World Coffee Market – the Impact of Speculation

July 16, 2008
Understanding the intricacies of the world coffee market is no easy task. Throughout history, coffee farming families have been at the mercy of the world market prices, largely dictated by climatic issues, supply and demand and the ever-hungry profiteers who have long negotiated for prices that fatten their wallets. To understand how the conventional world market work, check out this piece from coffeeresearch.org.
      This year, the world coffee market saw more volatility than in years past due to increased speculation by  a new wave of traders. According to a recent article by Sam Kornell called ‘Commodity Speculation: Gambling with the futures of farming families’ in CoffeeTalk magazine,”Commodity speculation (including coffee) in the United States changed fundamentally . . due to a rather obscure piece of legislation written by Republican Senator Phil Gramm that substantially relaxed, and in many cases eliminated completey, federal regulation of futures trading in American commodity markets. Gramm essentially managed to turn American commodities markets into a kind of  financial Wild West”.
     From 1936 to 2000, the year when Gramm slipped the controversial legislation through by attaching it to a 11,000 page omnibus Senate appropriation bill, speculation in the commodities (sugar, cocoa, coffee) markets was limited to experienced investment firms whose trading practices were regulated by Congress. After 2000 world commodity markets were opened to the whims of day-traders and less experienced and unregulated investors.
     Couple this with last year’s purchase of the New York Board of Trade (NYBOT which housed the arabica coffee trading system in addition to cotton, sugar and other commodities) by the Intercontinental Commodities Exchange (ICE), a British electronic energy marketplace. Sam Kornell writes, “The sale of NYBOT to the ICE made it even easier for non-commercial investors to get in – in a big way – on the commodities futures action. For one thing, the ICE and other electronic markets are harder to regulate, and they make investment in commodities contracts relatively easy”.
     Add to this falling stock market prices and the devaluation of the US dollar and the result is a very tenuous situation for coffee farmers and buyers. While market prices have escalated tremendously – a good thing for farmers – the uncertainty of the future weighs heavily on the mind of our partners in the field. They’ve watched the cycles come and go and they worry that, while their cost of goods continue to sky-rocket, the market will once again bottom out as it does time and time again.
To read the full article Commodity Speculation: Gambling with the Futures of Farming Families by Sam Kornell in Coffee Talk click here: http://www.coffeetalk.com/images/CTJun08web.pdf

 
The next installment of this newsletter will include a piece about how Higher Grounds Trading (in conjunction with our importing co-op, Cooperative Coffees, is bucking the conventional trading system). We trade directly with our partner farmers, negotiating prices far above fair trade minimums via transparent and friendly conversations with our producer partners.  Suspenseful, I know . . .

 

 

 


The Grassroots take on NAFTA

June 17, 2008

By Chris Treter

We’re 14 years into NAFTA and many throughout the U.S. don’t know what the North American Free TradeManifestation at the Other Campaign in Chiapas, Mexico Agreement (NAFTA) is or have forgotten its’ significance. That isn’t true south of the border where the gap between the rich and poor continue to grow at an alarming rate.

Meanwhile, 2008 sees the governments of Canada, the United States, and Mexico working on the Security and Prosperity Partnership. However, from the looks of the advisory board which include the CEO of Walmart and 28 big businesses, security and prosperity for all in North American seem to be far from its objectives.

In multiple visits to Mexico in the past decade we’ve
been witnesses to the lasting negative impacts of neoliberal economic policies manifested within NAFTA. From increased migration in southern corn and coffee growing communities to diminishing mom and pop shops being replaced with big box stores, cultural assimilation is on the move and the grassroots are fighting back. Check out “Reclaiming Corn and Culture” in YES! Magazine by Wendy Call to learn more about the role coffee cooperative are playing to support community sustainability.


Revolutionary Agrarian Law Struggles on in Bolon Ajaw

March 18, 2008

Posted by Chris Treter

As you sip your morning cup of coffee, there are many throughout the world that are living a daily struggle of survival. However cliché as it may sound, it is true. Many of the world’s coffee farmers have no formal support network except for their family and neighbors. They pick bean by bean from the tree and travel miles away to the nearest market, selling to the highest bidder. Called a coyote, the individual then sells to a larger coyote – he who has a warehouse. The big coyote sells to a processor – one who can process the coffee for exportation. They then sell it to an exporter who sells it to an importer who sells it to a roaster. Those beans are roasted up and then find their way to your cup at your local gas station or diner. Since so many players get a piece of the coffee dollar, very little ends up in the hands of the farmer. The bit they do earn then goes to purchase staple products for the family – shoes, clothes, maybe a flashlight to light their way in a village without electricity.

