Black Gold

The Dark History of Coffee

Antony Wild

• Publisher: Fourth Estate
• Year: 2019
• ISBN:
  9780007387601
• Topic: Politics & International Relations
• Subtopic: Colonialism & Post-Colonialism
• Index: Politics & International Relations

Your morning flat-white helped shape the modern world

‘Elegantly written, witty and so wide in scope, so rich in detail and so thought provoking’ Joanna Blythman

1

THE WAY WE LIVE NOW

I see I have been bitter. But what would you think of someone who could write such things without bitterness?

‘MULTATULI’, Max Havelaar, or the Coffee Auctions of the Dutch Trading Company (1860)

The catastrophically low price currently paid to the producers of coffee is leading to the largest enforced global lay-off of workers in history. Nonetheless, it is remarkable how little agreement there is concerning the numbers of people who are dependent on coffee growing for their livelihood. The Wall Street Journal, a newspaper not given to exaggeration in matters of business, estimated that some 125 million people depended on coffee in 2002. ActionAid claimed 60 million, Fair Trade 100 million. The World Bank has calculated that there are 25 million small producers in developing countries who depend on coffee as their sole source of income, each supporting an average of five family members: this is the equivalent of the entire population of Japan, the world’s eighth most populous country. Furthermore, the Bank estimates that a staggering 500 million people globally are involved directly or indirectly in the coffee trade. This figure is echoed by Dow Jones Commodity Services, which also assesses the importance of coffee to developed countries too: they have calculated, inter alia, that 300,000 people work in Italy’s 110,000 coffee shops, serving 70 million cups of espresso per day.

The coffee market in the USA is worth $19 billion annually, with 161 million consumers directly serviced by 150,000 full- or part-time workers. The Specialty Association of America estimates that if everyone from coffee machine mechanics to styrofoam cup makers were accounted for, the figure for those involved in the business would leap to 1.5 million. In Japan, a leading roaster has claimed that over 3 million jobs – 4.5 per cent of the workforce – are directly or indirectly related to coffee. While the industry is keen to stress the importance of coffee, if only to alert politicians to the gravity of the problems affecting it, clearly there is huge international dependence on the trade.

As long as the price that coffee fetches on the world market continues to be lower than the cost of production, smallholders and farmers must subsidize coffee consumers. They cannot do this indefinitely. The result is unemployment and the loss of livelihood on the vast scale commensurate with the numbers previously employed. Thus the World Bank estimates that between the years 2000 and 2002 some 600,000 workers in the coffee industry lost their jobs in Central America alone. This is the equivalent of the entire population of the city of Bristol becoming unemployed. With no sign of a meaningful price recovery, this employment crisis is getting much worse, rapidly and globally. It has started to cause political and social disruption, poverty and privation on an unprecedented level in countries where the national economies are frequently already extremely fragile. There has also been a fundamental shift in the recipients of the coffee trade’s largesse. In 1991 the global coffee market was worth around $30 billion, of which producing countries received $12 billion, or 40 per cent. Current figures suggest that the global revenues from coffee sales are in the region of $55 billion, of which only $7 billion (13 per cent) goes to the exporting nations. Coffee is the world’s most valuable trading commodity after oil, but the share of the coffee trade enjoyed by producers has fallen by two-thirds in ten years, whilst transnational coffee companies have reaped huge windfall profits from the low price that they now need to pay for the commodity. The average price paid to producers of coffee internationally has fallen 80 per cent since their last high in 1997: over the same period, the average retail price of the keenly competitive major US brands has fallen to $2.75 per pound, only 27 per cent less than its peak. The price of instant coffee in the UK, which represents 85 per cent of that market, has fallen by a paltry 5 per cent since the same date. The four multinational roasters that dominate the world coffee trade – Procter & Gamble, Nestlé, Sara Lee, and Phillip Morris account for 40 per cent between them – report record sales and record profits, although all except Sara Lee ($495 million in reported profits from their coffee and tea division) are understandably chary of stating exactly how much is attributable to coffee. Nestlé attributed a significant proportion of its 5.5 per cent half-year growth in sales to August 2003 to its ‘star performers’, instant coffee and bottled water.

