Socioeconomic Effects of Coffee Trade on the Ethiopian Farmer
Socioeconomic effects on farmers in a volatile Ethiopian coffee market and the promise of the Fair Trade movement
Coffee and Ethiopia have shared a lengthy and highly tumultuous relationship. According to some, their history dates back to the fifteenth century, but it is widely acknowledged that extensive trade didn’t begin until the late eighteenth century (Aregay 1988, 19). As world coffee consumption skyrocketed in the nineteenth and twentieth centuries, Ethiopia’s economy grew increasingly dependent on the industry. By the mid 1970’s, it’s estimated that coffee accounted for a staggering 55% of all Ethiopian exports. This figure has since declined, and today it’s estimated to be somewhere around 35% (Daviron, Ponte 2005, 61-62). The steady decline in production from the 1970’s to today has been attributed mainly to increased coffee production elsewhere, notably Brazil and Vietnam. These nations have developed massive coffee industries and are recognized as fierce competitors to African nations. Though today’s market is highly saturated thanks to globalization, world coffee prices are still rising. Why is it that an increase in availability leads to an increase in cost? Daviron and Ponte, authors of The Coffee Paradox, suggest “the growing gap between the price of the raw material and the final product is the result of oligopolistic rents captured by an increasingly concentrated roasting industry” (Daviron, Ponte 2005, 3-4). Ethiopia has suffered greatly as a result of these systematic transformations; the average Ethiopian coffee farmer makes merely 2-3% of his coffee’s retail price. Due to volatility in world coffee trade, stemming from overproduction and the excessive profits of roasters, today’s coffee farmer in Ethiopia faces tremendous socioeconomic strain. To combat this strain we must look to fair trade, the logical and ethical solution. It’s important to examine the history of Ethiopian coffee to best understand its status today. A notably
Coffee and Ethiopia have shared a lengthy and highly tumultuous relationship. According to some, their history dates back to the fifteenth century, but it is widely acknowledged that extensive trade didn’t begin until the late eighteenth century (Aregay 1988, 19). As world coffee consumption skyrocketed in the nineteenth and twentieth centuries, Ethiopia’s economy grew increasingly dependent on the industry. By the mid 1970’s, it’s estimated that coffee accounted for a staggering 55% of all Ethiopian exports. This figure has since declined, and today it’s estimated to be somewhere around 35% (Daviron, Ponte 2005, 61-62). The steady decline in production from the 1970’s to today has been attributed mainly to increased coffee production elsewhere, notably Brazil and Vietnam. These nations have developed massive coffee industries and are recognized as fierce competitors to African nations. Though today’s market is highly saturated thanks to globalization, world coffee prices are still rising. Why is it that an increase in availability leads to an increase in cost? Daviron and Ponte, authors of The Coffee Paradox, suggest “the growing gap between the price of the raw material and the final product is the result of oligopolistic rents captured by an increasingly concentrated roasting industry” (Daviron, Ponte 2005, 3-4). Ethiopia has suffered greatly as a result of these systematic transformations; the average Ethiopian coffee farmer makes merely 2-3% of his coffee’s retail price. Due to volatility in world coffee trade, stemming from overproduction and the excessive profits of roasters, today’s coffee farmer in Ethiopia faces tremendous socioeconomic strain. To combat this strain we must look to fair trade, the logical and ethical solution. It’s important to examine the history of Ethiopian coffee to best understand its status today. A notably