Such is the life for the chttps://i1.wp.com/www.traveljournals.net/maps/311/3117839-agua-azul-mexico-map.jpgommunity of Bolon Ajaw where many in the community hike hours to tend to their coffee fields. Theirs’ is a remarkable story of perseverance in the face of persecution. On the 12 of March, 2003, 47 Zapatista families established the community of Bolon Ajaw on the banks of Rio Azul in Northern Chiapas, Mexico. The establishment of the community was part of the EZLN’s, Revolutionary Agrarian Law which states that,

“The poor campesinos’ movement in Mexico demands the return of the land to those who work it and, in the tradition of Emiliano Zapata and in opposition to the reforms to Article 27 of the Mexican Constitution, the EZLN again takes up the just struggle of rural Mexico for land and freedom.”

Through this Zapatista Law, thousands of acres of land have been redistributed to the landless and poorest of the campesinos in Southern Mexico. Having righted a bit of the mal distribution of tierra, most of the landowners have been compensated for their land. The Revolutionary Agrarian Law is a direct response to the elimination of Article 27 by Mexican President Carlos Salinas de Gotari. At the demand of the U.S. government, Salinas eliminated the provision in the early 90’s in preparation for NAFTA. Article 27 stated that ejidos (communally held land) cannot be privatized and sold. By allowing for the privatization of communally held land, the elimination of Article 27 has paved the way for the sale of valuable land and its resources to the highest bidder – often times transnational corporation looking to take the resource and turn a profit.

This was a kick in the teeth to the poor campesino and indigenous communities throughout the country. The ejido system was a hard fought //web.ku.edu/~mexind/source%20data/procede_pic_guelatao.JPG” cannot be displayed, because it contains errors.
victory resulting from the 1910 revolution when revolutionaries like Emiliano Zapata fought and died for the poor of Mexico. For this reason, among others, thousands of Tzotzil, Tzeltal, Chol, and Tolajobal Mayan people rose up against the Mexican Government on Jan. 1st, 1994, the day NAFTA was implemented throughout North America. Evoking the memory of Emiliano Zapata, they called themselves the Zapatistas and ushered in an international movement against neoliberalism and in defense of humanity.

Along with the implementation of NAFTA, the Mexican government has further worked to deteriorate the ejido system by forming programs and supporting organizations which work to dismantle the very threads of communal living. PROCEDE (Program for Certification of Rights toEjido Lands) has three objectives: a) surveying and certifying parcels of land, b) certifying rights to common use lands, and c) titling urban plots for individuals. According to many analysts and thousands of indigenous communities, the program which offers incentives to gain private ownership to communally held land is a form of neoliberal economic policy that leads to migration, deterioration of community and pulls the indigenous population away from the natural resources of which they have protected and held sacred for centuries.

In order to ensure compliance with PROCEDE, paramilitary groups masked as “indigenous organizations” have reemerged. Bolon Ajaw is one of many Zapatista communities aggressively attacked by The Organization for the Defense of Indigenous Rights (OPDDIC), a right wing organization considered by many Human Rights Organizations and indigenous communities as a paramilitary organization. In the past two years they have become an increasing force throughout the Selva Lacandona and the Northern Zone of Chiapas. Under the pretext of “disputing lands” recovered under the Revolutionary Agrarian Law, the group aims to force indigenous communities off of recovered collectively owned lands and try to gain private ownership.

Occupation and Conservation

The Revolutionary Agrarian Law not only calls for the occupation of land but also aims to conserve it. “Zones of virgin jungle and forest will be preserved. There will be reforestation campaigns in the principal zones.” Bolon Ajaw is a prime example of the Zapatista attempts to conserve and cherish the abundance of natural resource.

The community is prime real estate. Nestled between a steep hillside and the banks of the Rio Azul, it is home to three of the most beautiful waterfalls in the state. Members of Ejido Agua Azul, a nearby tourist destination have joined OPPDIC and demand that the habitants of Bolon Ajaw pack up their bags and move elsewhere. “There are major plans for tourism in these parts,” Juan, a resident and Zapatista supporter in Bolon Ajaw who asks that his identity be kept secret tells us. “We want to work the land and be left peacefully alone.”

A hike to the waterWaterfall Bolon Ajawfalls with the children of the community quickly confirms how valuable this land is. The journey is filled with sights, smells, and tastes beyond one’s North American experience. Cacao trees, a part of the culinary heritage of the Mayan people, fill the shaded canopy of diverse native trees. Deep, dark soil softens each step as the smell of clean fresh water fills your nostrils as water splashes high into the air from the white water of the river below. Appetites are satisfied as our young host, Maria, a thirteen year old Zapatista girl dressed in a traditional bright colored huipil hands us fresh corn and beans straight out of the field we hike through.