Starbucks, a relative newcomer to the international coffee trade, is likewise reaping a huge profit harvest, up 19 per cent in 2003, and adding to its 6000 existing stores worldwide almost daily. The business is regarded as that rare breed, a ‘tastemaker’, a company that successfully creates a new market. Starbucks has repositioned coffee as an ‘affordable luxury’, and has provided a suitably mellow environment for people to indulge in it. The company’s Chairman and Chief Global Strategist, Howard Schultz, is a lean corporate colossus fêted by stock analysts and the business press. He is the ‘author’ of the soft-focus New Age autohagiography entitled Pour Your Heart Into It in which he writes that ‘My ultimate aim … is to reassure people to have the courage to persevere, to keep following their hearts even when others scoff. Don’t be beaten down by naysayers.’ It is unlikely that the smallholder abandoning his coffee plantation in Guatemala for a dismally uncertain future in a city shanty-town would derive any comfort from Schultz’s inspirational message. The price that his coffee achieves in the branded coffee shops of the developed world clearly spells out imbalance and inequity. Starbucks generally buys better coffee than many companies, and consequently pays the higher price by which its Public Relations division sets great store; but it is no coincidence that the company has become one of the prime targets of the anti-globalization movement. It has come to represent the unacceptable face of unfettered capitalism with its combination of modern aspirational marketing techniques and an attritional strategy towards its independent competitors. Crucially, in the eyes of activists, it also has a lead product that is effectively subsidized by the suffering of Third World farmers.

The widening gap between the haves and the have-nots in our globalized economy is brutally exemplified by the growing inequalities in the coffee trade, and, just as politicians in wealthy Western nations respond to popular concerns about Third World poverty with spin rather than substance, so the major corporations that have benefited from the current world coffee crisis have demonstrated a notable lack of commitment to doing anything about it beyond window dressing. Procter & Gamble, makers of Folgers, maintain that they contributed $10 million to community programmes in Mexico, Brazil, and Venezuela. Kraft, Sara Lee, and Nestlé claim that they go out of their way to help small producers, ‘ensuring that they receive the full value of their crop’, according to a Nestlé spokesman. Presumably this comment is designed to reassure concerned consumers that the transnationals do not actually steal the coffee at gunpoint.

The poverty of the world’s coffee farmers contrasts with the coffee trade’s wealth of statistics. Most of these emanate from an unremarkable 1960s office block in Berners Street, just north of Oxford Street in London, in which can be found the down-at-heel remnants of the once globally powerful International Coffee Organization (ICO). Funded by coffee-producing nations (invariably tropical and undeveloped), as well as consuming nations (generally Western and developed), in its heyday the ICO, with all its undoubted flaws, was a pragmatic attempt by the world coffee trade to mitigate the effects of wilder fluctuations in coffee prices. These arose from a combination of over-supply punctuated by periodic crop failures in Brazil. Although the motivation for the creation of the ICO was primarily commercial rather than philanthropic – chronic instability in a market is bad for business – the net effect was to impose limits on the gap between poverty and privilege in the coffee trade. Mandated by the International Coffee Agreement (ICA), which was signed under the auspices of the United Nations, the ICO promoted, regulated, monitored, and administered the ICA, which worked through an elaborate quota system permitting the pre-agreed restriction or expansion of coffee supplies to keep prices within certain thresholds. However, the full functioning of the ICO required the active participation of the USA, consumer of 25 per cent of the world’s coffee. Whilst there was a perceived threat of creeping Communism in the coffee-producing countries of Central America, it was in the best interests of the USA to support the ICA in order to help defuse social unrest in its backyard; but with the break-up of the Soviet Union this raison d’être evaporated and the ideologically driven policies of laissez-faire capitalism were given full rein. An international commodity-price control agreement had no place at the neo-liberal economic table, and the USA withdrew its support for the ICA in the late 1980s, and from the ICO itself six years later. The importance of the Berners Street headquarters of the ICO thus diminished; the research laboratory, lecture theatre and other facilities were closed down, and the promotional budget was slashed. The organization still hosts meetings of the member nations, and still compiles statistics with commendable zeal, but is a shadow of its former self.

