Idea Transcript
MAKE TRADE FAIR
CAFÉ DO BRAZ IL
BRAZILIAN COFFEE - THE BITTER TASTE OF CRISIS
INTRODUCTION
In April 2002, Oxfam International launched worldwide its Make Trade Fair campaign, which deals with the relations between trade and poverty. As part of this initiative, the "What's that in your coffee?" campaign is being launched in an attempt to reveal what lies behind the world coffee crisis and to identify those who are most negatively affected by commodities being deregulated.
In Brazil, Oxfam International linked up with the Integrated Workers' Union (CUT) and the National Confederation of Agricultural Workers (Contag), which were also working on this issue , to act together to address this real situation. The three institutions invited the Social Observatory to join in the effort to show the social side of the crisis in Brazil, and to coordinate a report that sought to give a voice to those who are least heard - men and women who suffer each and every day.
This document is divided into three parts. The report gives an overview of the crisis, the human labour involved in the productive chain, and the paths taken by coffee. The second part is geared towards presenting the proposals made by these partners, both national and international. The third part incorporates the positioning of the transnational groups - actors who increasingly restrict the choices and the independence of individuals. Our hope is that this contribution becomes an instrument that mobilises both society and the State in really implementing public policies that invert the harmful consequences of unfair trade, where those mainly affected are the sectors that are traditionally excluded. September 2002
CAFÉ DO BRAZ IL
BRAZILIAN COFFE - THE BITTERTASTE OF CRISIS
Contag CUT Oxfam International
Table of contents PART 1 REPORT Introduction ______________________________________ 4 Overview of the crisis ________________________________ 7 Labour in the production chain __________________________ 23 The paths of coffee _________________________________ 31 PART 2 PROPOSALS FOR THE COFFEE CRISIS Proposals from family farmers and rural wage earners ___________ 44 A coffee rescue plan ________________________________ 46 PART 3 What the companies say ______________________________ 51
Thanks
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This report was prepared by Dauro Veras, Débora F. Lerrer and photographer Sérgio Vignes. The authors would like to thank the teams of the National Confederation of Agricultural Workers (Contag), of the Integrated Workers' Union (CUT), and of Oxfam for their precious support, as well as the union leaders, experts, coffee growers, representatives from organisationsin the industry, civil servants and wage earners who assisted us in this task. We would like to thank in particular Astrid van Unen, Céline Charveriat, Cézar Barbieri, Constantino Casasbuenas, Gerônimo Brumatti, Kátia Maia, Laura Tuyama, Osvaldo Teófilo, and Sophia Tickell for their support.
“
I was impressed by the workers' feet on the coffee plantations. Feet that could tell a story.
“
Cândido Portinari, painter (1903-1962)
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I
It is late afternoon in Amsterdam, the Netherlands. Mario van der Luijtgaarden orders an expresso after leaving his workplace. He pays 1.70 euros1 for the cup of coffee which he drinks in just a few minutes. Nine thousand kilometres away, Maria da Penha Gonçalves is working hard to prune coffee trees in Governador Lindenberg, in the state of Espírito Santo, Brazil. At the end of her working day, which can last up to 12 hours, she is paid R$ 5.00 - the same amount Mario paid for his expresso and half of what her husband - a rural worker himself - earns. Between Maria's sore hands and Mario's steaming cup, the coffee follows a path that enriches a handful of people and keeps many in poverty. By the time it reaches the end consumer, coffee is converted from a commodity (a raw material) into a sophisticated item combining flavours from various regions of the world. Of each 100 cups sold in developed countries, less then two correspond to the remuneration of coffee growers. According to the International Coffee Organization (ICO), global retail coffee sales amounted to US$ 30 billion a year in the early 1990s, of which producing countries kept only one-third (US$ 10-12 billion). In 2001, only US$ 5.5 billion of the US$ 70 billion sales worth reached producing countries. The coffee business more than doubled in one decade, but the revenue of those who produce it
Distribution of revenue from coffee 1991 Total = US$ 30 billion Producer countries 30%
Consumer countries 30%
2001 2001 Total Total == US$ US$ 70 70 billion billion Producer countries 8%
Consumer countries 92%
Source:International Coffee Organization (ICO)
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dropped by half and their share in its profits dropped fourfold2. The crisis arose as a result of adjustments in the world coffee production after the end of the International Coffee Agreement in 1989. Up until that year, the coffee trade was managed - there was a balance between supply and demand. Since then, it has been governed by market rules. At the same time, transnational roasters became protagonists in this scenario, amassing the profits derived from the transformation of green beans into roast and ground coffee or instant coffee. The "Big Four" roasters - Nestlé, Kraft Foods, Procter & Gamble, and Sara Lee began to define how the retail market would operate, based on the trade of widely known brands. Together with the fifth largest roaster in the world, Tchibo, which trades the product in Germany, they buy almost half the world's coffee beans3 . In Brazil, Sara Lee dominates one-fourth of the domestic roasting market4 and Nestlé is the leader of the domestic instant coffee market5. This scenario is further affected by an excess in production. The price of coffee has dropped almost 50% in the past three years to a 30-year low, impoverishing 25 million producers throughout the world. The crisis is causing losses to over 3 million Brazilians in rural areas. If we include all the coffee production chain, the impacts of the crisis may affect over 8 million men and women6 . This trade model, based on unequal rules, is affecting farmers who grow other commodities as
Rosane Lima
Giel van den Hoven
European consumers pay a lot for their coffee
well. Trade barriers and taxes created by the governments of developed countries make it difficult for exports from peripheral countries to access their markets. A survey carried out by the Brazilian Chamber of Commerce (Camex)indicates that the Brazilian agribusiness loses US$ 7.8 billion a year as a result of this protectionism. In the coffee trade alone, these losses amount to US$ 1.8 billion7. In Brazil, this situation is aggravated by the huge concentration of income, one of highest in the world according to the United Nations Development Program (UNDP). In a list of 116 nations, Brazil only ranks lower than African countries like Sierra Leone, Central African Republic, and Swaziland8 . The unequal distribution of resources in rural areas increases social inequities. Although family farms represent 85% of all rural estates, occupy one-third of the total area, and account for 38% of the domestic agricultural/livestock production, they only receive 25% of all credit allocated to agricultural activities9. In this report, you will find relevant aspects about the coffee crisis and real-life stories that illustrate the disastrous situation prevailing in the industry. Its main objective is to give a voice to the various social actors affected by the coffee crisis as a means to contribute toward an informed debate and the search for concrete actions. It is also intended to encourage the media and researchers to further investigate the issues that, because of lack of time and space, are presented here in general terms. There are many more stories to be told in connection with the social crisis caused by what is happening in the coffee market.
Coffee growers earn less than 2% of the final price of a cup
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Notes When the text refers in a general sense to workers, rural producers, farmers, coffee growers, exporters, etc., the terms apply to both masculine and feminine genders. Conversion of currency uses the average quotation of 20/08/2002 (US$1,00 = R$3,10; 1 Euro = R$ 3,00)
References
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1
The exchange rate used for converting euros into reais is an average quotation on 20/08/2002, namely, 1 euro = 3 reais.
2
The global coffee crisis - a threat to sustainable development. London, 25/08//2002. Study by ICO's (International Coffee Organization) executive director, Néstor Osório, presented at the World Sustainable Development Summit in Johannesburg - August 2002. http:// www.ico.org/ed/crisis.pdf
3
Information contained in the Oxfam International report Poverty in your coffee cup: what's behind the coffee crisis, September 2002.
4
RIAS (Rabo International Advisory Services). Raising the income of coffee growers. Study published in July 2002 at the request of the Sustainable Economic Development Division of the Foreign Ministry of the Netherlands. http://www.minbuza.nl/english/
5
ABICS (Brazilian Soluble Coffee Association)
6
FAEMG (Agricultural Federation of the State of Minas Gerais), estimates for 2002, according to the document Agronegócio do Café
7
Folha de São Paulo newspaper, August 19th, 2002, page B-1.
8
UNDP (United Nations Development Program) - Human Development Report 2002 - http://www.undp.org.br/; Folha de São Paulo newspaper, 24/07/2002, page A-10
9
Novo retrato da agricultura familiar - o Brasil redescoberto. Incra/FAO 2000. http://www.incra.gov.br/sade/doc/AgriFam.htm
Overview of the
CRISIS 7
A super-harvest of problems Coffee-producing complex and occupied areab Geographic distributionc
- Under formation: 1 billion coffee trees, 314 thousand ha*/ - Under production: 4.9 billion coffee trees, 2.3 million ha 11 states and 1,850 municipalities
Jobs generatedc
8.4 million (directly and indirectly)d
Main producing statesb
Minas Gerais (50.8%), Espírito Santo (20.1%), São Paulo (12.4%) and Bahia (4.4%)
Cooperatives in operatione
49 (28% of the coffee market)
Estimated present harvesta (July 2002 / June 2003 harvest year)
44.7 million bags - Arabica: 35 million - Robusta: 9.7 million
- The data about coffee cultivation in Brazil is still far from thorough concerning the role of small producers and farm families and principally about fixed and seasonal salaried workers. Many coffee-raising properties count on the presence of other families (sharecroppers or partners) who are not always included in the numbers. It is important to make this reservation about the data that will be used throughout the report.
Last harvest (2001/2002)a
27.6 million bags
b) Brazilian Ministry of Agriculture/Conab (National Supply Enterprise) - estimate for June 2002 c) FAEMG (Agricultural Federation of the State of Minas Gerais) - estimate for 2002 d) It is estimated that about 3 million seasonal workers are hired during the harvest period. e) Associated to the OCB (Brazilian Cooperative Organization) - 2001 Not all cooperatives are linked to the entity. f) ABIC (Brazilian Association of Coffee Companies) - 2001. g) FAEMG - estimate for 2001 h)It is estimated that about two-thirds of these properties are smallholdings i)ABICS (Brazilian Association of Instant Coffee Companies) j) CECAFÉ (Brazilian Council of Green Coffee Beans Exporters) estimated for 2002
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Average productivity
a
Domestic consumption
19 bags per hectare f
13.6 million bags
f
4.8 kg/inhabitant/year
Per capita consumption Producing farmsg
300.000h
Roastersf
1,336
Brandsg
3,000
Soluble coffee manufacturersi c
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Exporters
220
Exportsj
24.3 million bags (21.8 million bags of green coffee beans, 2.5 million bags of soluble coffee and 25,809 bags of roast coffee): 54.5% of the harvest
* One hectare is equal to 10 thousand square meters.
Capital-deprived traders are going bankrupt for lack of clients. Coffee growers are abandoning their crops - which fall prey to pests - firing their employees, and are selling their assets to pay off their bank loans. Partners3 and leaseholders are leaving rural areas to swell the ranks of migrants on the outskirts of cities. The time bomb seems to be set to go off early in 2003, after the harvest is sold. By then, the new government of Brazil may face serious difficulties in the coffee production sector. The sector may face a period between harvests without any money followed by a small crop - coffee plantations yield a large crop in one year and a small harvest the following year - and then another period between harvests marked by the lack of capital. What does the current coffee crisis mean? What are its social dimensions? In order to answer these questions, our teams interviewed, over two months, dozens of people affected by the problem : rural wage earners, household farmers, partners, legal and illegal traders, medium and largehold farmers, exporters, industrialists, trade-unionists, economists, doctors, governmental authorities and other people. The interviews were carried out in coffee-producing regions located in the south of the states of Minas Gerais and Espírito Santo, the two main producing states, where the difficulties faced by coffee growers were observed. Degrading working conditions, contamination by pesticides, ill nourishment, and unemployment are becoming increasingly common in rural areas. There are
“
I fall asleep thinking about the empty pan. Coffee has given us nothing but trouble.
“
Brazil will harvest the largest volume of coffee in its history in the 2002/2003 harvest year: 44.7 million 60-kilogram bags, according to official estimates1. Leader in the production and export of the agricultural product, the country's productivity has evolved remarkably: 19 bags per hectare, compared to 14 bags/ha in 2001 and 13.6 in 2000. The bumper crop hit the headlines, but a vital piece of information was hidden by the figures: coffee growers have nothing to celebrate. Prices are at a 30-year low. Since 1997, Brazilian coffee has lost half of its value. As a result, income in rural areas has also dropped and alarming signs can be detected in coffee-producing regions. The crisis also affects other coffee producing countries2.
Maria da Penha Gonçalves, rural worker
Coffee plantation workers in the State of Espírito Santo
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Five years ago I could buy a cow with a bag of coffee. Today I need five bags.
“
Ronaldo Chiste, household farmer.
also manifestations of hope and creativity. Even without support in terms of credit and technology, small producers invest in crop diversification as an income alternative and as a means to ensure their food security. Organic coffee production is becoming a feasible market niche for some farmers, despite the obstacles that hinder their access to this market. Both among wage earners and among household farmers, businesspeople and professionals engaged in the coffee trade, there are people who are interested in finding solutions to the crisis. This reaction is still somewhat disjointed, but some progress has been registered.
