Tuesday, 11 March 2008

The Other Black Gold

Can the market be used to overcome the negative effects of the market? An affirmative answer is implied throughout Black Gold, the 2007 documentary looking at exploitation in the Ethiopian coffee industry.

Coffee is very big business indeed. After oil, it is the second most actively traded commodity in the world. Global sales have climbed from 1990's $30 billion a year to today's $80 billion. The industry is dominated by four multinationals - Kraft, Nestlé, Proctor and Gamble, and Sara Lee. And despite coffee's growing popularity, the prices beans command are at a 30 year low.

Ethiopia is the largest coffee producer in Africa. 15 million of its 27 million-strong labour force depend on the bean for their livelihoods, and it accounts for 67% of the country's export revenue. Like many countries overly dependent on the export of one commodity, it is particularly sensitive to the fluctuations of its market price. Black Gold shows the effects the low price has on Ethiopian farmers through the eyes of Tadesse Meskela, the manager of a 75,000 member coffee-producing cooperative. It documents his quest to get a better price for coffee growers. To illustrate the disparity, he shows a group of workers how a cup costing the equivalent of 12 cents in most villages retails at $2.90 in the USA. Typically farmers get 23 cents per kilo. The cooperative usually gets a better price but for individual farmers outside of the union, they can receive as little as eight cents.

One reason for the huge mark up between the point of production and the point of sale in the West is the supply chain. The beans are brought to auction and are purchased by processors. These in turn sell the coffee to another set of buyers who export it and sell it on to roasters in the West. The roasters in turn sell it on to the retailer, whereby it's sold to the customer. Tadesse's cooperative aims to repatriate profits lost to the supply chain by assuming as much of the Ethiopian side of the business as it can, with a target of removing 60% of the middlemen.

But even so many workers are aware of how coffee dependence stunts community development. Low prices means schools are not adequately funded (there is no state support for schools), clothing is of very poor quality, housing is extremely substandard and overcrowded, and food is in short supply. Generalised across Ethiopia's vast agricultural sector (farming accounts for 80% of employment) this means millions are susceptible to famine. Seven million people are dependent on food aid given by the USA and EU. We are shown how because if the price, one farmer cuts down part of his coffee crop so he can produce Khat - a drug banned in the West but one that nevertheless commands a greater price on the market. Compared with coffee's 23 cents a kilo, Khat can sell for four dollars per bushel of 20 branches. However, this is an act of desperation because coffee is a medium term investment for farmers - it takes five years for a coffee plant to mature and begin producing beans.

In sharp contrast to the poverty we are shown snapshots of Western coffee culture, taking in coffee houses, plush boardrooms, coffee tasting, the World Barista Championships, and the coffee house tour of Seattle. We are introduced to the present manager of the very first Starbucks to open in 1971, a woman who's obviously had an implant fitted. It was as if her personality had merged with that projected by the business. She waxed lyrical about the excitement of being part of Starbucks and "the lives we are touching".

As far as Black Gold was concerned, the main blame for this disparity lies with the World Trade Organisation and the subsidies the US and EU channel into their agriculture (this is particularly galling as many African nations subject to IMF "structural adjustments" cannot subsidise their farmers). The camera whisks us away to sunny Cancun for the fifth ministerial conference of the WTO in 2003. The G20 group of developing countries entered the talks aiming to change the rules of global trade. Their chief target was the US/EU agricultural subsidy and the tariffs that prevent them from competing in Western markets on more of an even keel. As was widely reported at the time, the talks collapsed on the fifth day. For all their neoliberal cant the West were unwilling to budge on agriculture, tariffs and intellectual property rights. But in an act of breathtaking hypocrisy they still demanded the G20 economies and other southern states opened up to more Western capital. They were singularly uninterested in poverty and development.

Tadesse was asked about what can be done to help his members. He said change was dependent upon raising the awareness of Western consumers. They need to be aware of the poverty that lurks at the bottom of their coffee cups and demand more fair trade products as a whole. On one level it is difficult to argue against. Time and again the farmers stated a rise of a few cents per bag would be enough to transform their lives and communities. The Black Gold website itself follows in a similar vein - those wanting to take action are requested to show the film, ask multinationals to pay a fairer price, write to your MP, and join one (or all) of the many worthy developmental NGOs. Western consumption is the cause of the problem, and it is Western consumption that will find the solutions.

The problem with this is despite the combustible material on show here Black Gold is a politics-free zone. Tories, Blairites/Brownites, and Orange Book LibDems would come away without any of their basic politics challenged. All that's needed is an opportunity for the poor nations to trade their way out of poverty. But all this is rather naive - it assumes the US and EU would consent to ceding their strangleholds on markets out of charity. Just supposing they did, multinational corporations will step in where states have stepped out and ensure global markets remain rigged in their favour. In other words, trade isn't the solution to the problem, it is the problem.

