Imagine you work in the car industry. You buy already manufactured cars and sell them to consumers. Since you’re a company that cares, you also donate 5% of your profits to a non-profit organization that helps make sure car manufacturers can eat and feed their families since they’re paid below-cost for each car they sell.
Does this sound ridiculous? It should. Yet let’s take a look at the coffee industry: it’s common practice for roasters and traders to donate part of their proceeds to non-profits or to “give back” to farmers to help them build schools and other desperately needed infrastructure.
We should be ashamed to work in an industry where our suppliers do not earn enough to guarantee a decent quality of life for themselves and their families. Yet this is a well-recognized problem within the coffee industry. A subset of producers has been in debt and impoverished for generations. These farmers have limited access to the market and the system prevents many of them from improving their situation. Across Latin America, chronic seasonal hunger is a problem, as is indebtedness.
The Coffee Tree’s Colonial Roots
Coffee originated in Africa before making its way to Asia and Latin America. How did it travel so far? Through colonization and the slave trade.
Large European-owned estates in Brazil and the Caribbean would use African slaves to farm immense amounts of coffee. In Central America, indigenous populations often worked the estates, having been forcefully evicted from their land and left with no choice but to labor for their oppressors.
Whether they were African slaves or subjugated indigenous populations, they lived hard lives: they were underfed, poorly treated, and disempowered. Many of them experienced violence or died simply due to the hardships of their work.
Slaves on a Brazilian coffee estate in 1885, three years before slavery was made illegal in the country.
Over the years, the European populations continued to amass more and more power while local people became more and more vulnerable to them.
This is an ugly truth. However, it’s one we need to acknowledge. The impact of colonialism still exists today and, until we recognize that, we can’t change things.
Colonial Structures Affecting The Coffee Industry Today
Let’s take a look at some of the coffee farms you will find in Latin America:
First, you have the big estates, which are typically owned by a wealthy family or a multinational trader. Particularly in Brazil, these estates have become extremely good at efficient farming. They are mechanized, they work with strains that are much more productive and efficient, and they now have an extremely low cost of production. They tend to have their own mill and often buy coffee from other parts of the community. In short, they are financially strong with a solid business model.
Then, you have wealthy farming families. Latin American countries tend to have their wealth concentrated in a small pocket of families. These families usually have their own farms, mills, and export companies.
You also have expat farmers from the United States. Often, their parents grew up in Latin America and so they have roots in the country. However, when they came back to buy land, they brought with them a host of advantages: strong market access, good financing, the ability to invest. As a result, they now have beautiful farms with quality coffees that they can sell for a premium.
And then you have the small, local farmers – the ones that, at Mayorga Organics, we partner with. They are marginalized, selling to the same multinational companies that they have partnered with for generations because they don’t have any other choice. These are the farmers experiencing seasonal hunger and struggling because the coffee “C Market” has dropped to 90 cents.
The big estates, the wealthy farming families, the expat farmers: they are all able to survive—and even thrive—through these difficult times. They are able to do this because of inherited wealth and inherited contacts. They can “ride out” the down times using the resources amassed over generations, as well as through the times when the market was high. The small farmers, however, have inherited an unequal power system that dates back to colonial days, and are still disadvantaged by a lack of market access.
The Impact This Has On Coffee Farmers
Market exclusion and reduced resources hinder small, local farmers at every stage. Let’s take a look at one example: financing. (This, in fact, is the whole reason I started my company. I wanted to help a family friend avoid the finance trap.)
Traditionally, a mill or an exporter offers a small, disempowered farmer a loan, knowing that they lack the capital and strong profit margins necessary to get financing from the bank. Part of the condition of offering that loan would be the right to buy all of the farmer’s coffee at less than the market value (in contrast to how, for example, a direct trade purchase would happen). The farmer, desperately in need of that loan for farm improvements, would say yes in order to get by another day.
However, that loan could come with astronomical interest rates. In my work across Latin America, I’ve encountered rates as high as 27%.
Perhaps that farmer needs that loan to buy fertilizer. Some mills will insist that the farmer buys the fertilizer through them – but when you look at the prices, they are up to five times the market rate.
So, the mills are profiting from the fertilizer sale, they are profiting from the interest payments, and they are profiting from buying coffee at below-market rates. Often, they are then able to sell this coffee at a good premium, thanks to its cup quality.
Few local farmers have the insight into the final green coffee prices to understand how inequitably they’re being treated. Partners of ours have told us, “This mill has helped us for generations. They helped our grandfather.” Yet when I asked what that help was, it turned out to be merely the high-interest loans and coffee purchases.
It is things like this that keep local farmers impoverished. In the meantime, wealthier farmers, mills, and exporters who benefit from the heritage of colonialism run profitable businesses. Many of these businesses were established 300 years ago, and many of them continue to reenact the same power imbalances today in 2019.
This is why it is important that we make sure we work with small, local farmers. Our policy at Mayorga is we only work with producers who live and work on their farm, or with cooperatives made up of those individuals. We get to know them and their needs. We pay a price that correlates with the quality of their product, and invest in programs that support their healthcare and their children’s education. We help them to diversify their income and then buy their alternative organic crops.
Coffee prices are currently at their lowest in thirteen years. There is more need than ever for non-profits to support producers. We cannot ignore the role of colonialism if we hope to make lasting, meaningful changes. As Maya Angelou famously said, “If you don’t know where you’ve come from, you don’t know where you’re going.” We need to ask ourselves: who really needs support? How can we provide appropriate support? It’s a systemic issue that requires comprehensive understanding if we stand a chance to make a material and sustained impact.
Feature photo: Depiction of the 1503 massacre of Queen Anacaona and her subjects in the Dominican Republic.