The problems resulting from the market free-for-all unleashed by the US withdrawal from the ICA were exacerbated by the World Bank and its cousin, the Asian Development Bank. Both of these institutions had lent heavily to Vietnam in the mid 1990s in line with their mandate to stimulate low-cost production and end market inefficiencies. Having massively defoliated the nation with Agent Orange during the Vietnam War, the USA promoted – through the World Bank, in which it has a controlling stake – the refoliation of Vietnam with low-grade Robusta coffee bushes, with a devastating effect on the other Third World economies dependent on coffee. From its previous position as a very minor producer of coffee, by the year 2000 Vietnam had become the world’s second largest coffee producer after Brazil, exporting 9 million bags of 60 kilos each – still of low-quality Robusta – which, along with Brazilian coffees harvested by machines, were produced at a labour cost of one-third of that required for the higher-quality Arabicas of many other producing countries.

The result of the Vietnamese expansion was a catastrophic fall in prices, as well as a considerable falling-off in the quality of coffee blends internationally. Robusta is a coarse-flavoured strain of the coffee plant that is more resistant to disease than its refined cousin, Arabica. It is also considerably cheaper and, despite its low quality, represents an opportunity for roasters to improve their margins. The flood of Vietnamese Robusta on to the market depressed the price of all coffees, and thus the smallholders elsewhere who tended to the plantations producing high-quality Arabicas found their margins inexorably squeezed. Good coffee comes at a price, and for many that price could not be obtained on the world’s markets any more. The situation was sufficiently serious for the usually conservative coffee trade magazines to produce hand-wringing editorials: ‘Vietnam is now the Number Two world producer of coffee – plenty of Robusta for all and more. Yet roasters claim there’s little if any Robusta in their blends. Well, who is buying it all then – the man in the moon?’ The men in the moon in the form of traders in Germany, Italy, and Poland devised a new method of steaming Robusta coffee to remove the worst of its harsh flavours, allowing roasters to use even more in their blends. Junk retailers sold junk coffee to junk consumers at the lowest price point. The World Bank remained unrepentant. ‘Vietnam has become a successful producer,’ said Don Mitchell, principal economist at the Bank. ‘In general, we consider it to be a huge success.’ However, fulfilling the dire predictions concerning the ‘race for the bottom’ (the tendency for export markets for Third World products to migrate to whichever country has the cheapest labour) made by many international NGOs and aid organizations, one of the victims of Vietnam’s success recently has been Vietnam itself. The price of coffee has tumbled so far that farmers there are starting to tear up the newly maturing coffee bushes because they cannot cover the costs of production. The unsubstantiated rumours that China, with its vast low-paid labour force, has started to gear up for the creation of a large-scale coffee industry, assisted by Nestlé, may mean that Vietnamese coffee will be further priced out of the market and that the country’s brief moment in the sun will be over.

While coffee-producing countries fight over the diminishing scraps falling from the consuming countries’ table, a separate coffee futures industry flourishes in London and New York. Coffee futures were originally designed as a financial instrument to enable coffee traders to hedge against windfall gains or losses resulting from movements in coffee prices over time. The creation of a futures market depends upon there being an acceptable set standard of coffee that forms the basic unit of contract – the New York ‘C’ market uses contracts based on ‘Other Milds’ (including Colombian, Kenyan, and Tanzanian Arabica), the London market uses Robusta coffees. The creation of these standards has been possible because of the relatively predictable nature of coffee production: tea, a commodity that varies much more by the year, the season, the weather, and the day of picking, has yet to evolve a futures market because it has not been possible for traders to find, let alone agree upon, a homogeneous type to form the unit of contract.

