WEBVTT

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Previously on Life. Two-Thirds of
the world poor live in rural areas

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and depend on agriculture. In reality,
we have to write into what is called

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a level playing field policy when
there was no level playing field.

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I think everyone believes that a free market is probably
in everyone\'s best interest. What you cannot have

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is subsidies and tariffs on one side and freedom
on the other because it just doesn\'t work.

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[music]

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Cafe Society in London or
Berlin, Paris, New York,

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Toronto, Tokyo, the spread
of the big coffee chain\'s

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has become one of globalization\'s most powerful
icons luring customers with an exotic range

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of cappuccinos, espressos,
mockers and blends of coffee

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from far-flung climes. Coffee is one of
the most traded commodities in the world.

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A major cash crop for many poor developing countries
trying to trade their way out of poverty.

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Coffee promises to increase
developing countries share of income

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from agriculture on world markets in line with
Millennium Development Goal number eights commitment

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to a global partnership for development.

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But the international coffee industry is in
crisis and many coffee producing countries

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are facing disaster. This Life program explores the
reasons why and some of the possible solutions.

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According to the International
Coffee Organization,

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there are almost seven billion kilograms of coffee
produced every year in countries like Brazil,

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Jamaica, Kenya, Uganda,
Guatemala, Honduras,

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Nepal, Mexico, Vietnam, and Ethiopia.

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Coffee is considered to be the second largest
traded commodity in the world after oil.

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Indeed uh… we estimate that

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uh… more than 85 billion dollars are
involved in the annual trade uh… of coffee.

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But the price coffee drinkers
pay for their cappuccinos

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and lattes bears little relation to the prices
paid to the farmers who actually grow the beans.

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Over the last six years coffee-producing
countries have seen their earnings

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from the coffee market fall by (inaudible) from
seven and a half to around six billion dollars.

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Today\'s coffee farmers there are
an estimated 25 million of them

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receive less than 1% of the price of a
cup of coffee sold in a coffee bar.

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[sil.]

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We are very worried about the crisis. If
this goes on, we will lose everything.

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In the past all children went to school

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but nowadays half of them
have to stay at home

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because we cannot pay anymore.

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There\'s no work anywhere because of the situation
with coffee, which isn\'t worth anything.

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And the harvest has dropped off.

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This coffee problem has been a big
problem for both me and my children.

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It\'s cost us a great deal of instability.

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[sil.]

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The crisis has already half the number of people working
full-time in a coffee farming in Central America.

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In the current buyer\'s market, the price coffee farmers
in many countries are getting for their coffee

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doesn\'t cover their production costs.

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Coffee farmers who grow the coffee,
who pick it and sell it on

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gained just four cents out of every dollar of
coffee that is sold on the supermarket shelves.

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Meanwhile, the supermarkets and
the four giant Roasters of coffee

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gained the great lion\'s share of the, of a dollar price
that sold on those, on those supermarket shelves.

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At the heart of the crisis in the coffee
industry today is overproduction.

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From 1975 until 1989, coffee
prices remained relatively stable.

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So did the supply and demand for coffee beans
monitored by the International Coffee agreement

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which helped guarantee coffee
farmers their livelihood.

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But in 1989, the International
Coffee Agreement broke down

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ending the 27 year deal between coffee-producing countries
which had regulated the supply and quality of coffee beans

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coming on to the world market. Since
then it\'s been a free for all.

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With new lower cost producers entering
the market leading to overproduction,

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a wider variety of poorer quality coffees competing for sales,
a 50 % reduction in the International price for coffee,

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and on top of all this, an apparent downturn in the amount
of coffee being drunk in the US and parts of Europe.

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There have been winners as well as losers.

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Vietnam, for example, seize the opportunities
opened up by deregulation to become a major player

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in the global coffee market. In
the late 1980s, Vietnam produced

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just 1.5 million bags of coffee a
year statistically, a tiny amount.

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But helped by government subsidies, mainly
to small farmers with low production costs,

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Vietnam increased its coffee
production 10 times over.