Millions of 60-Kg bags
DOMESTIC CONSUMPTION OF COFFEE IN BRAZIL 1965-2000
National consumption
Per capita consumption
Sources: IBC (consumption up to 1985); ABIC (consumption since 1990); IBGE (population)
Why production has increased Coffee has little worth now because of a combination of over-supply, stagnated global consumption, and large stocks kept by importers. These three factors tend to jeopardize any attempt to recover prices in the short term, according to an
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evaluation of the International Coffee Organisation (ICO). While global production has grown at an average annual rate of 3.6%, demand has increased by only 1.5% . The production for 2001/02 (October-September) is estimated at 113 million bags while consumption is estimated at 106. Global stocks are in excess of 40 million bags - which are sufficient to keep the international market supplied for several months, and reduce the bargaining power of the farmers4. Frosts in July 1994 in the state of Minas Gerais affected the Brazilian production and pushed world prices up. There was then a rush to plant coffee in Brazil, Vietnam, Indonesia, Mexico, and other countries. Because coffee plants take five years to reach their production peak, they are producing an excess now. In just a few years Vietnam has become the second largest coffee producing country in the world. An ICO estimate for the 2002/2003 crop points to a record world production, with Brazil accounting for about 37% and Colombia and Vietnam for 9% each. The three countries together will account for over half the global production. The monoculture fever proved to be a mistake, as many family plots stopped producing food and incurred debts to expand their crops. In 1994 a bag of arabica coffee in the Alta Mogiana region (state of São Paulo) was selling for US$ 150-200. Now it only sells for US$ 35-40. The daily wage of a wage-earning worker in the region, which was US$ 18 then, is lower than US$ 6 today5. In other places, this daily wage is even lower. In August 2002 a rural wage earner in the state of Espírito Santo was receiving about US$ 3 a day and wage-earning women were being paid half that amount. A small proprietor who grows robusta coffee (conillon) with his family in the state makes the following comparison: five years ago, the price of one bag was enough to buy a 105-kg bull. Today, a farmer has to sell five bags to buy the same amount of meat6.
Out of every 100 cups of coffee sold in the developed countries, less than two correspond to paying the coffee growers.
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Supply control under discussion
Excess Coffee World production in 2001/2002
• 113 million bags • Average growth of 3.6% a year
Global consumption in 2001/2002
• 106 million bags • Average growth of 1.5% a year
Global stocks
• 40 million bags
Source: ICO - estimate for October 2001 and September 2002.
“
“
Impoverishment is general and the social services of city governments are overloaded.
Adriene Barbosa de Faria, Mayor of Três Pontas and President of the Association of Cities of Minas Gerais.
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Supply management is a controversial issue. It is not easy to give up producing coffee, a product marked by some unique features: it is a perennial crop, the investments cannot be recovered in the short run; it is a biannual crop that is, coffee plantations produce a good harvest in one year and a lower one in the following year - subject to climatic conditions. Most farmers are highly dependent on the production of coffee for cultural and economic reasons. In addition, coffee can be stored for several years without losing its quality. It works like a true currency among producers and it is an item that can be sold for delivery in the future - pre-harvest marketing. Proposals for retaining coffee led to heated discussions within the industry involving technical arguments, economic interests, and ideological positions. Since 1989, after the collapse of the International Coffee Agreement, the ICO lost the power to regulate the supply through quotas and agreed price ranges and allowed the free market to run its course. This quota system was heavily criticized. But since then prices have been dropping constantly, except in 1995 and 1997, because of frosts that affected the Brazilian crops. There is a pressing need to intervene in the market to prevent the trade in this commodity from being dominated by oligopolies. In 2000, the Association of Coffee-Producing Countries (ACPC) decided to promote a program for retaining 20% of the production, but the plan didn't work and was strongly criticized by many Brazilians producers and exporters 7 . Among other causes, the failure of the plan was attributed to a lack of commitment on the part Asian producers with the goals contemplated in it. However, we should not think that all pos-
sible approaches are also doomed to fail. The ICO itself supports a proposal based on market mechanisms that seeks to reduce the amount of coffee being traded. The plan is based on a quality enhancement scheme. However, any initiative aimed at promoting a better balance between supply and demand can only work if, in addition to producing countries, consuming countries and the roasters take part in it.
The power of the oligopolies In this scenario of over-supply, the corporations that dominate the global roasting and distribution market have been enjoying huge benefits. They operate on a large scale and set up oligopolies, according to some studies 8. The resulting concentration increased the fragility of more isolated farmers, particularly of smallhold farmers. "Initially there was a concentration of traders; then there was a concentration of roasters and, finally, a concentration of distributors," explains professor Renato Flôres Júnior, from the Post-Graduate Economics School of the Getúlio Vargas Foundation. He says that
the process developed in successive waves. "Today we have an oligopoly of traders and another very small oligopoly of roasters, which in part also belong to the oligopoly of the farmers/distributors. This scenario is also marked by a new development, namely, large supermarket chains with brands of their own," the economist says 9 . On the other hand, family farm coffee growers do not have enough information on the market, technology, capital, transportation and storing logistics or the capacity to invest in creating and disseminating their brands. As a result, they have to bear higher costs in order to access foreign markets and cannot compete on equal grounds with large corporations. "It is a perverse specialization criterion," stressed the then minister of Finance of Colombia, Juan Manuel Santos, in a speech to the ICO General Council on May 21 of this year: "Producing countries in the South are specializing in high levels of poverty and in taking risks; developed countries are specializing in t r a d i n g t h e i r p ro d u c t s w i t h f u l l c o v e r a g e . That is, in addition to the fact that the markets don't work, the cost-benefit ratio has been inverted as well: the lower the risk, the higher the profit".
After the harvest, coffee goes through the stages of drying and processing
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Profile of the coffee chain in Brazil
A trader classifies coffee to be sold to exporters
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In addition to being the largest coffee producer in the world, Brazil has the unique feature of being a large consumer as well - it is the second largest consumer in the world, ranking second only to the United States. In 2001, the Brazilian population consumed 13.6 million 60-kg bags, representing a per capita average of 4.8 kg (in beans)10. Coffee is a symbol of hospitality and a daily stimulant consumed in millions of homes and workplaces. Growing coffee is a practice deeply linked to the history and culture of the country. There is an emotional relationship between the farmers and the plant that is often decisive when they are faced with the dilemma of diversifying their crops or not. Another unique feature of coffee in Brazil is the relatively low weight of the product in the country's economy: it accounts for less than 3% of Brazil's export earnings11. This fact reduces the country's vulnerability to price variations as compared to countries like Burundi (where coffee accounts for 79% of the exports), Ethiopia (54%), Uganda (43%) and Honduras (24%)12. But there is a fundamental similarity between Brazil and other producing countries: the social role coffee plays in generating jobs and income. The annual turnover in the production chain is estimated at about US$ 1.6 billion - 4.5% of the agriculture/livestock GDP - and it accounts for about 8 million direct and indirect jobs13. Coffee is grown in eleven states and 1,850 municipalities in Brazil. Minas Gerais is the main producing state, followed by Espírito Santo, São Paulo, Bahia, and Paraná. The number of coffee-growing farms is estimated at between 221,00014 and 300,00015. Although no final official data are available, calculations indicate that over two-thirds of these farms are family farmers. Despite the intensification and expansion of large mechanized plantations, coffee production still plays a major social role.
Family farms
Rural wage earners
Family farms are the main generator of jobs in rural areas. Although family plots occupy less than one-third of the land, they employ 77% of the labour force - about 13.8 million people, as shown in a study carried out in 2000 by the National Land Reform Institute (Incra) in partnership with the United Nations Organisation for Food and Agriculture (FAO)16 . The segment accounts for 85% of Brazil's farms and for 38% of the domestic agricultural/livestock production. However, it only receives one-fourth of all financing allocated to agriculture in the country. According to a survey carried out by Incra and the FAO, family plots produce 25% of Brazilian coffee. This rate varies in different regions of the country. In the South the rate is 43%; in the Mid-West 63%; in the North 94%; in the Northeast 23%, and in the Southeast the main producing region, 23%. In addition to their owners, partners, leaseholders, and rural wage earners cultivate these production units. When there is enough space, the children of the families frequently continue to work the same land after they get married. The study indicates that, if duly supported with credit and technology, rural properties engaged in family agricultural activities have many advantages in relation to large farms: they are more productive, economically feasible, and preserve the environment better. However, family farmers who depend on coffee as their main source of income have been losing space for lack of support. They face huge obstacles, such as the lack of scale in their production; difficulties in accessing the market; the action of middlemen and the lack of an agricultural policy to facilitate their access to new technologies, technical assistance - funding for infrastructure and harvest costs. Given the characteristics of their production , family plots could be producing higher-quality coffee if they had the necessary technical support, thus addressing one of the challenges facing domestic coffee production. The profile of the Brazilian production has changed in recent years and has tended to become concentrated17. In keeping with market logic, the coffee growers who are not competitive enough are giving up because they are unable to sustain themselves. At the same time, large farmers have been investing heavily in mechanization and irrigation, particularly in new agricultural areas in the states of Bahia and Minas Gerais. Mechanization has eliminated jobs in rural areas and has caused negative impacts on the income of family farmers.
According to the National Confederation of Agricultural Workers (Contag), there are about 5 million men and women selling their labour to agricultural undertakings in Brazil. Most of them work without relying on the benefits afforded by labour conventions or collective agreements. Many workers live on the outskirts of cities and travel long distances when job opportunities become available. They face serious problems, such as low pay, discrimination of women, illiteracy, poisoning by pesticides, and various degrading situations. Coffee production ranks second in the list of rural activities hiring people at the margin of the law after cattle-raising, according to the director in charge of wage earners at Contag, Guilherme Pedro Neto: "Less than 10% of the people who work in coffee plantations are registered workers". Rural wage earners in Brazil can be classified in three groups according to how they are hired: 1.5 million are hired with open-ended contracts, although they are not necessarily formally registered. This is a common practice in cattle-raising. Another 1.5 million work for four to eight months a year harvesting sugarcane, cotton, and fruits. These harvest workers are protected by collective labour agreements or conventions. The third and most unprotected group is made up of 2 million individuals who work without any guarantee in short-term jobs 10-20 days - in beans, tomato, cashew, and coffee plantations, among others. Like nomads, they move around to three or four different states every year, following crop cycles in a via-crucis of uncertainty and suffering. Their transportation, lodging, and food are of the worst quality. Some workers in this group are lured into working in farms where they end up being treated as slaves, a cruel practice that persists in the 21st century. Slave labour is defined as when the employer resorts to threats or violence to keep the employees on his or her property. They are forced to buy their food and clothes at high prices on the same farm where they work. Because they can never repay their debts with the money they earn, they are prevented from leaving the property and are forced to work long hours. The Ministry of Labour has been carrying out inspection with the Public Prosecution Service to catch these farmers, but they are seldom punished by the court system. Although slavery is not a practice widely adopted in coffee plantations in Brazil, the number of cases reported recently is worrying. Contag's director for wage earners reported that coffee production was mentioned as one of the five agricultural activities with the highest number of reported cases of slave labour in 2001. Inspectors detected slave labour situations in five farms in Espírito Santo, the second most important producing state in Brazil.
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Where Half of all jobs generated by the coffee industry in Brazil are in Minas Gerais,which leads the domestic production. The annual turnover of coffee in Minas Gerais amounts to US$ 800 million - 18% of the agriculture/livestock GDP in the state - and
COFFEE PRODUCTION IN MINAS GERAIS IN FIGURES Cultivated area
1 million hectares - 99.8% arabica - 0.2% robusta
Rural properties where coffee is grown
150 thousand (30% of all farms in Minas Gerais)
Population of the state
17.9 million
Direct and indirect jobs
4.6 million
Main producing regions
- Southern region (52.9%) - Alto Paranaíba and Triângulo Mineiro (the so-called Triangle region of the state) [Cerrado] (18,7%) - Zona da Mata and Jequitinhonha (28.4%)
Coffee-producing municipalities
697
Participation in the state's agriculture/livestock GDP
18.18% (US$ 800 million)
Source: FAEMG 2002
generates 4.6 million direct and indirect jobs18. Almost all the coffee grown in the state is of the higher-quality arabica variety, which is well accepted in consumer markets. Most of the coffee production in Minas Gerais is concentrated in the south, where the average altitude is 950 meters and the topography is irregular. The savannah region (Cerrado) of Minas Gerais has only recently begun to be cultivated by farmers who have been investing in large-scale mechanized production schemes. Coffee production began in the southern region of Minas Gerais in the mid-19th century in large farms that led to the creation of various municipalities. Some of the main coffee-producing cities are Três Pontas, Guaxupé, São Sebastião do Paraíso, Varginha, São Tomás de Aquino, Itamogi, Alpinópolis and Santa Rita do Sapucaí. Plantations in the region have been growing remarkably since 1976 with funds provided by the Brazilian government after the historical crop failure caused by frosts in the state of Paraná in 1975. But the southern region of Minas Gerais is
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Brazilian coffee is grown COFFEE PRODUCTION IN ESPÍRITO SANTO IN FIGURES Cultivated area
526,810 ha - 40.4% arabica - 59.6% robusta
Average size of the farms
9.37 hectares
Farms in which coffee is grown
56,169 (68.2% of all farms in Espírito Santo)
Population of the state
3.1 million
Direct and indirect jobs
500,000
People involved in coffee-growing (gender and type of labour)
Total: 362,340 (65.8% men and 34.2% women) Permanent - family: 86,050 Permanent - hired: 48,170 Temporary - harvest: 159,890 Temporary - out of the harvest season: 38,230
Profile of the labour
Arabica: 52,687 families - 44% owners - 51% partners - 5% employees Robusta: 78.031 families - 47% owners - 47% partners - 6% employees
Source: CETCAF 2002
not free from frosts itself. A strong frost in 1994 reduced the production in the following year, contributing to a temporary increase in the price of coffee. There was euphoria and a considerable expansion in coffee plantations, but a few years later the crisis returned to the 697 coffee-producing municipalities of the state. According to some reports, the cultivated area has now decreased It is estimated that 20% of all coffee plantations of Minas Gerais have been abandoned and that 30% are only minimally maintained - minimum weeding or limited use of herbicides, without correct fertilization. 19 The second largest coffee-producing state in Brazil, Espírito Santo, accounts for one-fifth of the domestic production with a cultivated area of over 500,000 hectares. Coffee is grown in seven of every ten rural properties in the state. The activity employs more people than any other single activity in the state: it generates 362,000 direct jobs and 150,000 indirect jobs. A marking feature in the state is that many family farmers grow coffee on farms smaller than 10 hectares. On half of the farms, coffee is
grown under partnership arrangements, with sharecroppers cultivating land owned by other persons and sharing the proceeds with them. Women play an important role, accounting for one-third of the hired labour in coffee plantations.20 Coffee was responsible for the development of many cities in the state of Espírito Santo, such as Linhares, São Mateus, Nova Venécia, São Gabriel da Palha, Vila Valério, Águia Branca, Colatina and São Domingos do Norte. Initially, farmers planted more arabica coffee, but many of them ended up opting for the lower-quality robusta variety that is more resistant to warm and dry weather . This variety today accounts for 60% of the production in the state. Coffee growers frequently use irrigation but few of them use machines because of the irregular topography of the state, due to their low purchasing power, and the small area of their lands. The state is susceptible to diseases and pests such as the red cochineal, Dysmicoccus cryptus, yellowleaf disease, and borer. 21 Only 5% of the farms are fully fertilized.22
17
São Paulo, the state whose coffee plantations funded the Brazilian industrialization process, accounts for only 12.4% of the domestic production today. Its plantations are concentrated in the Mogiana region in the north. The main coffee-producing municipalities are Franca, Cristais Paulista, Jeriquara, Pedregulho, Rifaina, Itirapuã, Patrocínio Paulista, São José da Bela Vista, Altinópolis, Batatais and Restinga. Coffee production, which was introduced in the region two centuries ago, boosted the development of all these cities. Mogiana produces arabica coffee, which is cultivated at an altitude of 900-1,000 meters. São Paulo plays an important role in the coffee business because of its port infrastructure for shipping the domestic production and because it has the largest coffee industrial complex in the country23. The state of Bahia accounts for 4.4% of the domestic production. It is a non-traditional coffee-producing area. Coffee plantations are concentrated in three regions in the state: the upland region, where the arabica variety prevails; the shore, where robusta is grown, and the west (Cerrado), where many companies have been growing arabica coffee in mechanized and irrigated farms. The state of Rondônia, the main producer in the Amazon, is another non-traditional coffee-producing area. It used to be the territory of Guaporé and only became a state in 1981. People from other parts of the country began to settle here recently. Coffee is grown in 160,000 hectares in the state and its production amounts to 1.4 million bags, 90% of which of robusta coffee.24 The state of Paraná was a major producer in the past. In the 1960s its coffee plantations occupied 1.8 million hectares, but today they only cover 156,000 hectares and account for only 4.3% of the total Brazilian production. Introduced in the 1930s, coffee led to the development of large cities like Londrina and Maringá. But the state is subject to frosts. In order to avoid climatic risks, coffee growers migrated to other regions and the activity lost importance in relation to others such as citrus and grain production. However, coffee is still grown in 210 municipalities, generating 3.2% of the agricultural income in the state. About 76,000 people have jobs directly or indirectly linked to coffee production. Coffee companies also play an important role in the state. Two of the main exporters of soluble coffee in Brazil, the Cacique and Iguaçu corporations, are headquartered in the state25.