Even as an eventual confrontation with the paramilitary and government loom. Daily life in the community continues unabated. Morning finds the women waking early to get the fire going in their dirt floored kitchen while they quickly prepare masa to make tortillas. After an older man blows into a conch shell to signal the beginning of the collective work day, men arrive to a pile of wood near the church. By days ends it will transform into a school. Meanwhile children play with our group in the river, enjoying the fast moving cool water on a hot sun drenched day.

On numerous occasions the members of Ejido Agua Azul have entered the community and shot their rifles, threatened and violently attacked members of Bolon Ajaw. Typical fashion includes entering the community and shooting into the air while verbally threatening the villagers. More egregious acts very recently include:

11th of September, 2007 – 50 members of OPPDIC entered Bolon Ajaw and brutally beat 3 members of the community

24th of November, 2007 – 80 members of OPPDIC entered Bolon Ajaw and brutally beat a sick man until he lost conciousness. They then went on to harass and beat an 8 year old child, pulling his fingers until he screamed.

2nd of January 2008 – After hearing shots in the milpa, villagers found a shirt strung from two trees with machete tears through it. A clear indication of what may happen if the community doesn’t pack their bags.

Four days after we left Bolon Ajaw and a day after a deadline to leave the community or face eviction, the paramilitary and state police again entered on February 21st, 2008. They shot guns and beat two women with their pistols. This time though, the community gathered on the outskirts of the village. With sticks in hand, they demanded the police retreat. An armed “reporter” was with the police and was detained and dearmed by the Zapatistas. In a February 24th La Jornada article, journalist Herman Bellinghausen reported that the “reporter” in question was actually an agent from the National Security Investigation Center (CISEN), Mexico’s top intelligence agency.

When asked why OPDDIC continues to harass them, residents of Bolon Ajaw told Gloria Munoz of La Jornada, “ So that we have fear. That is why they harass us. They say that they are going to kidnap us, they are going to cut our necks and cut us up into little pieces….We want to resolve the problem peacefully. We are not looking for a confrontation. We only want to work the land and be left alone. We are not going to leave,. They’ve already done all this and here we still are. And here we will die.”

Elsewhere, the Zapatistas, NGOs, international supporters and Human Rights Organizations are gearing up for a long struggle. February 15th saw people in nearly a dozen countries manifest their support for the Zapatista communities under threat. The Center of Political Analysis and Social and Economic Investigations (CAPISE) and Peace and Justice Service in Latin America (SERPAJ) are launching a legal case against the members of the Tzeltal Indigenous Ecotourism of the Agua Azul Waterfalls. On December 30th, CAPISE and SERPAJ organized an Observational Land and Territory Brigade (BOTT) to Bolon Ajaw. When leaving, they were briefly detained and threatened by members of OPPDIC from Ejido Agua Azul. Luckily they caught some of it on video tape. Today, NGO’s throughout Mexico are encouraging tourists to boycott the water falls of Agua Azul, sending a clear message to Ejido Agua Azul that the world cares what happens along the banks of their river.


The Wall Street Journal’s Fair Trade Faux Pas

March 12, 2008

Posted by Chris O’Brien

Today the fair trade adventures of the Bean Activists hit the big time in a story covering fair trade coffee tours in the Wall Street Journal.

The article gets off to a bad start by making the most common mistake of sloppy journalists covering fair trade – interchanging the terms “free trade” and “fair trade.” These terms are prima facie contradictory in meaning. Free trade in this context refers to the conventional global coffee market that allows coffee to be traded as a commodity on the New York coffee exchange. Fair trade refers to a system of trade that embraces principles of social and economic justice. Please, journalists, get this right. Your job is to communicate clearly, not to confuse very basic facts. If I seem testy about this it is because fair trade is complex enough as it is without the media complicating it further by making easily avoidable mistakes.

I suspect the journalist in question may actually be sympathetic to fair trade, as is often the case with people covering this issue, but unfortunately the article only gets worse after the unforgivable “free trade” faux pas. In predictable WSJ form, the article treats fair trade coffee tours as little more than a low-cost marketing tool used for building customer loyalty and increasing business.

Even worse is that the article contends that small coffee roasters embrace fair trade merely as a way of carving out a business niche. While this is undoubtedly true for some roasters, it is most certainly not true for at least two of the companies referenced in the article: Higher Grounds and Just Coffee.

