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ETHIOPIA: Feature - The high cost of coffee

CHOCHE, Oromiya, 24 September 2002 (IRIN) - In Ethiopia they used call coffee their gift to the world. But for the impoverished African country, known for being the birthplace of coffee, that gift has now become a poison chalice.

World coffee prices have plummeted, Ethiopia’s earnings from its biggest export have slumped by more than a half, and already-poor farmers face total ruin.

Abba Milki, 80, has grown coffee all his life. “I am standing on the ground where coffee was first grown,” he told IRIN proudly. “Our ancestors grew coffee, it is engrained in our history. But soon no-one will be growing coffee anymore in Choche. We cannot afford to."

With almost perfect conditions, farmers in Choche, near Jimma in Ethiopia's Oromiya region were once relatively well off thanks to coffee beans which can be found in almost every spot of this lush, fertile countryside. But over the last five years that wealth has been totally eroded.

They now wear tatty, worn out clothes and many have even taken to selling off the tins roofs which once set them apart from their poorer neighbours. Many, who grow their beans on government-owned small 0.75-hectare farms, are also ripping up the thriving bushes still laden with beans to plant maize, simply to survive.

COFFEE VITAL FOR ECONOMY

In Ethiopia a million people depend on coffee for their entire income. Some 15 million households benefit indirectly from coffee sales.

Its importance in securing vital foreign currency cannot be overestimated. Coffee accounts for about 60 percent of exports – but in the last few years the crucial dollars secured from coffee have plummeted from US $257 million to US $149 million per year.

The economy teeters on the brink because of the crash. It poses a major hurdle to Ethiopia’s poverty reduction strategy – whose central plank is agriculture-led development, such as coffee.
It also promises to throw off course the debt relief formula produced by the World Bank and International Monetary Fund, which is dependent on sustainable strong growth in exports.

Coffee also plays an important role in Ethiopian culture. Ethiopia proudly uses the ancient coffee ceremony on almost all tourist promotional literature. Any visitor to the country will usually be invited to a ceremony.

According to experts, farmers in Choche produce some of the finest organic Arabica beans – the highest quality beans - in the world. Third world farmers receive a paltry one percent of
the final price of a cup of coffee. Yet the big coffee sellers are making annual profits in the region of 26 percent.

The crisis is also hitting employers in the region. In a country as poor as Ethiopia, the average income is around a dollar a day. Once-wealthy large producing farmers are also now find themselves totally indebted to banks.

“The bank came the day before you arrived,” said Zeleke Mekuria, with tears streaming down his face. “They want my house. They said they would take it if I cannot repay the debt, which I can’t. Where will my children live?"

Zeleke, 54, used to employ 150 people on his coffee farm, but now just 14 workers pick berries on his 14-hectare farm. He has also cut the salaries from six birr (US $0.70) a day to 3 birr. The knock-on effects for the local economy are all too obvious.

DIFFICULT TO DIVERSIFY

But turning to other crops for export poses problems. Massive trade barriers by the European Union and United States have meant diversification is a problem. Oxfam International warns that the collapse in prices is not only devastating poor economies. It argues that it is exacerbating a serious drought in the country and forcing farmers to turn to cash crops like chat - a mild stimulant. But it also says there is a way out.

Already some of the coffee grown in Oromiya is being exported under fair trade packaging to the US. Steve Sellers, from the US-based TransFair organisation says the US market is crying out for specialist fair trade coffee at an acceptable price. In the last year, his company has doubled the amount of fair trade coffee being imported into the country.

But it still accounts for a tiny fraction of the US market, just half a percent. However Sellers argues this means they can make deep inroads and boost the supply of high grade specialised coffee.

ENORMOUS IMPACT

Oromiya Vice President Mohammed Alyi said without help from the rest of the world the economic and social impact would be enormous.

“Unless reliable solutions are sought the situation might get to the stage where it is irreversible,” he warned.

Oxfam International's campaign has devised a rescue plan for third world coffee growers – based on reducing supply and the big four roasting companies agreeing to forgo some of their profits.

But in Choche, the farmers struggle to retain any hope for the future.

Abba’s gnarled hands clutch his walking stick. “All I know is coffee," he says. “What I don’t understand is that people in your country drink it but I receive nothing. Why should we grow coffee when all it does is ruin us?”

Theme (s): Economy,

[This report does not necessarily reflect the views of the United Nations]

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