Wholesale, roasting, and retail There are about 220 coffee-exporting corporations in Brazil today. According to a study carried out by the Dutch consulting firm Rabo International Advisory Services (RIAS)26, many of these are small or medium-sized family-owned corporations that are wellknown on foreign markets and invest little in logistics.
18
Coffee traders usually outsource transportation and storage facilities. Because they focus on the supply just like the farmers do - they face obstacles to operate on scale. As a result, they have small profit margins and are more vulnerable. They are starting to increase their concentration but the process is still incipient. On the other hand, the roasting and retail segments are more focused on consumption. They add value to coffee by means of blendings27, brands and special distribution channels. Their profit margins are much higher than those of the coffee growers. The study indicates that four international corporations are roasting coffee in Brazil today - Sara Lee (USA), Melitta (Germany), Strauss-Elite (Israel), and Segafredo (Italy). Together, they control 38% of the market. Of the over 1,30028 roasters in Brazil, only Sara Lee and Melitta are present in practically all the national territory. Small and medium-sized roasters still play an important role locally, but they are losing space to the large ones. Sara Lee bought many local corporations in the past three years. The five brands it controls today (Café do Ponto, Pilão, Caboclo, União, and Seleto) have a 25% share of the domestic market.29 The Strauss-Elite group, which is the eighth largest manufacturer of roast and ground coffee in the world, arrived in Brazil in 2000 to buy the Três Corações roaster
of Minas Gerais. But the brand had losses in São Paulo and Rio de Janeiro. The strategy of the company now is to focus on the market of Minas Gerais and strive to rank second in domestic sales.30 In the retail sector, coffee accounts for a small percentage of the sales, but it is an important product to attract more consumers. For this reason, large supermarket chains work with small margins and pressure vendors to reduce their margins as well. Five major retailers control 42% of the market, according to the RIAS consultants. They observed, however, that the concentration in Brazil is less intense than in Europe, where the three main retailers control over half of the market and the five largest roasters control 60%. The specialty or gourmet coffee is a growing niche. In the past two years this market grew 20%.31 The government and businesspersons have been discussing how to add value to coffee locally, but the large roasters are not enthusiastic about the idea. "It would make sense to produce [roasted coffee] locally for export, but this is a vision for the future," said the president of Sara Lee's Brazilian coffee division, Maurílio Lobo Filho, in an interview to the Financial Times32. Meanwhile, Brazil continues to export its best coffee as a commodity and consuming lowerquality coffee. In the harvest year of 2001/2002 the exports of roasted coffee totalled only 25,809 bags.33
THE TEN COUNTRIES THAT IMPORT MOST OF BRAZIL'S GREEN COFFEE Accumulated volume January-July 2002 (in thousands of 60-Kg bags) Argentina Greece France Slovenia Belgium and Luxembourg Spain Japan Italy Germany United States
Source: CECAFÉ (Brazilian Council of Green Coffee Beans Exporters) 30/08/2002
THE TEN LEADING EXPORTERS OF GREEN COFFEE Custódio Rio Doce Guaxupe Cooxupé Nicchio Coimex Esteves Stockler Unicafé Tristão
Source: CECAFÉ (Brazilian Council of Green Coffee Beans Exporters) - 30/08/2002
19
Soluble coffee Nine companies manufacture soluble coffee in Brazil. The five largest exporters are the companies Cacique, Nestlé, Real, Iguaçu and Cocam. Together, they control over 80% of the Brazilian exports, which in 2002 are estimated at 2.5 million bags of green coffee beans (2.6 units of green coffee beans generate one unit of soluble coffee). As for the others, Macsol is a joint-venture between the Iguaçu group and Coca-Cola. The remaining manufacturers play a minor role. Nestlé dominates about 80% of the domestic market, according to businesspeople linked to the industry. The corporation trades a volume of soluble coffee in Brazil evaluated by the industry at 500,000-800,000 bags of green coffee beans every year, but the company does not make these figures publicly known. The domestic market is expected to grow, as many roasters are outsourcing the production of soluble coffee as a means to strengthen their image35. As the largest food company in the world, with a turnover of US$ 50.4 billion in 2001, Nestlé invests, on average, US$ 150 million a year in the Brazilian market, the seventh most important market in its global activities. Last year, the Swiss corporation earned US$ 2.5 billion in Brazil, 5% more than in the previous year, and had profits amounting to US$ 79.6 million. Chosen as "the company of the year" by the Exame magazine, Nestlé intends to make R$ 10 billion (US$ 3.1 billion) in 2006. In June of this year the company laid the cornerstone of a new soluble coffee factory to be built in Araras, in the interior of the state of São Paulo. They will invest R$ 95 million in the factory, which will become the largest producer of the Nescafé brand in the world. It will produce 22,000 tons of coffee for Russia and Ukraine. In the domestic market the Nescafé brand competes with over 70 other brands of soluble coffee that are mostly consumed by the population with low purchasing power36.
THE FIVE LEADING EXPORTERS OF SOLUBLE COFFEE July 2002 - accumulated volume in the last twelve months (in thousands of 60-Kg bags) Cocam (9%) Iguaçu (9%) Real (9%) Nestlé (26%) Cacique (30%)
Source: CECAFÉ (Brazilian Council of Green Coffee Beans Exporters) - 30/08/2002
20
One cannot understand the history of Brazil without associating it to coffee. When coffee became more important than sugarcane or cotton in the 19th century, it began to influence the lives of millions of people. The history of coffee production involves ecological, demographic, social, economic, and political changes. It is associated with the destruction of large tracts of native forests, with the slave labour of Africans, with bloody land conflicts that claimed the lives of many indigenous people and squatters, and with migrations of Europeans and Japanese. The "green gold" expanded agricultural borders and created fortunes and cities. It generated many jobs in rural areas. But it was also used as currency in power negotiations, left farmers bankrupt, and brought poverty to workers. The arrival of the plant to Brazil is controversial. Some seeds might have come from India in the late 1600s. A possible second introduction occurred in 1727, when an official of the Brazilian Navy, Francisco de Mello Palheta, smuggled seeds from French Guyana and planted them in the state of Maranhão. According to some reports, the first seedlings were taken to Rio de Janeiro by a judge in the mid-18th century. In 1790, one ton of coffee was already being produced for the local market. Over the next one and a half century, the bean became the main product of Brazil.
“A ferro e fogo” Professor Warren Dean (1932-1994) of the History Department of the New York University wrote a key book for understanding the role of coffee in changing the Brazilian natural landscape. In “A ferro e fogo”37 , he described how the practice of slashing and burning native forest areas to make way for coffee plantations was the main cause of the devastation of the Atlantic Forest in the 19th century, although it was not the only one. The researcher also reports the violent land grabbing process supported by the elite in power that prevailed then, the harmful effects of which are still felt in the inequities that characterize the present day Brazilian land ownership framework. After of the end of slavery, between 1888 and 1914, over one million European and Japanese immigrants came to Brazil to replace the labour provided by African slaves in coffee plantations. Many of these immigrants faced degrading working conditions. The migratory flow decreased during the 1930s, but the labour force in coffee plantations continued to be mostly made up of poor migrants coming from other regions. While Brazil's population as a whole tripled between 1900 and 1950, the population of São Paulo quadrupled and that of Paraná grew almost six and a half times . These domestic migrations constitute a feature of the wage-
A little bit of History earning labour force in coffee plantations to this day. In the process of expanding coffee plantations in forest areas, the theft of lands was a common practice. Gunmen hired by powerful people killed many native Brazilians and traditional populations. The historian draws our attention to the complicity between the Legislative and Judiciary branches, which granted title deeds to land grabbers: "The Brazilian State thus continued to pursue the abominable tradition of abdicating its responsibility and rewarding villains in the Atlantic Forest region" (free translation). Many land grabbers subdivided lands into small lots that were sold in instalments. This was a common practice in the north of Espírito Santo, in the extreme west of São Paulo, and in the north and west of Paraná.
The coffee-with-cream policy and the crisis of the 1930s Between the late 19th century and the first decades of the 20th century coffee was an important instrument of power in Brazil. In those days, Brazil's share in world coffee exports was in excess of 80%. The so-called coffee-with-cream policy was an alliance between the oligarchies of São Paulo and Minas Gerais in the 18891930 period supported by exporters of agricultural products 38. This pact allowed coffee growers of São Paulo, who represented the most dynamic sector of the Brazilian economy, to control the monetary and exchange policy of the country. In exchange for supporting São Paulo in Congress, members of the elite of Minas Gerais were
designated to high-ranking positions in the federal administration and had funds earmarked for public works. Members of the elite of São Paulo and Minas Gerais took turns in key positions in the federal administration. In the municipalities, political power lay in the hands of the so-called "colonels," who imposed their will on the illiterate population through their give-and-take politics. The coffee-with-cream pact was defeated by the Revolution of 1930, which established the secret vote, introduced the labour law and gave priority to industrialization. The Depression of the 1930s represented a big blow to the exporters of agricultural products, as it reduced the demand for coffee sharply. Thousands of coffee bags were burned in an attempt to keep prices up. In response to the crisis, president Getúlio Vargas bought coffee stocks, charged a fee for each coffee plant, prohibited the establishment of new coffee plantations, and retained 20% of the exported coffee. According to the historian José Augusto Ribeiro 39 , the retention of stocks was the first step to rationalize coffee exports, which up to then were dominated by foreign banks. Coffee exports began to be managed by the federal administration. Vargas also carried out a tax reform that transferred the tax on coffee exports from the state to the federal administration. The government continued to control the coffee trade until 1989, when the international market was deregulated.
21
References 1
Brazilian Ministry of Agriculture / National Supply Enterprise (Conab), June 2002. The harvest year runs from July to June. http://www.conab.gov.br/ politica_agricola/SafraCafe/safraCafe.pdf
2
For more information on the global coffee crisis see the Oxfam International publication - Poverty in your coffee cup: what’s behind the coffee crisis
3
Under partnership systems, rural workers cultivate the lands of a rural proprietor and share the produce of the crop with him or her. The partner is commonly referred to as a sharecropper, as the proceeds of the crops are often shared on a 50/50 basis.
4
International Coffee Organization (ICO), August 2002. http:// www.ico.otg/ed/crisis.pdf
5
According to João Abrão Filho, president of the Rural Union of Altinópolis (SP), in July 2002.
6
Coffee-grower Ronaldo Chisté. São Domingos do Norte (state of Espírito Santo), July 2002
7
ESTADO NEWS AGENCY. Setor cafeeiro bombardeia plano de retenção. Fabíola Salvador. April 22, 2001. http://www.estadao.com.br/agestado/noticias/2001/ abr/22/74.htm
8
FLÔRES JR., Renato G., CALFAT, Germán. Government Actions to Support Coffee Producers - An investigation of possible measures from the European Union Side. Getúlio Vargas Foundation / University of Antwerp, Belgium. April 2002. http://www.fgv.br/epge/home/PisDownload/974.pdf
9
Jornal do Café, ABIC, nº 129, May 2002
10
Brazilian Coffee Industry Association (ABIC), 2001
11
ICO, 2001
12
World Bank, 2000. Burundi, data from 1999
13
Agricultural Federation of the State of Minas Gerais (FAEMG), estimate for 2002
14
Ministry of Agriculture, estimate for 1998
15
FAEMG, estimate for 2002
16
National Land Reform Institute (INCRA)/United Nations Organization for Food and Agriculture (FAO), 2000. Novo Retrato da Agricultura Familiar - o Brasil redescoberto. Data based on the Agriculture/livestock census of the IBGE (Brazilian Institute for Geography and Statistics) 1995/1996
17
Rabo International Advisory Services (RIAS) Raising the income of coffee growers. Study published in July 2002 at the request of the Sustainable Economic Development Division of the Ministry of Foreign Affairs of the Netherlands. http://www.minbuza.nl/english/ and information provided by farmers.
