Saturday, November 29, 2003


where does your coffee dollar go, part ii

long-time readers know i often ask this rhetorical question to focus attention on how little of your expensive chain coffee drink goes to embattled coffee farmers.

today the ny times lays it out for you -- but misses the real issue, as usual. the article re-hashs old news: that the brilliant colombian president uribe's (a yoga student and well as a member of a coffee family) plan to open juan valdez coffeeshops is about to bear fruit here in nyc.

illustrating the article is a crucial breakdown of where the coffee dollar goes (actually, the coffee US$3.75!), provided by my dear friends at the scaa.

you get the US$0.03 for the farmer; the US$0.18 for the roasters & importers; the US$0.07 for the paper cup; the US$0.40 for milk (more on that in a second!); the US$2.82 for rent, marketing, labor, investment costs; the US$0.25 for coffeeshop owner profit. but what they leave out is a crucial component: sugar.

it is that omission that lies at the heart of the article's -- and perhaps the industry's -- oversight of what seems like a bigger connection.

i love the coffee industry. but despite being the world's second most widely traded commodity, many coffee people just don't seem to see the dead horse on the table.

that cup: coffee, milk, sugar, which is how most people drink it. . . think carefully dear readers and you will see how it could serve as the signal marker for the nation's whole agricultural policy.

and how it is now balanced -- a weird mix of support along with a market devoted to brutal price and quality suppression -- to rip off consumers, the "third-world," and the coffee industry itself.

yup, despite its size and predominance of truly major multinational firms, the coffee industry at all levels seems totally disadvantaged by the very structure of our farm plans.

i think one can argue that all coffee participants are getting hosed, especially us coffee-loving consumers, but we don't seem to notice.

the coffee industry is consumed -- and rightly to a great extent -- by the impact of the current world-price depression known as the coffee crisis. by omitting sugar from the equation the industry itself appears to show that they may be misunderstanding a key problem in the coffee-dollar question: american agriculture support programs.

the entire agriculture policy of the u.s.a. is basically set to support a few crucial lobbies: wheat, dairy, sugar, cotton. despite all of the current administration's discussion of free trade and globalization, these receive enormous protection.

notice that coffee isn't there, although the u.s.a. grows coffee in kona and puerto rico, and is the world's major consuming nation.

let's go back to sugar. the times does, amusingly,
mention sugar supports in an editorial today. as i understand it from speaking to coffeeshop owners and roaster-retailers, the coffee dollar should include about half a penny, perhaps three-quarters, for sugar.

without the supports that would fall apparently to about a seventh of a penny. those copper fragments don't seem like much until you realize how much coffee americans drink. then it adds up quick, which is one reason why the fanjul family is now more powerful than the rockefellers could ever have dreamed of being.

now let's look at the milk. the article says that of the US$3.75, US$0.40 goes for milk. ouch! well, that shouldn't surprise anyone who's been to the grocery store this autumn and seen how much milk has risen.

and how much does the u.s.a. offer the dairy industry in support? under the so-called "freedom to farm" act, dairy supports were to have been eliminated.

but these things die hard: a farmer's group, while complaining about reduced support, estimated the government would still end up paying US$330 million to prop up milk producers in 2003 under the so-called "m.i.l.c." program.

yup, it's welfare for cows. look, i'm not against american farmers. i was born in a farm town in kansas.

but sometimes you have to tell the truth a little bit, hmm? and the truth is, despite the reduction of dairy support, we still pay enough to cows to call ourselves practical hindus.

farmers' incomes are down; the government's still doling out support; and i'm paying more for milk than ever! this is insane, yes? who is benefitting here?

i don't have to keep going on like this, do i? the direction should be obvious. it's not that i'm calling for the coffee industry to dive in and fight for its share of pork.

although, since that's the way the current administration does business, maybe it should. . .it's that consumers particularly should understand the sharp edge of farm policy is currently sticking us where we keep our wallets.

those readers who are interested in ideas such as fair trade don't even have to go so far. it's not only a question of justice to people in the third-world; although that of course is important. it's your own weekly grocery bill.

or your daily cup of coffee. . . i personally have no idea why the so-called "big four" coffee roasters who sell most supermarkert brand x coffees -- the multinationals nestle, p&g, sara lee, kraft -- don't grumble about the agricultural supports. maybe they make up for it in their other business areas.

but consumers, regional roasters, roaster-retailers, and independent coffeeshop owners should be howling like rabid wolves. we are in the exact same position as the struggling coffee farmer, aren't we?

harmed by a set of economic policies devised by whom to benefit whom? the coffee farmer gets the macro end of the globalized pool cue in the kidneys, in terms of the commodity market system (the coffee crisis), while the consumer gets the small end in the ear, in terms of farm subsidies.

the specialty coffee industry is at work on an alternate market, with alternate auction systems, and the so-called "q" contract. this should help those coffee farmers who are devoted to producing quality.

but how should we consumers and coffeeshop owners, stuck with inflated prices for milk and sugar, react? what should we be doing?

please note that this isn't an anti-capitalist rant, so spare me your free-market hate mail. because i am a believer in free trade and globalization -- only with a level playing field, and with honest, transparent rules.

but do think about it, dear readers: pour yourself a lovely hot cup of your favorite single origin or blend, and take a little ponder!

or should you find this too heavy, then hop over to this lovely article by one of my new favorite people (thanks, marshall!).

i have no idea who you are, beautiful simran bhargava, but i know exactly who you are! you love coffee just as much as we here at bccy do; clearly you have the heart of an scaa consumer member.

and finally, for you long-suffering bread fans who feel like recently you've received short shrift, an article on the american scholar of the baguette, dr. kaplan. . .by our beloved deborah baldwin, who put us scaa consumer members on the front page of the times last july!

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