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It now produces in an over produced
market up to 15 million bags per annum.

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In 10 years, it\'s become the second biggest
coffee producing country in the world.

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But has this rapid expansion
affected the quality of the product?

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Uh… In Vietnam you can find a very
good quality coffee but unfortunately

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because they grew so fast, they did in 10
years weather controller like Columbia

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did in 100 years. So they are very good

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at developing their agriculture. But when
the processing of coffee takes place,

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there are many mistakes, many difficulties.
The quality is not as good as a,

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as another origin that had a tradition

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and a technology in producing good quality
coffee. The market will pay less for

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that low quality coffee.

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But Vietnam is not the only country responsible
for the overproduction in the coffee market.

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Brazil with 3,00,000 farmers
and three million people

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directly employed in the coffee industry
remains the world\'s biggest coffee producer.

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Here mechanized harvesting is increasingly
used on large scale coffee plantations.

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But modernization and questions
about the quality of the beans

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have hurt farmers in the more
traditional coffee-producing countries.

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Ethiopia is renowned as the
cradle of coffee cultivation.

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Here in the cafe region, coffee
is grown in the rain forest

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in the same way as it has been for
centuries. Nova (inaudible) plantations

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and environmentally friendly production.

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But producing coffee this way
in today\'s market is expensive.

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[non-English narration]

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There is a lot of coffee in the world nowadays.
So we have to make our coffee the best product.

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You must only pick the red berries.

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Only the red ones? Yes.

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Where is your basket? I will show you.
Only the red ones that are ripe

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not the dry one nor the green or
over ripe ones, only the red ones.

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They are good. Coffee is growing
in Ethiopia under shade of a big

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indigenous trees in all places. If there
are places in this, in this country where

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uh… Coffee is growing by itself under a big

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uh… trees in the forest but the coffee
beans fall from, fall to the ground

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and they grow by themselves again.
And without any human interaction,

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it\'s grown without the application of any chemicals,
chemical fertilizer or chemical herbicide

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or umm… any insecticide is not used

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to all these Ethiopian coffee.

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Today, coffee accounts for over 50% of Ethiopia\'s export
revenues. Seven hundred thousand households are dependent on it.

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[sil.]

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Despite worldwide overproduction and
competition from cheaply produced beans,

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Ethiopian producers are
concentrating on quality.

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They reason that their coffees
reputation and traditions

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will still sell in today\'s
difficult markets.

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[sil.]

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[non-English narration]

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Final picking for quality is taking place in
the store. That\'s what they are going to do

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or maybe every afternoon. When
they take the coffee to… to…

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to the warehouse but what
I am telling them is to…

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to look into the coffee
here thoroughly so that

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it might be easier uh… in the
afternoon to check for quality.

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So they should take out the bad one.
Yes, the bad ones are like this one.

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For example, these… these coffees
are very uh… very, very small

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and also they might be, they are black,

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for all these kinds of coffees are
(inaudible). So they have to be taken out of

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uh… this coffee. This is
the quality control booth

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who are making a department level. All these coffees
are now the best ones, these are the best ones now

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because there is no improper
uh… coffee in this one.

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Uh… All are of good quality.
That\'s why I\'m proud of

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uh… the quality of uh… Ethiopian coffee.

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[sil.]

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But the combination of Tadessa\'s hand picking and
labor-intensive production methods means a higher price.

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A price the buyers are not
necessarily willing to pay.

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[sil.]

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Buyers are very powerful. There are not
paying uh… good price for the farmers.

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They are paying a price which is very lower
than that of the cost of production.

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So we cannot say that buyers are buying in a
good price from the farmers or from suppliers

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because uh… because of the oversupply
of coffee in (inaudible) market

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and the countries like Vietnam which are producing the very
cheap and a lot of coffees, they are getting coffee from there.

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Because of this umm… this
is a buyer\'s market today,

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not the exports market or
not a producers market.

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The rapid expansion of cafes in the developed world
obscures another factor in the coffee crisis.