18
FAEMG, 2002
19
Coffee Technological Development Centre (CETCAF), February 2002
20
Idem
21
GOMES, Wander Ramos. The state of Espírito Santo is a major producer of robusta. In Coffeebreak - http://www.coffeebreak.com.br
22
INCAPER (Reseach, Technical Assistance and Rural Extension Institute of Espírito Santo).
23
Coffeebreak - Official website of the National Coffee Council. http://www.coffeebreak.com.br
24 25 26
22
3 Brazilian Agriculture/Livestock Research Corporation, (Embrapa), data for 2000. http://www.embrapa.br Idem RIAS 2002.
27
Combination of different types of coffee.
28
ABIC, estimate for 2001 The RIAS estimates this figure at 1,700
29
Financial Times, article by Thierry Ogier republished by the Folha de São Paulo newspaper on 06/04/2002, page B-14
30
Valor Econômico, 28/05/2002
31
Gazeta Mercantil newspaper, 05/07/2002
32
Financial Times, article by Thierry Ogier republished by the Folha de São Paulo newspaper on 06/04/2002, page B-14
33
Brazilian Council of Green Coffee Beans Exporters (CECAFÉ), 2001/2002
34
CECAFÉ, July 2002
35
Interview with the executive director of the Brazilian Association Soluble Coffee Corporations(ABICS), Mauro Moitinho Malta, in August 2002
36
EXAME, a Brazilian weekly magazine. A empresa do ano [Nestlé] aposta no Brasil. Cover article by Cláudia Vassallo. São Paulo : Ed. April n. 14, July 10, 2002, issue n. 770.
37
DEAN, Warren. A Ferro e Fogo – a história e a devastação da Mata Atlântica brasileira. São Paulo, Companhia das Letras, 1996
38
PEDRO, Fábio Costa. A política do café com leite. http://www.hystoria.hpg.ig.com.br/coron.html
39
RIBEIRO, José Augusto. A Era Vargas - volume 1. Editora Casa Jorge publishing house, Rio de Janeiro, 2001.
WORK in the
production chain
23
Concentration and increasingly poor working conditions
S
Since the early 1990s, the life of wage-earning workers in coffee plantations has become more difficult. This is what a study1 carried out by professor Francisco Alves, who holds a PhD in Production Engineering from the Federal University of São Carlos (state of São Paulo), suggests. The working conditions are even tougher than in sugarcane plantations. Alves remarks that the deregulation of the market and lower prices created a situation of deep concentration [of wealth] in the coffee chain. Under this new production model, the strongest links in the chain transfer the burden of reducing costs to the weakest ones - wage earners and family farmers. The consequences are lower revenues, social exclusion, unemployment, and rural exodus. The crisis is aggravated by mechanization of production , which increases the labour supply and pressures wage earners to accept jobs under worse conditions. Coffee growers in the Triângulo Mineiro region (the so-called "Triangle" region of the state of Minas Gerais) estimate that mechanized harvesting techniques reduce the costs of a coffee bag by almost one-third. A large machine replaces 150-500 people/day. Mechanization has been more commonly adopted in new production areas - in savannah regions in the states of Minas Gerais and Bahia, the so-called "cerrado" - by more capitalized farmers. Because the machines are expensive, one of the alternatives that farmers resort to as a means to reduce labour costs is to offer more precarious working conditions to potential workers. The researcher observes that this is not a recent phenomenon: "In Brazil this is something that can be traced back to the days of slavery and in rural areas it bears the mark of large landownership," he says. "Even after the exporters of agricultural products lost economic power in the 1930s, the practice of subduing the labour force in rural areas remained intact." (free translation)
"Coopercats"
24
The labour contractor, who is known by the nickname cat, is a character that is often associated with the increasingly poor working conditions prevailing in coffee plantations. Because the harvest period is short and there is a high rotation of workers, they often work in one farm after the other under verbal contracts with these contractors. The laws governing labour relations are often disregarded. Many coffee growers claim that they cannot afford to pay social taxes. "If I register my employees, I will not be able to cover my production costs, and I will end up losing my land and becoming a wage earner myself," says one of them. Many farmers resent the absence of an agricultural and tax policy ensuring a differentiated treatment to family plots.
The National Confederation of Agricultural Workers (Contag) is negotiating the adoption of a new rural regulatory norm with the government and businesspeople. It is also trying to persuade the Ministry of Labour to carry out at least 10% of all its inspections in rural areas by the end of 2003. The entity also supports a bill under analysis at the National Congress providing for the establishment of a short-term harvest contract.2 The "cats" act in a more sophisticated fashion, through labour cooperatives - also referred to as "cat-cooperatives" or "coopercats." Francisco Alves reports that manufacturers of fruit juice concentrates created these cooperatives as a means to ensure greater control over the logistic flow of the orange productive chain without having to take care of its harvest or transportation. The "coopercats" became active in the coffee chain also, particularly in São Paulo, in the south of Minas Gerais, and in the north of Paraná. Coffee growers join these cooperatives because they offer them a legal - and cheaper alternative for hiring workers without running the risk of being sued for irregular labour relations. However, these labour cooperatives deprive workers of rights conquered in the 1980s, the researcher remarks. Some associations of orange producers came up with an alternative for hiring workers without the intermediation of false cooperatives. They jointly hire all of the workers that they will need. Each producer pays the association for the labour they use. In addition to having basic rights assured, the workers can remain employed for longer periods carrying out different tasks between harvests.
Health and security Many wage earners "die before their time" as a result of the terrible living conditions they face. This is the opinion of a researcher of the Jorge Duprat Figueiredo Foundation for Labour Safety and Medicine (Fundacentro-Minas Gerais), Antônio Ídolo Dias. At a recent national seminar3, he reported that a regulatory rule proposed by the Ministry of Labour for protecting the health and safety of rural workers is under discussion right now. Various practical measures could be taken to improve the living conditions of workers in coffee plantations. An example would be the development of a specific glove for harvesting coffee, Dias recalled. The gloves being used today are either not sufficiently functional or comfortable, as they are too rigid and prevent the workers from handling the beans appropriately, or they are not resistant enough and tear easily. "One can easily perceive that the development of machines follows a distinct logic than that of the development of equipment for protecting workers," he said.
Lafaiete and Penha in the Novo Brasil (New Brazil) village It's late in the afternoon in the Novo Brasil village, municipality of governador Lindenberg, state of Espírito Santo. Maria da Penha Gonçalves, 21, crosses the little square of the village carrying a bag of coconuts on her back. Her husband, Lafaiete Teixeira de Jesus, 32, is with her. They are extremely tired after a long day of work in coffee plantations. They work for daily wages in crops grown in small rural properties in the region that belong to other people. Politely, they stop to talk to us, but they prefer to stay on their feet. If they sit down, they know they may collapse from exhaustion. Accumulated tiredness is what they are experiencing: they have been working in crops since they were 12 years old. "I earn five reais a day working in crops," Penha tells us. That is less than two dollars and half the amount paid to men. Together, they have a monthly income of R$ 300 (less than onehundred dollars). It's barely enough for them to take care of their children Brasiléia, 7, and João Marcos, 4. The children attend a public school, but the couple was not that lucky: Lafaiete never went to school, and Penha only completed the third grade of elementary school. They are a living picture of the difficulties faced by thousands of small farmers in Brazil. They used to be poor. With the drop in coffee prices, they are on the verge of abject poverty . "We were sharecroppers for three years, but we had to leave the property," Lafaiete tells us. When coffee could be sold for a good price, they managed to make a small nest egg. They exchanged 20 bags for a fourbedroom wooden hut at the top of a hill. It was a good deal. Today, they would not be able to buy a single bedroom with the same amount of coffee. Recently they began to cook in a
woodstove, because they cannot afford to buy cooking gas any longer. They bring wood home from the farms they work in. The typical day of the family is a permanent struggle to survive until the next morning. They wake up at 4:45 a.m. to be picked up by the truck that takes them to farms where jobs are available. They stay there until the end of the afternoon. They take rice, beans, and macaroni in their lunch pail. They can only eat meat when they eliminate eggs and milk from their diet and stop buying medicines. Lafaiete recalls that he hurt his leg once and could not work for 60 days. He got no pay during this period. "If we get sick and need a medicine, we die," Penha says. "The boss only likes us when we are working." Her only recreation on weekends is to go to the Assembly of God Church, where she can still get some support from the community. Other than that she just walks in the streets, sits down on a bench in the square, and talks with friends. Alternatives for the future? Lafaiete becomes agitated: "We just can't find any other job! Nobody wants to hire people who have never studied. We have to continue to work in crops, things will not change..." Penha adds: "I go to bed thinking about the empty pans in my kitchen. "Coffee left us with nothing and only brought us sorrow." But she still has dreams: "If I could do something different I would like to work as a maid. I would like to dress well, wake up happy on Sundays." They bid us farewell and start walking toward the trail that will take them to the top of the hill. They need to rest a little, as the day begins early in the coffee plantations of Novo Brasil. And the truck will not wait for them.
25
A case of chronic poisoning Maurílio and Creuza Debarbi make their living growing coffee in a family plot in the municipality of São Domingos do Norte, state of Espírito Santo. He is 52 years old and she is about the same age. Those who meet this friendly and hospitable couple for the first time cannot imagine that they are victims of chronic poisoning by pesticides. Condemned to suffer painful sequelae and to carry toxic products in their bodies forever, they face their ordeal with dignity. Their story serves as a warning for all those who use chemical products in their crops. Maurílio began to use poison in his pastures and coffee trees in 1975.
He used to spray it without any protection, such as gloves and a mask. Sometimes he felt palpitations and rested in the shade of a tree for a while until he felt better. He would then continue to spray the product in his coffee plantation - in the beginning, 20 full sprayers of liquid poison a day, which he gradually reduced to 10. Sometimes he had a cold sweat and fever at night, whereupon he would take an anti-fever medicine and would feel apparently better on the following day. He had no idea that his body had been irreversibly affected already. "In 99 I was applying Randape (Round-up, a herbicide brand) to my coffee trees when all of a sudden I felt a weakness in my legs, fell to the ground and could not get up," Maurílio recalled. "I became purple, threw up, and my sweat smelled of poison. I was taken to the hospital in São Domingos, took 18 flasks of intravenous fluids, and remained in the hospital for three days.
26
The doctor told me I was lucky and that I could have died if I wasn't as strong as I was. The poison had entered my bloodstream and would not leave."
Skin cancer In the past three years he has had six operations for skin cancer in the ear, mouth, and forehead. He cannot swallow certain foods. He became hypersensitive to pesticides - if he happens to pass by a plantation where poison or even chemical fertilizers were used, he feels thirst and pain in the joints. One day he was crossing the eucalyptus plantation of neighbours and he fainted. He was forced to stop using pesticides in his farm altogether in
order to avoid the risk of a fatal relapse. The situation of Mrs. Debarbi is also sad . She never applied the pesticides directly, but for two decades she delivered meals to her husband in coffee plantations and washed his contaminated clothes. In 1981, she got sick and could not walk for six months. She recovered, but in 2000 she had her right kidney removed because of a malign tumour. It is impossible to tell for sure whether pesticides caused the problem, but the evidence is strong. The rural worker recognizes that he failed to read the warnings on the label of the products, but he places part of the blame on the manufacturers: "These companies should give courses on their products and only sell them on prescription," he says. And he has a message for all those who apply pesticides in crops: "My advice is that they should stop doing it. It's not worth it, because you run the risk of dying."
The head of the national executive board of the Integrated Workers' Union (CUT), who is also in charge of the National Institute for Health at the Workplace (INST), Rita Evaristo, recognizes that in many collective bargaining processes the real emphasis is on economic topics. Discussions on health issues are often postponed: "The problem is that, in many cases, these issues are not tackled and Brazil continues to rank first when it comes to work accidents." Rita reported that CUT is organizing a specific course on health and safety for rural workers: "We intend to propose interventions by the union movement for the purpose of preventing work accidents, improving living conditions in lodgings for workers, improving the quality of their transportation , and promoting discussions on the use of pesticides, among other measures."4
Pesticides cause most deaths by intoxication in Brazil Sleep problems, sexual impotency, paleness, kidney and liver dysfunctions, loss of concentration and memory, depression. When rural workers feel these symptoms, a warning bell should sound : they could be the symptoms of poisoning by pesticides. The statistics for this problem are still embryonic in Brazil, but they are sufficient to show that a silent tragedy is taking place. Data collected by the National System for Toxic-Pharmacologic Information (Sinitox)5 in 31 control centres in 17 states indicate that pesticides for agricultural use poisoned 5,127 people in 2000. They are the main cause of death by intoxication in Brazil. Of the 377 registered deaths, pesticides caused 141. The total of non-reported cases is much higher. Almost all cases reported to doctors are of acute intoxication, but few of them are of chronic poisoning - caused by the continued use of pesticides over long periods. The doctor in toxicology Sony de Freitas Itho, who is the coordinator of Toxcen (Toxicologic Assistance Centre) in Vitória (state of Espírito Santo), estimates that less than 10% of the cases are actually reported. In 2001 there were 475 notifications of poisoning by pesticides in the state of Espírito Santo, the second largest coffee producing state as well as a large vegetable producer. It is the second principal cause of intoxication in the state, ranking second only to drugs. Of the 23 deaths registered last year, pesticides caused 216. According to the IBGE (Brazilian Institute for Geography and Statistics), the use of pesticides in Brazil increased by 22% from 1997 to 2000.7 The indiscriminate use of pesticides in coffee plantations affects particularly the wage earners who spray them. Most of these workers do not use individual protection equipment IPE), which is seldom provided by their employers. An additional problem is caused by the solidarity that prevails among rural workers: very often they share the pesticides they buy with their neighbours. For this reason, children often drink the poison from plastic soft drink bottles that should not be used to store the product. The inadequate disposal of empty containers also contributes to pollute rivers and streams.