The coffee futures market is a financial instrument that has now assumed a life of its own largely abstracted from the real trade in coffee. Speculators and investment funds trade on the market with no intention of ever seeing a single coffee bean delivered. It is grimly ironic that, whilst coffee farmers struggle for survival, the capitalist institutions based on the same commodity flourish, and it is no coincidence that when the vast trading floor of the New York Coffee, Sugar & Cocoa Exchange, formerly housed in the World Trade Center, was destroyed on 11 September 2001, it was able to resume business almost seamlessly in contingency premises prepared after the previous bomb attack in 1993 and maintained at a cost of $350,000 a year. The Third World, in the meantime, has neither the financial resources nor the political infrastructure to be able to respond meaningfully to the crisis it faces. The only international organization of coffee growers, the Association of Coffee Producing Countries, shut its doors in January 2002. Although speaking for over 70 per cent of the world’s production, it was unable to find unanimity amongst its member countries, never mind amongst those outside the organization. Colombia’s Federation of Coffee Growers, a central buying and marketing organization which for over seventy-five years had successfully helped its smallholder members to absorb the worst of global coffee price cycles, is now straining under additional pressure from the increasing violence and instability of that country. The membership is sometimes turning to illegal coca cultivation in desperation. ‘Colombia is facing a deep internal crisis related very much to the situation of drugs and coffee,’ the Secretary General of the association of producers reported. Similar national marketing organizations in other producing countries have collapsed over the last ten years, defeated by the World Bank and the IMF’s insistence on placing stringent conditions on loans to countries operating any constraint over the free market. The Nicaraguan Government, for instance, had to drop proposals to delay foreclosures on loans to coffee growers after intensive pressure from the IMF and the Inter-American Bank.

The large-scale social unrest forecasted as a result of the poverty and displacement caused by the near-collapse of the coffee industry continues to grow. New Guinea highlanders are reported to be abandoning their plantations; Indian and African smallholders have uprooted their worthless coffee plants; Nicaraguan coffee workers marched on Managua and fourteen of their counterparts from the oppressed state of Chiapas in Mexico were found dead of starvation and dehydration in the Arizona desert, where they had been dumped by the people they had paid to smuggle them into the USA. By 2001, Oxfam had reported that, in real terms, ‘coffee prices are lower than they have ever been’ and that a minimum price mechanism of $1 a pound should be installed – roughly double the prevailing price. The newly formed British Coffee Association of leading roasters dismissed the report’s findings as ‘too short term’, although they conveniently neglected to come up with a long-term alternative.

While there is evidence that ‘Fair Trade’ coffees have had a significant impact on a minority of consumers, the four transnational roasters that dominate the world coffee trade and the six multinational exporters that control 40 per cent of the export trade are unlikely to turn into corporate do-gooders overnight. The central concept of Fair Trade coffee – that the price paid for coffee allows growers to receive a living wage – has also remained of marginal interest to cut-price retailers and bargain-hunting consumers alike. Similarly, ‘shade grown’ and ‘bird-friendly’ coffees – those grown in a more environmentally sensitive way that helps to preserve the local ecosystem and migratory bird life – have found their way onto the shelves in the USA, but the industry as a whole continues to back technologies that bring down the costs of production with scant regard for the social or environmental costs.

The most recent manifestation of this tendency was the announcement that a new Genetically Modified coffee is in development that would allow the ripening of coffee beans on the bushes to be triggered chemically, obviating the need for the labour-intensive process of harvesting the bushes repeatedly by hand as they produce a mixture of flowers, unripe cherries and ripe cherries. By cutting back on labour requirements, the new GM technology threatens primarily the livelihood of producers of high-quality Arabicas. In Brazil, where quality standards are less demanding, one pass with a vast coffee-harvesting machine already does the trick for over half of the coffee grown there. The producers of quality Arabicas are precisely the ones suffering most from the current crisis in the industry, so the prospect of GM coffee is a particularly cruel blow. Those who back the technology say that it will enable poor coffee farmers to control the timing of the harvest and enable them to grow other crops. Detractors point out that it will also enslave them to the use of specific – and expensive – proprietary seeds and chemicals, with no guarantee that they will receive higher prices for their coffee.

The development of GM coffee – which will probably be ready for the market within five years – has been possible because coffee is the single most scientifically scrutinized of foodstuffs. Coffee science is in part research and development, in part a concerted attempt by the industry to combat the attacks made by the medical profession on coffee, and particularly caffeine, its most active ingredient. Funded largely by the transnationals, bulletins extolling the health properties of coffee issue forth from apparently independent scientific bodies, while anti-caffeine scientists and campaigners fight battles for legislation to curb the widespread, unregulated use of the drug, not just in coffee, but also increasingly in soft drinks and ‘energy’ drinks.