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While coffee consumption
worldwide is going up,

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it\'s not keeping pace with the steep rise in
worldwide production. And in some parts of the world

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Germany, France, throughout the European Union
and the USA, consumption is actually falling.

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Some experts worry that poorer quality
coffees will mean even less coffee drinkers.

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What we are trying to say is
to the producer (inaudible)

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try not to put into the
market super standard coffee,

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trying not to produce super standard coffee. And
now you also say to the (inaudible) don\'t buy it?

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And… that we cannot say.

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Coffee also has other competitors like
soft drinks which could pose a threat.

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In the long run, there could
be a problem because there…

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there is a competition with other liquids
out there. And it\'s their responsibility

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under game to see what do we offer
to the consumer. And I give you this

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very clear statement in the sense that
those countries in the traditional markets

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in which there has been an increase
of some low quality coffees

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we see a decrease in consumption.
Consumption per capita in countries

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like Germany, there are
Roasters and Roasters,

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there are some that only use the best qualities,
they are others that makes a little bit more.

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I cannot qualify what the business
attitude of the roaster is

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uh… but they know that if they do not
maintain a minimal level of… of…

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of quality sooner or later, the
consumer is going to desert them.

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It\'s a matter of how the
consumers approach,

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how the blends are… are made.
And the technology

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that intervenes in the processing
of coffee in consuming countries

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is a more and more sophisticated. Now there are procedures
to take bad quality coffee with a lot of defects,

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do a vaporization and… and take out

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uh… bad taste or bad uh… smells.

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I think that there is a lack of
transparency for the consumer

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about what he is drinking.

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Seventy percent of the world\'s coffee is
produced on farms of less than 10 hectares.

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For these small farmers, the boom in cafes
and coffee shops in the developed world

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in recent years has not brought huge benefits
because the amount of coffee they\'re selling

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is actually quite small.

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If you see companies like a Starbucks, like Costa,
like… many companies that develop around the world,

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they are expanding, they are offering
and they are attracting a way of life.

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Coffee is just part of it.
Uh… If you look closely

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the proportions, you will see that coffee is not
the higher proportion in what is being sold.

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Uh… But its new approach,

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its new consumers but is a very
small segment of the market.

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Coffee-producing countries have seen
the value of the coffee they export

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fall by 20% in the last decade from 10 billion
US dollars in 1990 to six billion in 2000

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but they could sell to
their own populations.

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I give you the example of
Brazil that in eight years

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went from eight million bucks to 14 million
bucks of consumption. It\'s a big population,

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the incomes of the country have increased. We
have that, we think that countries like Colombia,

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like Mexico, like India, like Indonesia

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with the population and the income they
have, they could repeat that example.

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Yet, another option for small coffee producing
farmers is to diversify and move into other crops

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but crops which have a value and a market.

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Growing coca for the cocaine trade has been
an option for farmers in Central America,

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other crops are more difficult.

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Prices drop and people find that they go out of business and they can\'t
make money in it so they get out, that is the nature of the market.

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You have at the moment an oversupply and coffee, there
is no doubt that people will leave coffee production.

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And they will either uh… leave the
land completely and go into cities

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and towns looking for jobs or they will
switch to other methods, other production.

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But as the Ethiopian farmers
who face this dilemma

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understand only too well, it\'s hard to
invest in new crops without any money.

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[sil.]

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If the world does not take an interest in our
coffee, we may just as well plow the land

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and grow something else but we
don\'t even have money for oxen.

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Coffee farmers would love
to diversify out of coffee

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but they find themselves imprisoned
by walls set up by rich countries.

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If they want to move into uh… maize, they find their
markets are dumped. If they want to move into

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umm… if they want to move into peanuts, they find they can\'t
export because there\'s huge uh… barriers to exporting

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uh… peanuts for instance to the United
States. So although, they\'re… they…

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they\'re desperate to move out and then everything is screaming
at them to move out of coffee, they actually find themselves

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imprisoned unable to shift out of coffee.

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Fairtrade offers another way
out of the coffee crisis.