Why the problem remains hidden from view Sony mentions various reasons to explain why so many cases of poisoning are not reported. First of all, reporting such cases is not compulsory . The access of rural workers to doctors and laboratorial tests is difficult: "If you are a wage earner, you just cannot leave your workplace, or else the amount corresponding to one day's work will be deducted from your wages." For chronic cases, a precise diagnosis is difficult, particularly when the rural worker has used several products with different effects. Many workers are careless and only look for a doctor when they feel incapacitated. The failure of toxicological surveillance services also aggravates the problem. Few health professionals master the subject, since toxicology is not a compulsory discipline in medical schools. She also mentions the lack of refresher courses for doctors, the lack of awareness of the existence of toxicological centres, and the fact that medical records are not correctly filled out: "The workers often don't know the name of the product they used." Some recommendations made by the toxicologist to deal with the problem include: A permanent campaign to make the population aware of the risks of using pesticides indiscriminately. A search for alternatives such as organic herbicides and biological control of pests. Making salespersons aware of the need to explain to rural workers how to use pesticides safely. Enforcement of all legal provisions on the subject. Registration of all workers who spray pesticides in crops through identification cards and periodical lab tests. Inclusion of Toxicology as a compulsory discipline in the curriculum of medical schools. Provision of refresher courses to health professionals who work in rural areas. Better toxicological surveillance services. Improving the access of rural workers to laboratorial tests.
Awareness-raising Sometimes the evidence of poisoning is so clear that everybody can see it. "Two years ago farmer Geraldo Batista died of a heart attack," reports the vice president of the Union of Rural Workers of Colatina, Cézar Barbieri. "Nobody wanted to stay at the wake because of the smell of poison." There was another shocking accident near his farm recently: a girl drank the water of a coconut taken from a coconut tree that had been sprayed with poison and had to spend two days in a hospital. The Union has been promoting a series of initiatives aimed at minimizing the problem, among which the dissemination of organic agricultural practices, awareness-raising campaigns for farmers, and the adoption of stricter controls for selling pesticides.
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Industrial workers Rural wage-earners get to work by truck
A cat's life It is five in the morning in São Gabriel da Palha, state of Espírito Santo. It still dark when João (fictitious name), 30, finishes his breakfast. He puts his knife in his belt, grabs half a dozen hoes, and says good-bye to his mother. Four other workers wait for him sitting on the curb. They carry lunch pails with rice, beans, manioc flour, and one piece of meat or sausage. They also carry bottles with drinking water and some of them carry their own tools. Twenty minutes later, a small truck driven by a farmer arrives. All of them get in the open body of the truck. The vehicle picks up fifteen men. The sun is up already, but the workers shiver with cold. After the truck is full, it takes the human cargo down the road. It drives by a highway police station without any problem, turns down a side road, and heads to a farm gate. All the workers get off and walk to a coffee and coconut plantation. Their hard work begins at 7:00 a.m. At 10:00 a.m. they have a one-hour break for lunch and a 30minute coffee break in the afternoon. They work until dusk, when the truck picks up the tired and sweaty workers to take them back to their homes. Each worker receives a daily wage of R$ 11 - about US$ 3.50 - that is paid in cash at the end of the week. They don't sign any receipt, they don't have any contract, and they don't have the right to any weekly remunerated rest period. They have no vacation, no 13th salary (provided for in the Brazilian labour laws), and no records of time in service for retirement purposes. Those who do not show up to work for any reason do not get paid for that day. Those who get sick must cope with the problem on their own. They are not paid when it rains and they cannot work. João earns R$ 25 (US$ 8) a day to act
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The coffee-processing industry - which includes transportation, roasting, grinding, cleaning, and packaging - formally employed 19,706 workers in 2001, according to surveys carried out by CUT's Socio-Economic and Political Studies Department. 8 The activity has been displaced from the states of São Paulo and Rio de Janeiro to the state of Minas Gerais and to the Northeast region of the country Bahia, Pernambuco, Paraíba and Ceará. There was also a drop in remuneration at national level. In 1994, a slightly more than 60% of the workers earned less than four minimum salaries. This percentage increased to 74% in 2001. The participation of women increased. While in 1994 their total participation amounted to 26%, in 2001 they accounted for 35% of the labour force in the industry. Many of the companies in the industry have low competitiveness, use obsolete equipment, and have little concern for quality. The situation of the workers in this segment is precarious. Many of them come from rural areas and they are often semi-illiterate. "The industrialization process does not depend very much on schooling," remarks the director of the National Confederation of Workers in the Food Industry (Contac), Osvaldo Teófilo. "As a result, there is a high demand for labour and salaries are extremely low, in some cases as low as almost half the salaries paid in the soluble coffee industry." Teófilo draws our attention to some differences between the workers in the roasting industry and those in the soluble coffee industry. "In the roasting industry the situation is tolerable and you don't find many problems related to the work environment, such as heat, noise, and poor lighting. But the conditions in the soluble coffee industry are much worse: there is a high number of work accidents and professional diseases caused by falls, burns, lesions caused by chemical products, injuries caused by repetitive efforts, and hearing problems caused by loud noise ."
as a cat - a middleman who hires informal workers to work in farms. He does the same thing that his late father used to do. His labour rights are as ignored as those of the farm hands he hires. "We have no security whatsoever," he complains. "I work during the day to be able to eat at night." In harvest periods he can be in charge of up to 50 men. His income increases a little, as the wages of the day workers include a bonus of R$ 3 for each bag they reap and he gets a commission of R$ 0.20. But the sacrifice is also greater. The workers have to eat in a hurry in order to maintain their productivity. Many of them give up their lunch and work for up to 14 hours straight.
Income equal to costs A survey carried out in June 2001 by the Association of Programs in Alternative Technologies (APTA) with 15 coffee growers of São Domingos do Norte, a municipality of Espírito Santo with a population of 7,500, indicates that the costs for producing robusta coffee are equal to the income generated by the product. That is, small farmers are practically working for free. They only manage to make ends meet because they cut down expenses and replaced part of their hired staff by family members. According to the study, the average expenses for producing a bag of robusta coffee amounted to R$ 48.70 at the time, while the price was about R$ 50 - one-third of the value in the previous year. This situation has been harmful for São Domingos do Norte, where two-thirds of the population live off the land. Family agriculture prevails in 80% of all rural properties and coffee growing is the main generator of jobs and income in the region. "For generations these farmers specialized in growing coffee and were certain that would be able to sell their produce without any problem," remarks the agriculture/livestock technician Dirceu Godinho Antunes, one of the co-ordinators of the APTA. "They developed such a dependence on the money [which they thought was] guaranteed from coffee that they stopped growing food crops for their own consumption." He blames this situation partly on the government, which has not implemented effective research and rural extension agricultural policies to encourage the development of other income-generating alternatives. The NGO is engaged in alternative sustainable agriculture projects with 500 families in rural areas in Espírito Santo and 250 families of Tupiniquim indigenous people on the coast of the state. These projects were designed to reduce costs by replacing synthetic inputs with natural products available in the farms. "We provide the conceptual groundwork for the sustainable management of the soil," the technician says. "The idea is to ensure production for domestic consumption and for food security purposes - and also for a differentiated market, namely, a market of healthy food products for people and the environment".
Their hands are calloused and often full of cuts and wounds. Almost none of them use leather gloves to harvest the crops. Neither the workers nor the bosses like them, because the workers lose the sense of touch when wearing them and can, as a result, inadvertently remove leaves from the coffee trees. Lycra gloves are softer, but they only last one week. Accidents such as snake or scorpion bites are rare, particularly in crops sprayed with pesticides - products that have a cumulative effect over the years if applied inappropriately. Sometimes João takes two or three men with him to apply the pesticides. "They are very careless, they don't bother to use any protective gear or a mask," he says. The cat knows that he is engaged in an illegal activity, but: "I cannot register any of the workers I hire, and neither can the employer, or else he will go bankrupt. We work in a different farm every week, so how can I register them?" The authorities tolerate the situation. "Inspectors only stopped our truck once," he says. "We had to go to the union and sign a commitment to enter into a one-month contract." He thinks that rural wage earners should organize themselves better and create a union of their own. But he is sceptical as regards any changes: "If they unionise, they will develop price lists, the workers will demand their rights, and the bosses will not like it," he ponders. "The law of the strongest prevails here..."
Informal work marks the activity in rural areas
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References
30
1
ALVES, Francisco. Trabalho e trabalhadores no Complexo Agroindustrial do Café. March 2002.
2
According to Guilherme Pedro Neto, director for wage earners of the National Confederation of Agricultural Workers (Contag).
3
National Seminar on Labour Health, Safety, and Conditions in the Coffee Chain, held on April 8-10, 2002 in Belo Horizonte (Minas Gerais), sponsored by the Integrated Workers’ Union (CUT), the National Confederation of Agricultural Workers (Contag), and the National Confederation of Workers in the Food Industry (Contac).
4
Idem
5
National System for Toxic-Pharmacologic Information (Sinitox) - http://www.fiocruz.br/sinitox
6
Interview with the coordinator of Toxcen - Vitória (state of Espírito Santo)
7
Folha de São Paulo newspaper, 06/20/2002, page A-19
8
Desep-CUT. Panorama do emprego formal na indústria de processamento de café. October 2001
The paths of
COFFEE
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The migrant´s desillusion Every year for almost two decades, Father Antônio Garcia Peres has accompanied the day-today routine of the workers who migrate temporarily from the state of Paraná to work in the coffee harvests of the southeast region of the country. Between the months of April and October they leave towns like Bela Vista do Paraíso, Centenário do Sul and Uraí and head for the states of São Paulo and Minas Gerais in the hope of earning some money. The year of 2002 is possibly the worst ever. News of a super-harvest led to more migrant workers, who were consequently fa-
32
ced with very precarious situations. "They leave for the harvest with their family and everything, but then they get there and are offered lower wages, so they work harder and earn less," Father Antônio reports. He remembers that five years ago migrant workers came back to the south of the country with enough money to repair their houses and buy new clothes and sometimes even electric appliances. "But the wages they are getting this harvest will scarcely buy them food." One of the reasons for the lower wages is mechanization of farming in the northeast region of São Paulo, which brings the harvest to an end in August instead of October. A harvester with the capacity for 800-1,000 coffee trees a day puts a hundred farm hands out of work. The situation is all the more serious because the earnings from the harvest represent savings that are used throughout the rest of the year. In other words, when these families fail to earn enough during harvest season, they have no other sources of income until the next year. This affects the economy of their cities of origin and also harms those who do not work with coffee. Merchants, liberal professionals, urban wage earners - the entire community - become fragile. Father Garcia says of the hardships of the migrant workers' lives: "In the old days there were many cases of slave labour, especially in Minas Gerais, but today the problem is more the quality of the work and the lodgings. In some places there isn't even water to take a bath and cook."
Hunger and palliative measures Altinópolis, a town of 15,500 inhabitants in the region of Alta Mogiana in São Paulo, is a point of reference for migrant workers. At harvest time, about 2,500 rural wage earners move from the north of Minas Gerais and other areas to look for work in local harvests. But the prices crisis has been causing a situation of social tension that could become explosive. Not even a harvest of an estimated 350,000 bags can keep hunger away. As an emergency measure, the City Government, together with the Union of Rural Workers and the (owners') Rural Union, distributes 1,500 free meals a day to the farm-workers. The "Bóia Quente" (Hot Food) Program functions in five points in the town, and in the morning also serves a buttered bread-roll and coffee. This does not tackle the roots of the problem. But in the face of the desperate situation of those who have nothing to eat, this was the alternative found to avoid the worst. "If coffee is doing badly, the whole business and the population do badly," sums up João Abrão Filho, President of the Rural Union and Secretary of Agriculture. He says that business in town has almost come to a standstill. "Since the situation is very bad, many people who did not work
before - women and children - are now having to go and do farm work." According to the Secretary, local farmers are completely decapitalized because the price of arabica coffee does not cover the cost of production. Abrão assures us that many other coffee municipalities in the region are also in a critical situation.
Rural exodus Colatina, a municipality in Espírito Santo with 113,000 inhabitants, is another example of how the decadence of the coffee culture can affect the living conditions of small farmers. In the rural zone, mostly made up of owners of 10-40 hectares, abandoned coffee plantations are quite common. Given the difficulty of surviving, many farmers try their luck in new agricultural frontiers or else look for sub-employment in the urban area, thereby contributing to territorial disorder. Pockets of poverty proliferate all over the hills of the city to aggravate the already precarious situation of infrastructure and sanitation. Almost all the household, hospital and industrial refuse is tossed untreated into the rivers. The improper use of pesticides and herbicides has caused problems of occupational health and contaminated waterways. "Urbanization has been violent and too powerful," says Mayor Guerino Balestrassi. "We want to invert this process and we have to create conditions so that the small farmers have some managerial capacity." His bet is on encouraging diversification and technology. One of the hurdles mentioned by the Mayor is that owners are afraid to take on wageearning workers, because of the strict labor laws: "To break this mentality, we are developing a condominium structure that will offer management techniques." He explains that the idea is to give farmers the incentive to share the costs of hiring the service of accountants, lawyers and agricultural technicians. Fruit-growing is one of the alternatives mentioned by the Mayor to generate income.