The world consumes the equivalent of 120,000 tonnes of pure caffeine per annum, just over half in the form of coffee. Caffeine itself is a white alkaloid with a sufficiently pronounced bitter taste to make its absence noticeable in decaffeinated coffees. It is possible to kill oneself with a caffeine overdose: about ten grams, or the equivalent of a hundred cups of coffee rapidly consumed, will do the trick for an adult, making Balzac’s daily consumption of sixty cups of coffee decidedly risky. Less than 3.5 grams is lethal for children, and early researchers showed that ‘a 1/67 of a grain of caffeine will kill a frog of moderate size’, should you happen to have such a frog that you have ceased to be fond of. Smoking increases the rate at which caffeine is metabolized by the body (smokers therefore experience less effect), whereas drinking decreases it. Caffeine does not counteract the debilitating effect of alcohol although it may give the illusion of so doing. Caffeine intoxication has its own entry in the USA’s Diagnostic and Statistical Manual of Mental Disorders. The diagnostic criteria assume the recent consumption of more than 250mg (50mg less than the daily recommended safe dose), and as well as the usual suspects include gastrointestinal disturbance, muscle twitching, rambling flow of thought and speech, tachycardia or cardiac arrhythmia (palpitations), and psychomotor agitation. They do not include the ‘bilateral burning feet’ and ‘restless leg’ syndromes that have been clinically noted elsewhere. Caffeine intoxication can tip over into caffeine psychosis, which can produce hallucinations: truck drivers in the USA have reported being pursued by balls of white light, which suggests that caffeine psychosis could explain the widespread belief in UFOs in that country. It is also claimed that caffeine ‘is capable of undermining psychological well-being’, although there are individual variations in sensitivity – ‘patients with anxiety disorders may find the normal effects distressing, whilst the non-anxious find them pleasant and stimulating’. Long-term caffeine intoxication, which is called ‘caffeinism’, is more common in psychiatric patients, who in general consume more caffeine than the rest of the population. Caffeine is believed to cause urinary incontinence in the elderly, and has been found (with unknown effects) in the systems of new-born infants who do not have the necessary liver enzyme to metabolize it. There is also evidence to suggest that caffeine can cause osteoporosis as it increases the rate of calcium elimination from the body. On the plus side, caffeine is used to treat neonatal apnoea (cessation of the spontaneous breathing of an infant) and to increase sperm mobility.

It is remarkable that we voluntarily introduce this powerful drug into our systems knowing so little about what it might be doing to us. While the producing countries face ruin, the West, so the gainsayers maintain, has become a dangerously caffeinated society. The cheap, coarse-flavoured Robusta coffees that are dragging world prices down contain twice as much caffeine as higher quality Arabicas. There are the first sign...

Table of contents

• Title page
• Copyright
• Contents
• Preface
• Prologue
• Introduction
• 1 The Way We Live Now
• 2 Origins
• 3 Enter the Dragon
• 4 The Mocha Trade
• 5 Coffee and Societies
• 6 The Fall of Mocha
• 7 Slavery and the Coffee Colonies
• 8 The Continental System and Napoleon’s Alternative to Coffee
• 9 Napoleon and St Helena
• 10 Slavery, Brazil, and Coffee
• 11 The Great Exhibition
• 12 Harar and Rimbaud: the Cradle and the Crucible
• 13 Modern Times
• 14 Coffee, Science, and History
• 15 The Battle of the Hemispheres
• 16 Fair Trade
• 17 Espresso: the Esperanto of Coffee
• 18 The Heart of Darkness
• Coda
• Appendix – The Find at Kush
• Epilogue
• List of Illustrations
• Picture Section
• Selected Further Reading
• Index
• Acknowledgements for the Revised Edition
• P.S.: Ideas, Interviews & features …
• About the Author
• By the Same Author
• About the Publisher