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Currently Fairtrade accounts were just one 1% percent
of the global coffee market, although it is growing.

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Sales of Fairtrade brands increased
by 22% between 2001 and 2002.

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Fairtrade enables consumers to make a
choice over how their coffee is produced.

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[sil.]

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Fairtrade plays a vital role in
so many uh… coffee farmers lives.

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It\'s increased massively because there\'s a strong
consumer demand for a… a coffee that has been produced

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and bought at a decent price that\'s
been paid back to that farmer.

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Equally, the money that\'s paid back to the cooperatives
is invested in the, in… in the communities

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uh… such as in… in the schools, in the health clinics but
also in the marketing of that coffee for the future.

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It provides a vital source of revenue
for many, many poor uh… coffee farmers.

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The Fairtrade principle
of guaranteeing price

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is important to farmers who suffer
when coffee prices fluctuate or drop.

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[sil.]

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If the company could give us a single price
that of the fair market that would be good.

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In the current market, it wouldn\'t
be worthwhile harvesting the coffee

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because we won\'t be able
to pay the workers.

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Fairtrade is well-intentioned but
my own personal belief is that

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what the farmers overseas are looking
for in the countries in which we deal,

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which is after all 5/6th of the world. Uh…
What they\'re looking for is non-intervention,

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they\'re looking for a
fair chance to compete.

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And there is a lot less rules if you
have uh… the opportunity to compete

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and the markets do the job for you.
And I think, my impression is

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uh… that farmers even in distant
areas, even illiterate farmers

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have given me lectures on pricing in the
Chicago markets. Uh… They know this today,

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uh… technology has revolutionized
uh… the world of agriculture

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and these are not stupid people. Uh…
And I\'ve yet to meet a stupid farmer.

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Fairtrade coffee also acts
as a quality guarantee.

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Producers sell direct to
importers like Simon Wakefield.

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Simon has spent much of his working life around coffee
beans. Working with the farmers who produce them

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and making decisions about quality. For
him, it\'s an all-consuming passion.

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We\'re looking for umm… a
good full-bodied flavor

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which is strong you can taste it and
right in the back of your palate.

00:20:10.000 --> 00:20:14.999
You get a little bit of acidity or wine in this out
of it so a wine like a fruity wine, it\'s like a… a,

00:20:15.000 --> 00:20:19.999
like a wine if you guess. Uh…
That that sort of great fruity.

00:20:20.000 --> 00:20:24.999
Umm… And you will get very good flavor out
of it, a nice floral… floral notes to it.

00:20:25.000 --> 00:20:29.999
[sil.]

00:20:30.000 --> 00:20:34.999
Should coffee be treated like wine?

00:20:35.000 --> 00:20:39.999
Coffee should. Yes, yes, it should.
Umm… There hasn\'t been but it\'s, the…

00:20:40.000 --> 00:20:44.999
the knowledge and the interest I guess of the consumers is…
is getting to the stage now where people are interested in

00:20:45.000 --> 00:20:49.999
and they want to know where it comes from.
Every country tastes different

00:20:50.000 --> 00:20:54.999
and every region of coffee within that
country tastes difference as well.

00:20:55.000 --> 00:20:59.999
Does coffee deserve to be priced like wine?

00:21:00.000 --> 00:21:04.999
Yes, I mean, it… it does. And I think in the,
in the retail sector of this price like wine

00:21:05.000 --> 00:21:09.999
umm… there\'s… there\'s quite a heavy, quite a
healthy price to pay for a cup of coffee or a…

00:21:10.000 --> 00:21:14.999
a pound of coffee in the shops. But the farmers don\'t see
much of that. The farmers don\'t see much of that, correct.

00:21:15.000 --> 00:21:19.999
[sil.]

00:21:20.000 --> 00:21:24.999
Coffee importers like Simon are crucial to the
future of producers like Tedessa in Ethiopia.

00:21:25.000 --> 00:21:29.999
To stay in the market

00:21:30.000 --> 00:21:34.999
they need to convince buyers
that quality makes a difference.