The Landless Movement Close by, in Nova Venécia, a coffee municipality with 43,000 inhabitants, 50 families of the Movement of Landless Rural Workers (MST) have grown coffee since 1988 in the Pip-Nuck settlement. At first, almost all the revenue of the settlement came from the coffee plantations. The impact of the fall in prices forced diversification. Today the 480,000 coffee plants account for 80% of the total revenue, and the tendency is that this share will drop even further. "People began to plant black pepper, bananas, manioc, coconuts, tomatoes and to raise cattle," says one of the local leaders of the movement, José Rocha. But the farmers who managed to get land to plant are still few in comparison with those who still need to be settled.
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In late July, the authors of this report found 120 MST farmers camped in black canvas tents in the state capital, Vitória. Their objective was to press the government to speed up expropriations for land reform in the north of the state. Marcos Francisco da Cunha, the 32-year-old leader of the group, is yet another of those affected by the coffee crisis. He and his family used to work as sharecroppers on a family estate in Nova Venécia, but this year the crisis caught them out. They had to sell their house to pay off a bank loan. The farmer, his wife and small child had nowhere to go and moved into the landless camp. "I think the price of a cup of coffee is absurd," he comments. "Who's gaining anything with this? All I know is that they took something from me." Claudionor Gomes da Silva, 43 and married with four children, is another coffee farmer in penury. He worked as a sharecropper on a farm in Colatina for more than five years, and then, when prices plummeted, he was left without any alternatives. "They took the bread from my children's mouths," he protests. Forced to leave the countryside, now they survive in badly paid jobs in the city of Linhares. Claudionor preferred to place his hopes for the future in the collective struggle for land reform. "We are like a brotherhood," he says, referring to the others in the camp. "We help one another and we are going to move forward."
Workers humiliated Hunger and humiliation are part of the daily routine of migrant farm-workers. This is the case of a group of 50 men from the north of Minas Gerais who went to the coffee harvest in the south of the state in May of this year. On reaching the plantation that had hired them, they had their first unpleasant surprise: the pay was far less than what had been agreed upon. At night they all had to share two houses with three rooms each, sleeping on the floor and next to the openair sewage. At the end of a working day that started at 6 in the morning and ended at 6 in the evening, some of them had to wait until 11 o'clock at night to have a bath, since there were only two showers for all 50 of them. Ten of the men who arrived at the plantation the first day soon abandoned the job when they realized the awful working conditions, and especially the horrible food: tasteless beans full of stones, hard rice and chicken feet. The others continued, but were outraged on payday when they saw that the amount deducted from their wages for meals was higher than the one agreed upon previously. When they complained to the farm manager, they were told that if they wanted to leave they would have to pay R$ 50 that Brazilian labor legislation requires in the case of prior
34
notice. Most of the group were scared and paid up. "We were in a bad situation, we couldn't even sleep right," recalls one of them, José Hamilton da Rocha. Faced with the prospect of returning home without any money, they decided to report their plight to the Union of Rural Workers. Only then did they find out that many of their rights were being disrespected. By law, rural workers who move from one region to another must have an admission test and receive a copy of their work contract at the municipality of origin. Both the union at their place of origin and at their place of destination must be informed of this contract. The conditions of lodgings have to be suitable - beds, bath, drinking water and proper sewage. In addition, the farmer must offer transportation to where the work actually took place. "We were told that there would be a bus to the farm, but we had to walk the three kilometers," recalls another wage earner, Rosalino Batista Oliveira.
Precarious inspection, slow justice The lawyer of the Union of Rural Workers of the south of Minas Gerais, Tanilda das Graças Araújo, admits that only 10% of the workers found in a situation similar to slave labor manage to get any compensation: "In most cases we don't even know." She explains that farmers prefer the crop-pickers that come from afar because there is less risk of being caught by the inspectors. Besides earning less, these workers are more vulnerable because they know nobody in the region: "Whenever something happens, in general they run away because they don't know whom they can ask for help. Even knowing that the situation is wrong, they give up the idea of going to the court because labor disputes take so long. Most of them feel hopeless and leave without a penny in their pocket." One of the coordinators of the Union, Paulo Sebastião, does not attribute the precarious working conditions just to the low price of coffee. "What most depreciates the work is mechanization," he says. "The farmer no longer needs to weed or clear the land, he just tosses on the poison, that takes care of everything." He recalls that 15 years ago workers earned as much as three minimum wages1 a month at harvest time and that there was no lack of work the rest of the year. "Farmers kept you and the family on for the coming year." Today wages are three times less. Since the employer makes practically no commitment to the workers, everyone just hops from one farm to the next. Inspection is precarious. The assistant delegate of the Ministry of Labor, Paulo Andrade Azevedo, admits that the office is lacking in staff and material. There is just one pick-up truck, one doctor, two engineers and seven inspectors to attend to 46 municipalities under his
jurisdiction. Besides the rural environment, the team is also responsible for inspecting all the productive sectors in the region. Whenever the inspectors come upon an irregular situation, they notify the employer, make a report and apply a fine. The assistant delegate claims that since the farmers take on a lot of people, it is difficult to regularize the situation of everyone at the same time. The Ministry allows five days for the employer to register the worker's documents and another five days at the end of the harvest to settle accounts. For Union member Sebastião, it is precisely this mechanism that has allowed for irregular practices. "The work papers are retained during the harvest," he explains. "If the inspector does not turn up, the farmer returns the papers unregistered. And if he does turn up, the farmer still has ten days to sign and leave everything in order." Sebastião reports that formerly, when inspection was carried out and people were caught redhanded, there was no way the farmer could avoid punishment. He also criticizes the fact that the Ministry of Labor fails to admit such situations as slave labor. "The workers are hungry, they sleep on the floor, they are stuck in a region without being able to leave, and this is considered normal. It is only 'degrading work'," he says ironically. "The Ministry of Labor is like beans cooking, it only works under pressure!"
Impoverishment in Minas Gerais In Minas Gerais, where almost 700 of the 853 municipalities grow coffee, stories of losses and di-
fficulties are frequently told, even among the big farmers. "I've been dealing with coffee for many years and I've never seen such a tough and longlasting crisis," states the President of the Coffee Commission of the National Confederation of Agriculture and Livestock (CNA), João Roberto Puliti. A good example of a large-scale coffee planter, Puliti once produced as much as 16,000 bags, but has now given up: "Nowadays, I'm satisfied if I gather 700 bags." The Mayoress of Três Pontas and President of the Minas Association of Municipalities, Adriene Barbosa de Faria, warns about the social crisis: "Impoverishment is general and the social services of the municipalities are overloaded." Edésio Pereira do Amaral, owner of 102 hectares, has fond memories of 1994. In that year there was a hard frost, the Real was on a par with the dollar, and he managed to sell his coffee for as much as R$ 270. He optimistically ventured to buy more land, for which he still owes the bank. Amaral employs seven full-time workers and 50 temporary workers for the harvest, which this year should bring in 2,300 bags. After facing pressure from the union members in the region, he now maintains cordial relations with his old adversaries. He pays his harvest pickers R$ 12 a day in average and is proud of complying with all the labor regulations. The farmer complains of unfair competition from another producer who has taken from him workers brought over from Bahia by offering them a little more wages but without signing their work documents.
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Volcafé doubles its capacity Amid the biggest coffee-price crisis in recent years, some companies took the opportunity to invest. This is the case of Copag, which belongs to the Swiss group Volcafé, one of the world's largest coffee buyers and present in 25 countries. The head office of Copag in Varginha (state of Minas Gerais) was undergoing renovation work in July. The partner in the company and general manager João Pedro Alvarenga announced that he is going to double the storage capacity to 150,000 bags. The installations process, classify and store beans that will be destined by priority to countries like Germany and Japan, and also to some Brazilian roasting companies. The entrepreneur explains that he is feeling the reflexes of the crisis, because storage costs have grown in relation to the price of raw material, but he is working with a long-term perspective. His expectation is that in 2003 the supply level will be back to normal, since the crop will naturally yield less. He thinks that the government should finance the harvest to enable the coffee growers to bear the costs and be in no hurry to sell. As Alvarenga sees it, those who most benefited from the lower prices were retailers and the roasting companies overseas. "Nobody here benefits from low prices, because roasting and storing have a fixed cost and the turnover goes down. My profit comes from the number of bags sold, so if the price stays low, I make less."
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Cooperatives With 2,300 members, 85% being small-sized, Cooabriel (the Agrarian Cooperative of Coffee Growers of São Gabriel da Palha-state of Espírito Santo) sells 300,000 bags a year - mostly of the robusta variety - and numbers among its clients such corporations as Sara Lee and Melitta. In its 39 years of existence, the company has never faced such difficulty as at the moment. Out of a total of 250 employees, more than one hundred were dismissed last year. "We had to dismiss competent people because we couldn't pay the social charges," laments President Antônio Joaquim de Souza Neto. Costs had to be cut by 62,5% in order to guarantee survival. Antônio defends urgently adopting an agricultural policy that offers the farmer accessible credit. He remarks that although up to now the coffee business in Brazil has lived with resources taken from the sector itself - the Fund for Development of the Coffee Economy (Funcafé), these resources never arrive when the coffee growers most need them. This is the case of funding for harvest-time. The money arrives only about 60 days after the beginning of the harvest, when it ought to be in the farmers' hands 60 days before. His opinion is that investing in productivity and quality are the most feasible alternatives for the small farmers to face the crisis: "Together we will be strong."
and the crisis
Unfair competition The coffee-grower cooperatives suffer not only from falling prices but also from unfair competition. Many coffee companies in Brazil function through "orange" firms - middlemen who take over business to hide the identity of the true agent of the transaction. In this way they make sales using false invoices and other accounting tricks to dodge taxation. In January 1999 the then Mayor of São Gabriel da Palha, Paulo Lessa, denounced the existence of a "coffee mafia" in Espírito Santo.2 According to him, the "ghost" companies acted surreptitiously, causing enormous fiscal evasion. Lessa and his family suffered death threats as a result of these denunciations. At that time the State Secretariat of Finance launched the Coffee Operation to curb illegal practices and suspended the activities of 38 buyer companies. One coffee merchant who prefers not to have his identity revealed asserts that the frauds still go on in many States. The creativity of the tax-dodgers opens different breaches for cheating the law. According to the businessman, one of the schemes used is to export soluble coffee "cold": the company releases the coffee for export, sends empty containers abroad and sells the product on the domestic market without any invoice. Another common fraud is to transport coffee from one state to the other with the invoice of another agricultural product, so as to pay less tax. The proliferation of
illegal trade jeopardizes the competitiveness of legalized companies, who have to bear higher costs.
Cooxupé makes investments With its 8,600 members, 1,100 employees and functioning in 56 municipalities, Cooxupé (the Regional Cooperative of Coffee Growers of Guaxupé, Minas Gerais) is the biggest coffee cooperative in the world and one of the ten biggest Brazilian coffee exporters. Although its directors claim that they also feel the effects of the crisis, this year the company will invest about R$ 5 million (US$ 1.6 million) in equipment and rented warehouses to receive the production of the super harvest. The storage capacity will rise from 2.8 to 3.3 million bags. The superintendent of production, José Geraldo Rodrigues de Oliveira, claims that the cooperative has no other choice but to expand the structure to receive the coffee. However, he considers this investment practically risk-free, because of the expectation of a smaller harvest next year. The Superintendent of Cooxupé, Joaquim Libânio Ferreira Leite, is likewise optimistic as to the outlook of recuperation: "In 2002 the price had already reached its lowest rate because last year they took into account the expectation of a large harvest in Brazil."
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Shrimp and fruit Brothers Daniel and Isaac Cozzer own a property of 23,9 hectares together with another two brothers in São Domingos do Norte, Espírito Santo. Hostages to a loan to finance the coffee harvest, they found themselves obliged to sell a car to pay the bank. The crisis forced them to look for alternatives. Today coffee, which once accounted for almost their entire production, corresponds to only 40% of the cultivated area and accounts for 65% of the income from the property. The family is not contemplating giving up coffeegrowing but is going to reduce it. Their aim is to cut the coffee share to only 40% of the revenue within three years. "We started investing more in fruit-growing, especially guava, coconut, lemon and orange," says Daniel. "We also began to raise pigs, fish and shrimp." The brothers belong to an association of shrimp farmers in São Domingos do Norte, which guarantees the marketing of the product. The family has recently experienced a case of rural exodus. Their brother Ângelo Francisco was a farmer, but gave up the land and went to Colatina to work as a truck-driver. With the drop in coffee prices, the Cozzers stopped using fertilizers and now only use organic manure. They have not used pesticides on their crops for ten years and are now thinking of registering the property as an organic producer. They have other projects to add value to what they produce. They are considering buying a small roaster for about R$ 20,000 (something in the area of US$ 6,500) as well as selling frozen fruit pulp. "Today we lose as much as 50% of the guava due to flaws in the skin," explains Isaac. "The pulp can be sold in the off-harvest season, when it fetches a better price." The idea is to push these projects ahead in partnership with other farmers in order to bring down the costs. "The best way to get out of this crisis is through organization," is how Isaac sums it up. "If the small farmer stays on his own, he's out of the market."
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Growers want more intervention in the market The Superintendent of the National Coffee Board (CNC, the growers' association) and President of the Cooperative of Coffee Growers of the Region of Garça-SP (Garcafé), Manoel Vicente Bertone, defends vigorous State action in regulating the activity. In his mind, the government should tax exports and intervene in the market by buying coffee so as to impact prices and the exchange revenue. The resources gathered from taxes could cover the costs generated by the crisis, which would enhance the government's social responsibility. He emphasizes that this is his own personal opinion rather than necessarily that of the associations he represents. A critic of economic liberalism, he holds this policy responsible for much of the misery that permeates the coffee-growing sector. "Government and private sectors have the duty to assume management risks instead of accommodating themselves to revenue being transferred between sectors and countries, always from the poorest to the richest," he points out. "Coffee is heavily taxed in consumer countries, which know how to make use of their economic dominion to generate wealth." He underscores that developing countries used this same thesis when, in times of international agreements on commodities, they taxed coffee exports in partnership with the developed countries. The practice was discontinued with the intensification of globalization. "I think that the world is now realizing how perverse this model is."
