyors did not theorize it or write about it extensively, making it all the more elusive. What we do know is that race is a social construct and that it has no biological grounding. While it does not exist in a scientific sense, race has profound political, social and economic implications. And it continues to be an undeniable fault-line within South Africa.

What is clear is that non-racialism does not mean not-seeing-race-ness. In this lesser sense, it mimics the American notion of a post-racial society. It is based on the myth that 1994 symbolized a tabula rasa – a blank page. But 25 years later, the past haunts us.

Mural depicting 1st election in new South Africa, 1994 opposite Parliament, Cape Town, Western Cape (Photo by Hoberman Collection/UIG via Getty Images)

In our public life, we often find ourselves in a rinse-and-repeat cycle in which an offensive action is followed by public uproar and reactive debates. In this polarizing space, the spotlight remains on rabid racists, leaving implicit and internalized anti-black racism unchecked – both of which affect most South Africans.

Political entrepreneurs – understanding the wounds we carry as a nation – capitalize on the moments of uproar by playing on these incidents. What happens in the context of the misuse of our racialized experiences is that well-meaning citizens opt to shun any references to race in order to maintain respectability. This tempts us to see race talk as unproductive rhetoric, and not as a useful language to name our experiences with one another in this country.

In our public life, talk about the past has similarly been weaponised. Our history is either denied or it is deployed to delegitimize, to silence, and to condone the inexcusable. But it is exactly in this moment that we need more robust and critical engagement with our histories and their effects in the present – not less.

When we actually grapple with the historical records, the findings are chequered. History refuses to simply serve as a pass or a trump card. It is far too unruly and intricate to merely be functional. History demands to be reckoned with as a way of understanding the processes that led to the present. A more accurate way of understanding it is as an unfinished story. It has no end and it implicates us all.

A way we can begin to participate in the unfolding of our history is to infuse non-racialism with substance. We need a larger project that rigorously surfaces our experiences at the coalface of the color line. Scholars in the social sciences and the humanities as well as fiction writers have no doubt begun this theorising labor, and their work has to make its way into the mainstream. The process of naming the thousands of experiences we have with each other can begin to inform our imagination about what it means to simultaneously be inclusive, rooted in Africa and released from Europe’s orbit.

The project of naming our experiences for ourselves is an act of power. In fact, the true might of colonialism and apartheid lay not in their arsenal but in their ability to name us, define our borders, to codify our laws, and thus, frame our self-imagination.

In this moment, as South Africa reaches the quarter of a century mark, it is imperative that we take a fresh look at the past. Not merely as a story of victory, but as an incomplete struggle. At 25, all South Africans need to join the struggle, knowing that aluta continua and that the country we inherited in

1994 is ours to continually liberate.

We are part of the same cast of characters in history’s production of South Africa, and we are on the stage now.

Dr Sebabatso Manoeli is a historian and non-profit professional. She serves as an Innovation Director at the DG Murray Trust. Previously, she was a History Lecturer at the University of Oxford, and at Stanford University’s Montag Center for Overseas Studies. She consulted for the African Union Commission’s Department of Political Affairs and the Centre for the Study of Violence and Reconciliation on transitional justice, as well as the African Peer Review Mechanism.

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