00:21:35.000 --> 00:21:39.999
Tedessa is hoping his emphasis on
traditional quality control techniques

00:21:40.000 --> 00:21:44.999
will help find new markets.

00:21:45.000 --> 00:21:49.999
Finally, handpicking takes place by women
which are employed in this Factory.

00:21:50.000 --> 00:21:54.999
And that they pick the bad
beans which are inset bitten,

00:21:55.000 --> 00:21:59.999
maybe which are rotten or… or
uh… which are uh… broken beans

00:22:00.000 --> 00:22:04.999
will be picked by the woman.
And finally this is the coffee

00:22:05.000 --> 00:22:09.999
which is fit for exposure. This is how quality
control is kept in this processing unit.

00:22:10.000 --> 00:22:18.000
[sil.]

00:22:30.000 --> 00:22:34.999
On a sales trip to Europe, Teressa is
bypassing world markets to make his own sales

00:22:35.000 --> 00:22:39.999
direct to discerning importers
of high-quality coffee.

00:22:40.000 --> 00:22:44.999
This is Tedessa from (inaudible)
coffee farmers from Ethiopia.

00:22:45.000 --> 00:22:49.999
Okay. Uh… We can\'t keep the
quality, you know, to,

00:22:50.000 --> 00:22:54.999
who can keep the sustainability
of our business. Okay.

00:22:55.000 --> 00:22:59.999
We… we need these to grow because we
are directly representing the farmers.

00:23:00.000 --> 00:23:04.999
And uh… these farmers have
nothing other than coffee.

00:23:05.000 --> 00:23:09.999
That is a saying in Ethiopia about coffee
even by the government. A one-eyed man

00:23:10.000 --> 00:23:14.999
shall not play with his hand. Right.

00:23:15.000 --> 00:23:19.999
Since is a one-eyed if he is,
he\'s going to play with the sand

00:23:20.000 --> 00:23:24.999
he will lose at that eye. The main
export of our country is coffee.

00:23:25.000 --> 00:23:29.999
We are getting (inaudible) to get 75% of
the foreign exchange earnings from coffee.

00:23:30.000 --> 00:23:38.000
[sil.]

00:23:45.000 --> 00:23:49.999
It\'s a very difficult name.

00:23:50.000 --> 00:23:54.999
Yirga Cheffee. Yeah, okay. You say it uh…
once again please. Yirga Cheffee. Yeah, okay.

00:23:55.000 --> 00:23:59.999
Yirga Cheffee. Yeah, Yirga Cheffee.
Yeah, yeah.

00:24:00.000 --> 00:24:04.999
Yirga Cheffee, it\'s a excellent taste, it\'s a beautiful
body, it, the uh… body stays a long time in your mouth.

00:24:05.000 --> 00:24:09.999
It\'s a very nice and uh… it\'s a very nice,

00:24:10.000 --> 00:24:14.999
it would be very nice when we could discuss
about a bit more of us this coffee.

00:24:15.000 --> 00:24:19.999
It is the best form… from… from…
This… this coffee is the best,

00:24:20.000 --> 00:24:24.999
the best of these four. Yeah, yeah,
yeah, I know that. It… it is the best,

00:24:25.000 --> 00:24:29.999
it is one of the best, (inaudible).
Yeah, yeah, yeah.

00:24:30.000 --> 00:24:34.999
But yeah, I know that. Okay. It\'s very
nice as far as we know that as well.

00:24:35.000 --> 00:24:39.999
Yeah, yeah. You can deliver
what you promised. Yeah.

00:24:40.000 --> 00:24:44.999
Because we keep samples here, you know.
Yeah, yeah, I know, I know that.

00:24:45.000 --> 00:24:49.999
Tadessa Meskela may have found a niche market
for the quality Ethiopian coffee he is selling,

00:24:50.000 --> 00:24:54.999
but in the current hostile market what\'s the
future for other small coffee producers?

00:24:55.000 --> 00:25:00.000
[sil.]