Unemployment Bertone is convinced that the alleged Brazilian competitiveness at the cost of cheap labor and low prices does not compensate the internal social costs: "The enormous difference between the price of our coffee and that of our competitors shows that we are relinquishing exchange revenue that is absolutely crucial to our country." He warns of the risk of mass unemployment in Brazil's coffee-growing sector within a few months, with damaging effects not only in the rural areas but also for those who live in the cities. "Economic retraction means less tax collected, rural exodus and increased violence," he claims. "It's the State paying along with farmers the price of a commercial aggressiveness that should be better dosed for the benefit of Brazilian society." As he sees it, it makes no sense that an activity of such economic importance is not used as an instrument of social justice. "Brazil has a key role to play in this discussion, given its leadership in the coffee-growing area," he feels. In the field of civil-society organizations, coffee growers point to cooperativism as a potent instrument for redistributing income.
The middlemen Jorge (a fictitious name) grows coffee on a 240hectare farm and also works as a middleman in the state of Espírito Santo. He joined the market a year ago to offset a drop in his income as a farmer. With the help of two truck-loaders and a driver, he runs an informal firm installed in an old wooden hangar in the north of the state. Responsible for an "ant" business, he negotiates about 3,000 bags a month with a margin of profit of R$ 3 (about US$ 1) per bag. He does not deal directly to the exporters, because he lacks the structure to process the coffee and meet the Health and Safety standards. His buyers are bigger middlemen. "You either stay without any work or you do business on the sly, like I do," he says. The trader admits that you need to have backing if you want to get into the big-time stuff. To open a legalized firm trading in coffee, he reckons that you would need capital of at least R$ 200,000 (about US$ 65,000) to invest in installations, electronic machines for benefiting, and hiring trained personnel to operate them. Since competition is great among the middlemen, he alleges that his prices would not be competitive if he paid the taxes. Jorge ventures a guess that 90% of coffee dealers are not officially registered. Valdir Laureti, a coffee dealer with a legalized
firm in São Gabriel da Palha (state of Espírito Santo), represents yet another link in the chain of coffee middlemen. He declares that he trades 30,000 bags a month - ten times more than his informal competitor - and obtains a gross margin of R$ 5 (US$ 1,60) per bag. He claims that after all the expenses are paid there is little left - but he does not complain about the transactions: "The turnover has never been as high as this year. I sold well, but if the price had been higher I could have made more." About two thirds of the coffee he buys go to a roaster and the rest to exporters in Vitória. His company employs 25 workers, but he plans to dismiss eight in the next two months to cut down on costs. Laureti makes a comparison to show the practical effect of the drop in coffee prices on his professional life: "In 1986 I managed to buy a small truck with 80 bags, now I would need 700." He says that he cannot afford to get into roasting because that is a business that demands a lot of capital. He thinks that organic coffee could be a good deal but that it is necessary to trade at least 10,000 certified bags a month to offset the costs and that his firm lacks the structure for this. Laureti reckons that nine out of ten coffee-growers that he knows are in debt.
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Trade shaken It is eleven o'clock on a workday in the main street in São Domingos do Norte, a municipality of 7,500 inhabitants in the north of the state of Espírito Santo. Sitting on a chair on the sidewalk, Domingos Ballastrini, 74 years old, kills the time whittling away at a piece of wood with a pocketknife. For half a century he has been the owner of the Ballastrini and Co. hardware store. His place is empty - no customers. The merchandise too is beginning to disappear, because he cannot afford to replace the stock. "Today not a single cent has come in," he says. "Yesterday I sold only ten Reais" (US$ 3,10). It was not always like this. Once there was a lot of activity, with shop attendants helping him and his two sons at the counter. They sold everything: electric appliances, cloth, building material, tools. Money was abundant. Today the store is a melancholy caricature of the years of plenty. Ballastrini has been forced to rent part of the commercial area to an Evangelical church. He has almost R$ 40,000 (US$ 13,000) in credit to receive from customers he keeps in his "little notebook" - all of them honest folk that just cannot afford to pay him. "I spend the day smelling the dust," he complains. "We keep hoping, but the day for me to close up is getting nearer and nearer."
In search of alternatives Market niches Special coffees - organic and certified with the "fair trade" stamp - have been announced as promising alternatives for small producers. Out of 100,000 bags of organic coffee forecast for this year, Brazil will export 70,000 - an increase of 191% in relation to 2001, according to the Brazilian Association of Organic Coffee Producers. The price is 50% higher than the conventional and the demand is growing 20% a year.3 But it is important not to see these market niches as some miraculous way out of the crisis. They are not accessible to all the poor growers, since they require techniques that take time to adopt. And the problem of coffee-growing is an emergency. In order to place organic coffee on the market, farmers have to obtain certification. This is a market mechanism that offers differentiated consumers the chance to choose a differentiated product or productive process, explains Laura Prada of the Institute for Forest and Agricultural Management and Certification (Imaflora): "The message is as follows: 'Give preference to my product because as a coffee grower I am responsible for the workers, the surrounding community and the environment'. The farmer who wants to access this differentiated market is going to have to satisfy criteria that society has defined as fair or acceptable."
A successful example
“
“
We feed on hope.
Domingos Ballastrini, trader.
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One example of how organic coffee growing is working comes from the municipality of Nova Venécia (state of Espírito Santo). Since 1995, Maria Helena Mantovanelli and her husband Alcione Puttin have been developing sustainable agriculture on their 25-hectare property. There they plant banana, cashew, coconut, mango, passion fruit and coffee without using any chemical fertilizer or pesticide. With a crop of 40,000 plants, this year the couple produced 300 organic bags. In the certification process, they abandoned conventional techniques and had the soil and water audited. They needed to prove the preservation of riparian forests and the legality of their workers' situation. About R$ 2,100 (US$ 680) was spent on these matters. At present they supply two Brazilian companies. Initially the production costs of growing organic coffee are higher, but in three or four years they reach the same level as conventional coffee. At the end of eight years the tendency is for the costs to fall more, due to the savings in input materials. For example, the coffee berry borer is attacked by biological control, the Uganda wasp (Prorops nasuta). Maria Helena emphasizes the
social function of her farm: "We are committed to making others aware of the need to farm without poison," she says. "When they are mature enough to realize the advantages, they will benefit from all this." Biodiversity has already won the day. Her property is full of birds, wild rabbits, capybaras, parrots and even monkeys, which are rare in the region. The work enjoys the support of the local government of Nova Venécia, the Capixaba Research and Rural Extension Institute (Incaper), the Health Pastoral and the Regional Agency for Marketing (Arco).
Some government actions The Ministry of Agriculture In early August the Ministry of Agriculture, Livestock and Supply launched sales-option contracts for coffee growers and cooperatives. Until the month of October, 6 million bags will be offered - 78,2% arabica because this is the percentage of the variety in the Brazilian harvest. Resources to the order of R$ 765 million have been earmarked for these operations. The Minister of Agriculture, Marcus Vinicius Pratini de Moraes, also announced the inclusion of the product in the guaranteed minimum-prices policy and the release of R$ 320 million (US$ 103 million) for the program to support exports. The government has allocated an additional R$ 400-500 million (US$ 130-163 million) for funding the 2002/2003 harvest.4 "This program to support coffee growing has been developed to preserve the national complex and sustain prices at a moment when the international quotation for coffee is affected by over-supply," stated Pratini de Moraes. Accor-
ding to the government, the Bank of Brazil is to finance 80% of the value of the bag for stock, which is sufficient for a volume of four million bags. "We are strengthening the farmers' financial capacity for exporting, because they are facing difficulties in renewing lines of credit for advances on exchange contracts," said the Minister.
The Green and Yellow Fund The federal government plans to develop a partnership project with coffee growers to value and promote Brazilian coffee abroad. According to the Minister for Development, Industry and Foreign Trade, Sérgio Amaral, exporters will have a new line of credit available to them - the Green and Yellow Fund. "For coffee exports, the objective will be to produce, process, roast, pack and place in the supermarket," he declared. Amaral estimates that the gains for farmers will be as high as 40% of the final retail value in supermarkets in Europe and the United States.5 The Green and Yellow Fund, which is the responsibility of the Ministry of Science and Technology, has a budget of R$ 80 million (US$ 26 million) for this year, part of these resources being earmarked for the coffee and leather sectors. This partnership between government and the business sector is also designed to seek out new markets by negotiating better tariffs. Amaral says that the National Bank for Economic and Social Development (BNDES) is to finance Brazilian companies that want to set up and sell their products in other countries. One of the prospective markets is China.6 An estimate made by the Brazilian Association of Soluble Coffee Industries (ABICS) points out that the daily consumption of two cups of coffee by 10% of the Chinese population would raise Brazil's exports by 12 million bags.7
Where these paths lead... The testimony presented here, far from aiming to give a comprehensive account of a sector as complex as coffee, is to draw attention to one of the crucial aspect of this crisis: its social side. We want to go beyond the economic discussion and the laws of the market to show that we are talking about people with names and addresses. Human beings who are suffering now and can no longer wait. We had no pretension to deal with the theme in greater depth or exhaust all the views and opinions. The limitations of this work, which was carried out in less than three months, have to be put into context. This is little time in proportion to the dimension of the challenge. Nevertheless, we consider that this could be a contribution to make Brazilian society and even other countries aware of the problem of coffee in Brazil, which is a world giant in this particular product.
Much of the testimony and information presented here point to paths, possibilities and challenges. The programs of the federal government, for example, are an attempt to tackle the crisis. But these actions are still at a remove from those who suffer the hardest impact. The following chapter presents the proposals of small growers, household farmers and rural wage earners, who also have the right to be heard. This report has endeavored to contribute to the global and national campaign launched on 18 September 2002, an initiative that gathers together organizations from different countries. Two parts of the publication are making this connection: one on what is being said by the large transnational roasting companies, the other on the proposals of the international campaign included in the so-called "Coffee Rescue Plan."
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References 1
42
In september 2002 the minimum wage in Brazil was R$200 (US$65)
2
A Gazeta, 22, 23 and 24/01/99 and 08/07/99, Vitória (ES)
3
Gazeta Mercantil, 09/08/2002
4
The Ministry of Agriculture, Livestock and Supplies. http://extranet.agricultura.gov.br/
5
The Ministry of Development, Industry and Foreign Trade. Speech given by Minister Sérgio Amaral. http://www.mdic.gov.br/imprensa/radio/20020522Cafe.mp3
6
Gazeta Mercantil, 22/05/2002
7
Folha de S. Paulo, 23/05/2002
PROPOSALS for the coffee crisis 43
BRAZIL
Proposals of household farmers * and rural wage earners
Household farmers and rural wage earners form the most vulnerable link in the coffee productive chain. This is where the social and economic impact of the current crisis can be seen most dramatically. While the transnational coffee companies increase their profits, household farmers are abandoning their crops and rural wage earners who work with coffee are losing their jobs and seeing their working conditions becoming more and more precarious. This situation calls for urgent measures to be taken to make coffee growing an activity that sustains and strengthens household farming in Brazil and provides rural wage earners with dignified working conditions.
*These proposes were aproved during the National Meeting, organized by Contag, CUT and Oxfam, in Vitória (ES) on the 20th and 21 st of August, 2002. The meeting had the support of Actionaid Brasil, Federation of Workers on Agriculture of Espírito Santo (Fetaes) and Secretary of Agriculture of the State (ES).
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COFFEE-ROASTING COMPANIES A commitment to engage in a propositional dialogue with representatives of household farmers. A clear commitment to guarantee the rights of workers involved in coffee production, including financing effective monitoring mechanisms. Investing resources in programs to improve the quality of the coffee produced under household agriculture schemes.
GOVERNMENT Family Agriculture Participation of representatives of household farmers and workers in the Deliberative Council on Coffee Policy (CDPC). Participation of representatives of household farmers and workers in international meetings of the International Coffee Organization (ICO) and other relevant international entities. Implementation of specific policies for coffee within the National Program to Strengthen Family Agriculture (Pronaf), including resources of the Defense Fund for the Coffee Economy (Funcafé) to fortify extension and technical assistance directed at the quality of coffee and diversification of production, in addition to training in storing, marketing and transforming coffee for direct export. Negotiating existing debts with Pronaf. Policy of guaranteeing minimum prices for coffee produced by household farming. Actions towards strengthening the participation of household farming in the fair-trade coffee market. Access to land through land reform and extension of agricultural credit so that sharecroppers, leaseholders and the children of small coffee producers can improve their living conditions. Conduct research with representatives of household farmers and rural wage earners on the profile of coffee production in Brazil in order to identify their participation and conditions. Creating, with government participation, a seal of quality and origin for the coffee production of household farmers. An international marketing policy to better the image of Brazilian coffee. Setting up a mechanism for monitoring effective competition between toasting companies and other agents in the production chain. Transparency with regard to prices for producers and consumers in the region, and transmitting this information to household farmers. A campaign to clarify the Brazilian consumer on the quality of coffee.
Rural wage earners Creating specific legislation so that the harvesting contract is drawn up collectively through the Unions of Rural Workers (STRs), thereby guaranteeing labor and welfare rights. Increasing inspection in the rural area carried out by the Regional Labor Bureaus (DRTs), thereby guaranteeing the application of the laws and norms that protect worker rights. Suspending public credit to employers who ignore labor and welfare legislation. Setting up a program to train workers in the use of Individual Protection Equipment (IPE), handling chemicals, and techniques that reduce the risks of accidents in rural areas.
