The Global Coffee Trade Crisis

Background

Ethiopian coffee farmers harvest some of the world’s best-tasting coffee but “…cannot afford to send their children to school, buy medical supplies, or even purchase enough food” as reported by Oxfam. (Oxfam Australia, 2009) This is primarily because they are cheated by middlemen who often buy their coffee at low prices since the coffee farmers usually lack access to information about market (cell phones or computers), so cannot afford to locate fair trade opportunities. The farmers are desperate for any upfront cash offered by middlemen and therefore often agree to low prices before harvest.

Given these challenges, Oromia Coffee Farmers Cooperative Union (OCFCU) was established in 1999 to represent over 23,000 farmers. The union returns 70 percent of the profits to the farmers. “We used to sell our coffee to exporters who would cheat us and sometimes they did not pay us at all. Now we know the value of our coffee and we receive profits from the coffee sold by the Union”, says Miju Adula, Chairman Kilenso Mokonisa Cooperative, OCFCU. (Howard, 2005, p. 37)

This case study illustrates the story of the Oromia Region coffee farmers, and how OCFCU has eliminated many of the middlemen who drive up the prices of coffee through ‘fair trade’. This concept has been embraced by producers in developing countries who are poor, and cannot directly access fair market prices, yet their products are producing billions of profits in the United States and United Kingdom. (Holden, 2006)

Coffee in Ethiopia

Classified by the World Bank as a low income, highly indebted country, Ethiopia is one of the poorest countries in the world. However, Ethiopia is recognized as the birthplace of coffee and now produces around 220,000 tonnes of coffee a year, with more than 1.2 million coffee growers, 95% of which

...