Exploitation of Africa’s Coffee Family Farmers from Fair Earnings While the Rest of the Coffee Supply Chain Players Enjoy Healthy Margins

Introduction.

Coffee is one of the world’s top traded commodities, ranked highly among products like crude oil, gold, and natural gas. Indeed the coffee industry is one of the most important agricultural sectors worldwide. Evidence shows that such top commodities have truly delivered life-changing monetary value for the populations involved in their primary production in the countries of origin. For example, oil has contributed immensely to the wealth of its producing citizens. But the same cannot be said for millions of African farmers who break their backs to produce extremely high-quality coffee. The world is enjoying the farmers’ fine coffee, the stock exchanges in Europe and America are swimming in fat coffee profits, but the poor farmers back in Africa are left to clutch onto ‘peanut’ incomes that cannot sustain even one decent meal per day. This is blatant exploitation of African farmers and no justification can suffice.

The majority of Africa’s population works in the agriculture sector (59.4% of total employed persons in sub-Saharan Africa worked in the agricultural sector in 2019) and coffee being a primary agricultural product, then the poor prices paid to African farmers is a major cause of extreme poverty in the region. The share of Agriculture in GDP is still higher in Africa compared to developed nations (Agriculture share per GDP was 15.3% in sub-Saharan Africa in 2018)2. It, therefore, follows that a key contributor to Africa’s GDP has been dealt a devastating blow not by genuine market forces but by carefully designed exploitation targeted at condemning the African farmer to ‘terminal’ poverty.

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Coffee is a popular commodity in the global market, and its price is an essential indicator for traders, but it is more crucial for farmers in developing countries, especially in Africa. Farmers from Africa are exploited due to poor prices which are currently not enough to cover production costs. Prices paid to coffee farmers globally are lowest in Africa.

[1] Statista, 2019 Year
[2] The World Bank

1. Historical Coffee Prices

  • Coffee trading prices are decreasing since 2011. This decline is predicted to continue after 2020;
  • Market price of Arabica is higher than Robusta but more unstable;
  • Prices paid to farmers are lower in Africa than other regions;
  • Coffee producer prices are decreasing which is reducing the earnings of farmers.

1.1. Coffee prices paid to African farmers compared to farmers from other regions.

For coffee farmers, the key indicator is “Prices paid to Farmers” i.e. producer prices which shows us real revenues for the farmers in the agricultural sector. We used data from the International Coffee Organization, which provides price trends for several coffee exporting economies. Figure 1 analyzes Arabica prices for major exporting countries compared to several African economies between 2000-2018. Farmers in Colombia, India and Brazil  are getting higher prices on their crops compared to African countries – Ethiopia, Uganda, Democratic Republic of Congo and Cameroon.

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