The proposals for domestic policies presented here should be complemented by government negotiations with producer countries in an endeavor to find mechanisms to manage production and prices.
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Recommendations A Coffee Rescue Plan is needed, to bring supply back in line with demand and to support rural development, so that farmers can earn a decent living from coffee. The plan needs to bring together the major players in coffee to overcome the current crisis and create a more stable market.
Within one year, and under the auspices of the ICO, the Rescue Plan should result in: 1. Roaster companies committing to pay a decent price to farmers. 2. Roaster companies trading only in coffee that meets the ICO's Quality Coffee Scheme standards.
3. The destruction of at least five million bags, as an immediate measure, to be funded by roaster companies and consumer governments and roaster companies. 4. The creation of a Diversification Fund to help low productivity farmers create alternative livelihoods.
5. Roaster companies committing to buy increasing volumes of coffee under Fair Trade conditions directly from producers. Within one year this should apply to two per cent of their total volume, with subsequent incremental increases.
The Rescue Plan should be a pilot for a longerterm Commodity Management Initiative to improve commodity prices and provide alternative livelihoods for farmers. The outcomes should include:
3. 4.
1. Producer and consumer country governments establishing mechanisms to correct the imbalance in supply and demand to ensure reasonable prices to producers. Farmers should be adequately represented in such schemes. 2. Co-operation between producer governments to
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5.
6.
stop more commodities from entering the market than can be sold. Support for producer countries to capture more of the value in their commodity products. Extensive financing from donors to reduce farmers' dependence on agricultural commodities. An end to EU and US double standards on agricultural trade that squeeze developing countries into a narrow range of options. Companies paying a decent price for commodities (above the costs of production).
Coffee Companies*
Coffee retailers (supermarkets and coffee bars) 1. Demand of suppliers that the coffee they sell pays producers a decent price. 2. Promote Fair Trade coffee brands and products. 3. Insist that coffee products are labelled on the basis of their quality.
The Coffee Rescue Plan will only succeed if all participants in the coffee market are actively involved. The following recommendations include elements of what each group can do to make it work.
Roaster companies
4. Starbucks to make public the findings of the commercial viability of its sourcing guidelines.
Governments and Institutions
– Kraft, Nestlé, Procter & Gamble e Sara Lee
International Coffee Organisation
1. Commit to paying a decent price to farmers.
1. Organise, with the UN and the participation of the World Bank, a high-level conference on the coffee crisis by February/March 2003, headed by Kofi Annan and James Wolfensohn, specifying that participation is conditional on being willing and able to make concrete commitments.
2. Commit significant resources to tackle the coffee crisis (including a financial contribution to aid packages that deal with the crisis). 3. Label coffee products on the basis of their quality. 4. Commit to buying increasing volumes of coffee under Fair Trade conditions directly from producers. Within one year this should apply to two per cent of their total volume, with significant subsequent incremental increases to be determined annually by the Fair Trade movement.
2. Work with producer countries, Fair Trade organisations, and roaster companies to define a decent income for producers. 3. Implement the quality scheme, preceded by an impact assessment on small farmers.
5. Lobby the US government to rejoin the ICO. 6. Adopt clear and independently verifiable commitments to respect the rights of migrant and seasonal workers, including respect for ILO conventions.
* This plain is part of Oxfam International´s globo campaign: “What´s in your coffee?”
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World Bank 1. Identify World Bank support for producer countries to manage the short-term impact of coffee-price collapse, including rural development considerations in the Poverty Reduction Strategy Paper (PRSP) exercise. The World Bank and IMF should develop a long-term integrated strategy to tackle the problem of commodities. 2. Continue to review the HIPC process in light of the expected shortfall in export revenues resulting from the fall in commodity prices, and ensure that any country which suffers from a significant decline in commodity prices between Decision and Completion Point under HIPC automatically receives additional debt relief at Completion Point to ensure that it meets the 150 per cent debt-to-export target. 3. Contribute to a major international conference on coffee with the presence of the United Nations (UNCTAD) and the ICO by February/March 2003.
Producer governments 1. Co-operate with each other to stop more commodities from entering the market than can be sold. 2. Put the issue of diversification at the centre of poverty-reduction strategies. 3. Provide support to farmers who have to leave the coffee market, including attention to women left on family farms. 4. Address the immediate needs of rural farmers for extension services including: - Technical and marketing information - Credit schemes and debt management services These extension services should pay particular attention to the needs of women farmers. 5. Institute sanctions against anti-competitive trading practices that hurt small farmers. 6. Assess the impact of the ICO Quality Scheme on small producers, especially women farmers. 7. Protect the rights of seasonal and plantation workers to ensure that labour legislation, consistent with core ILO conventions, is enacted and implemented. Particular attention should be paid to the rights of women labourers.
UN Conference on Trade and Development(UNCTAD) 1. Develop a long-term integrated strategy to tackle the problem of commodities. 2. Contribute to a major international conference on coffee with the ICO by February/March 2003.
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8. Promote the formation of associations of small producers and companies in order to strengthen them in Brazilian coffee markets.
Consumer governments 1. Provide political and financial support to tackle oversupply, including: - Support and financial help for the ICO Quality Scheme, including monitoring the quality of coffee entering their markets from each producer nation, and rapidly makes this information public - Removal of remaining tariffs - Destruction of the lowest-quality coffee stocks 2. Support the ICO as the forum where producers and consumers can tackle the coffee crisis. 3. Increase funding for rural development and livelihoods in Overseas Development Assistance. 4. Provide incentives for roaster companies to undertake technology transfers and to carry out more of the value-added processing in developing countries.
Consumers 1. Buy more Fair Trade coffee. 2. Ask retailers to stock more Fair Trade products. 3. Demand that companies adopt pricing policies that guarantee a decent income to farmers. 4. Request better labelling on the origin of coffee from roasters/retailers. 5. Request that pension fund managers raise the questions below.
Investors 1. Encourage roaster companies to adopt supply-chain management schemes and pricing policies that pay above the costs of production and protect the labour rights of coffee workers, in the interests of the long-term sustainability of the coffee market. 2. Express the view to coffee companies in which they invest that improvements in the lives of poor farmers will be the criteria applied when assessing reputation risk management on issues of price and supply-chain management.
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50
What the corporation say 51
KRAFT Statements on Corporate Social Responsibility
Views on the Crisis
Views on Control of Oversupply in the Coffee Market, including the ICO Quality Scheme
Actions Taken to Address the Crisis
Kraft Foods shares together with its consumers, customers and the coffee industry as a whole, the concern for the long-term sustainability of good quality coffee. This means we support ...A decent and improving standard of living for growers and producers of coffee and their families.1 The market will find its own solution because countries and producers will be driven out of the market. Our role is on the demand side - our role as Kraft is to increase consumption.3 As the original producers of vital raw commodities for our quality products, farmers must be able to achieve an acceptable overall level of financial return in order to remain viable participants in the coffee sector on a long-term basis.4 Our role in the coffee industry is to provide coffee products at reasonable prices that meet both the quality and values expectations of our consumers. . The ICO quality initiative has been offered as one means of addressing the current price environment. Therefore, we are giving this program careful evaluation to fully understand its implications for our complex global business and its potential contribution to constructively addressing the current market situation.6 It won’t work. It never has because it is a voluntary scheme and because it is unclear what it is trying to do. We are fundamentally opposed to any scheme that intervenes on price.7 Kraft has spent $500,000 on a quality improvement scheme in Peru. It claims that its efforts in conjunction with a local cooperative, Cocla, to introduce better quality standards has improved the overall price that Peru receives for its coffee. Kraft also supports quality improvement in Viet Nam, focused on the arabica producing area of Tan Lam in conjunction with Douwe Egberts, GTZ and the Tan Lam company.6
Price & Premiums Paid for Coffee I11
52
Kraft pays a quality differential for a large proportion of the green coffees we purchase. The significant majority of our coffee is purchased from exporting companies in countries of origin. Therefore we cannot assess directly the magnitude of benefits that accrue to specific farmers. However, as a general matter we believe that producers of coffees for which we pay quality differentials receive higher prices than they would in the absence of these differential payments.12
NESTLÉ A few years down the road, we are going to be asked not only if we have maximised short-term shareholder value, but also some other, more difficult questions. Among them will certainly be: What have you done to help fight hunger in developing countries?2 Nestlé is concerned about the plight of those coffee farmers who are presently receiving historically low prices for their coffee crop. This situation results in a disturbing increase in poverty and suffering for themselves and their families. Nestlé is against low prices as they are not only bad for farmers, but also bad for Nestlé’s business. While in the short term they reduce the cost of raw materials, low prices inevitably lead to high prices and it is these wide swings which negatively impact our business.5 Nestlé fully supports the ICO Quality Improvement Scheme and its application as it pertains to the export of green coffee from producing countries.8 Nestlé considers the International Coffee Organisation (ICO) as the best platform to set up a price stabilization mechanism, since the success of this kind of initiative requires the commitment of the governments of both producing and importing countries. Unless an entirely new system is to be created, the ICO remains the only viable forum. Nestlé supports any coordinated effort between governments, industry, intragovernmental agencies, and NGOs to eliminate the boom to bust cycle and helping the individual coffee farmer.9 Nestlé has a number of projects in place to help improve the situation of the small farmer. Mexico is one example of this.10
About 13% of our coffee is bought through direct purchasing, where a premium is paid for quality. The mechanism of ensuring that the farmer benefits from the premium varies from country to country, but we have controls in place to make sure that this is the case.2
1 Kraft Foods “Sustainability. an important issue in the brand orientated food industry” presented to Oxfam 23 April 2002 2 Peter Brabeck-Letmathe, CEO Nestlé, 30 November 1999 “The Search for Trust”. 3 Interview with Oxfam 23 April 2002 4 Letter to Senator Sam Farr 7 March 2002 5 Low coffee prices Causes and Potential Solutions Presentation to CSR Europe 12 July 2002 6 Kraft letter to Oxfam 26 June 2002 7 Interview with Oxfam 23 April 2002 8,9,10,12 Nestlé letter to Oxfam 26 June 2002 11 No company was prepared to disclose the average prices paid for coffee
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PROCTER & GAMBLE Statements on Corporate Social Responsibility
Views on the Crisis
P&G has always conducted its business with integrity and a strong P&G core value of “doing the right thing.” We have long been leaders in human resource management, employee compensation and benefits, -workplace safety, environmental management of our operations, ethical business practices and involvement in the communities where we have operations.1
No-one in coffee can deny the crisis.2
We recognize the social problems many coffee-growing families face given the current situation of global overproduction and low prices. P&G is committed to help address the underlying social and economic issues which contribute to this situation and we want to work with reputable organizations that can help provide long-term systemic solutions.3
Views on Control of Oversupply in the Coffee Market, including the ICO Quality Scheme
Actions Taken to Address the Crisis
Price & Premiums Paid for Coffee I 10
54
We support the National Coffee Association’s efforts to identify ways to ensure an adequate, sustainable supply of coffee in the range of qualities demanded by consumers, while addressing social and ecological needs. We also support efforts such as the Cup of Excellence competitions that promote the host country’s best coffees.5 P&G supports the National Coffee Association’s position on the coffee crisis. P&G is not prepared to support the International Coffee Organisation’s scheme because it is not the NCA position.
As a company we have supported coffee growing countries on three levels: Local- Contributions from various P&G offices around the world, Brazil, Mexico and Venezuela, to build schools. Business Unit - $1.5 million in funding to non-profit organisation, Technoserve, to help small-scale coffee growers. Corporate - P &G fund makes contributions to organizations like The Nature Conservancy and disaster relief efforts.7
P&G buys a significant portion of its total requirements directly from exporters with offices in producing countries. The employees in our Green Coffee Department spend significant time in country working with exporters; these exporters help translate our local quality needs back through the local supply chain.
SARA LEE Sara Lee’s objective is to utilize the corporation’s purchasing power to influence those from whom the corporation procures products and services to: embrace high standards of ethical behavior, comply with all applicable laws and regulations, treat their employees fairly, and with dignity and respect, so as to promote their welfare and improve their quality of life, and be socially responsible citizens in the countries and communities in which they operate.
Sara Lee and the coffee industry at large do not consider such fluctuations (in price) in the interest of local farmers, the industry, or the consumer.4
Sara Lee is uneasy about price support. The market needs to equilibrate on supply and demand. We believe the best solution (is) ...to be found in the improvement of coffee quality at a local level. Compensating coffee farmers for the burden of lower income by artificially paying guaranteed prices provides an incentive to overproduction, while creating unwanted discriminating positions on the green coffee market. For this reason Sara Lee will not promote or initiate the marketing of coffee under the Fair Trade level.6
Sara Lee’s support includes “the execution of projects in coffee originating countries (Viet Nam, Uganda, Brazil) aimed at helping coffee farmers and their families to improve their living conditions by developing and implementing production-methods with minimal impact on the environment, while resulting in higher coffee quality and therefore in higher market prices.”8
While purchasing green coffee, Sara Lee will continue its Small Farmers Policy (since 1989), committing itself to a minimum of 10% of total coffee purchase being purchased directly through small planters and co-operations of small planters, preconditioned by the availability of required coffee qualities and related prices.9
1 P&G on Corporate Social Responsibility July 2002 www.pg.com/ abouLpg/corporate/ sustainability/faq 2 Interview with Oxfam II June 2002 3 Sustainable Coffee- document presented to Oxfam II June 2002 4,5,6 Interview with Oxfam IO June 2002 7 Folgers Web site, Procter & Gar 8,9 Sara Lee letter to Oxfam I9 Jun
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SDS Edifício Venâncio VI - 1º Andar CEP: 70393-900 - Brasília - DF web site: www.contag.org.br phone: (55-61) 321 2288
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CAFÉ DO BRAZ IL
BRAZILIAN COFFEE - THE BITTER TASTE OF CRISIS
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