As long as production is subordinate to the market, as long as workers are not paid the full value of their labour power, superexploitation and one-sided development/underdevelopment will remain the lot of Africa. And no amount of consumption with a conscience will change that.


Jim Jay said...

Excellent post phil. However, anything that even threatens to come between me and my coffee addiction must be treated with caution.

Just as tabacco exploits the third world farmer and the end user of the product, coffee often hurts the user in the long term.

We should look at fairer trade and these economic relationships - but we should also think about a more radical picture where we take a step back from mass production of addictive harmful products and look towards localised production for the needs of the population as a whole.

blackstone said...

Great article. Last year around this time Ethiopia was in a heavy dispute with Starbucks over the beans it supplies.

Here's an excerpt from Fortune magazine.

"To produce a pound of organic sun-dried coffee, farmers in the southern Ethiopian village of Fero spread six pounds of ripe, red coffee cherries onto pallets near their fields. They sun the fruit for 15 days, stirring every few minutes to ensure uniform dryness, then shuck the shells.

Last season, that pound of coffee fetched farmers an average price of $1.45. Figuring in the cost of generator fuel, bank interest, labor and transport across Ethiopia's dusty roads, it netted them less than $1. In the U.S., however, that same pound of coffee commands a much higher price: $26 for a bag of Starbucks' roasted Shirkina Sun-Dried Sidamo.
Getachew Mengistie, general director of the Ethiopian intellectual property office drinks coffee in Addis Ababa, Ethiopia.
An Ethiopian specialist tastes coffee to determine its quality at the main coffee processing center in Addis Ababa.
A worker sweeps coffee beans fallen from broken bags in the main coffee mill in Addis Ababa.
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The country, one of the poorest in the world, wants to trademark the names of three coffee-growing regions to force companies that sell its beans to sign licensing agreements and to gain higher prices for its produce.
The U.S. company says Ethiopia should instead seek geographic certification, which allows distributors to use the name in their branding.

The price differential, says Getachew Mengistie, head of Ethiopia's Intellectual Property Office, is evidence that his country has been unable to capitalize on what he calls its intellectual property. The Fero coffee is an extreme example, but it's not the only one. Ethiopia's specialty beans routinely retail abroad for three times the price of ordinary coffee. "

The underdevelopment and superexploitation has been the hallmark of capitalism and the source of the West's accumulation of wealth and development.

Ed said...

I did a two year stint working as a part-time 'barista' (eeuurgh!) at Starbucks to pay my way through some of the PhD. The store manager in that film you mention was the perfect example of the sort of worker that Starbucks expected to employ - someone who completely identified with the aims of the company in a 'gee I'm really really excited about our new summer range of fappucinos and our expected increase in sales of cold beverages in July' sort of way.

You'd think it was an American thing - but I met quite a few other low-paid Starbucks employees who really did seem to identify quite closely with the company. Thing is, I was never quite sure how much of this effusiveness was genuine and how much of it was an attempt to please the ever watchful supervisors/mystery customers etc. It was like living under some dreadful totalitarian regime.

Phil BC said...

I hear what you say, Jim. Looking back over the piece now I think I was perhaps overly dismissive of attempts at making trade fairer. In and of itself, a "politics" solely focused on trade is no answer But as a good Gramscian it does have a place as an adjunct of a broader programme of socialist change.

Cheers for your input as well Blackstone. One thing I was going to nod toward but didn't was competition between the big powers over Africa's resources, and reference your post on China and Zambia. As Chinese interests in parts of Africa grow it's interesting to see them set up the kinds of semi-colonial arrangements the West have long enjoyed.

Ed, I've often wondered about how and why low paid employees can, at times, identify with their employers. For managers and the like you can understand why - their position and income depends on identifying with and carrying out the company's policies. But this isn't so for them at the bottom. I wonder if lack of trade union organisation and widespread atomisation has something to do with it? At some point in the future I'd like to do some work on this. Has anyone got any thoughts?

Leftwing Criminologist said...

hi phil - good piece

we actually debated some of these issues at a local go green weekend eventa few weekends ago with climate change protesters and members of the uni fairtrade society

(see report - http://leftwingcriminologist.blogspot.com/2008/03/go-green-joint-campaign-in-bangor.html)

Daisy said...

Great post... in Margaret Atwood's futuristic novel Oryx and Crake, there are actual "Coffee Wars"--and you can totally see it happening...

Ed said...

"I wonder if lack of trade union organisation and widespread atomisation has something to do with it?"

I would say that's pretty much at the root of it, yes. The absence of any belief in the possibility of an alternative way of structuring work and society (in fact, the absence,even, of the slightest *interest* in the possibility of an alternative). It's TINA plus consumerism plus MTV. Depressing isn't it.

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