They see their devotion to fair trade as a way to set themselves apart from less socially conscious competitors. And these companies are using tours to coffee farms that use fair-trade practices as a way to reinforce that mission — and, ideally, forge a stronger connection with current and potential customers who also are committed to the cause.

Higher Grounds was started by Chris and Jody Treter as a way of addressing economic and political injustices in Chiapas, Mexico. Just Coffee has a similar commitment to justice and sustainability. They even say so in their company tagline: “Not just a market but a movement.” In other words, they are specifically not trying to differentiate themselves from other coffee companies but rather to align with those who hold similar convictions regarding fair trade.

Fondo PaezI know from first hand experience that Higher Grounds conducts tours as primarily an opportunity for educational outreach (that’s me in the cowboy hat at left, with L-to-R Mel from Peace Coffee, Chris and Jody, and Miguel from Fondo Paez).
Higher Grounds does conduct paid fair trade coffee tours to Chiapas. Do they cover their costs through participant fees? Sure. Does it ultimately lead to increased customer loyalty and hence improved sales? Probably. Is that why they do it? No.

In fact, the particular tour pictured above was actually not even a paid tour – we were all there at our own expense to learn about the indigenous farmer coop Fondo Paez. To be fair, the journalist may not have known that about this particular picture, but it does point up the fact that the Journal seems incapable of seeing human behavior through any thing but a capitalist lens.

The point of fair trade is that profit isn’t the only thing driving human behavior. Justice and sustainability are important in their own right – not just as marketing strategies that permit business growth. The Wall Street Journal article misses this point entirely.


Coffee Review Gives High Score to Fondo Paez (roasted by Kickapoo)

March 2, 2008

Most anyone involved in the fair trade coffee movement can tell you that dectractors of fair trade often argue that the quality of fair trade coffees aren’t on par with micro-lots (small amounts of coffee purchased from one farmer) or ‘Cup of Excellence’ coffees. This is illogical for several reasons. First, the fair trade system provides guidelines for trading relationships between buyers in the Global North and disenfranchised farmers/artisans in the Global South. It does not dictate how farmers should grow coffee. Most small family coffee farmers have been farming for generations and they know more than most industry professionals give them credit for. In fact, it’s been our experience that small family farmers, whose livelihoods are dependent upon the fruits of their land, are the most in tune with the needs of the soil, the results of climatic change on their region, and the overall health of their coffee trees and family gardens. This is true for small family farmers here in the States as well as Jesus Rodrigo Yatacue, a farmer and socio of Fondo Paez coffee co-op from the Cauca region of Colombia. Second, instituting a floor price for coffee and other products does not result in mediocre quality. This argument – often posed by opponents of fair trade – is equivalent to saying that the institution of a minimum wage in the States is directly related to the quality of labor of a person. It’s not a fair assessment, nor a correct one.

January 2008 Visit with Fondo Paez farmers in El Maco -Jody & Chris Treter, Chris O’ Brien, Melanee Meegan

On to the point of this blog entry . . . it’s always exciting when one of our partner farming co-ops receive due credit. This past month, Ken David’s popular Coffee Review offered up a round of cuppings of Colombia single origins. Coffee from our partners at Fondo Paez was at the VERY TOP OF THE LIST with a 95 score (beating out several well-known micro-lots)! Kickapoo Roasters – a new member of the Cooperative Coffees importing co-op – did the roasting artistry. Kickapoo was founded by TJ & Denise Semanchin and Caleb Nichols. TJ Semanchin was once roaster extraordinaire at Peace Coffee, another company that recently made waves in the world of quality coffee when their head roaster – Keith – headed up the winning roasting team at last year’s Roasters Guild annual gathering.

Congratulations to Kickapoo and Fondo Paez!

Here’s the Coffee Review Report:

Viroqua, Wisconsin
Reviewed: February 2008

Overall Rating: 95 points

Aroma: 8
Acidity: 8
Body: 7
Flavor: 9
Aftertaste: 8
Roast (Agtron): Medium (51/62)

Kickapoo Roasters
Origin: Fondo Paez Cooperative, Valle de Cauca Department, western Colombia.Notes: This coffee is certified organically grown. Although the words “Fair Trade” appear as well on the label of the attractive 12-ounce valve-topped can, the trade-marked seal of TransFair USA, the sole American certifier for the Fair-trade Labeling Organizations International (FLO), does not. Fondo Paez is a cooperative of 550 farmers from the indigenous Paez people of central Colombia. Kickapoo Coffee is a Wisconsin micro-roaster devoted to organic and fair-trade principles and coffees. Visit www.kickapoocoffee.com or call 608-637-2022 for more information.Blind Assessment: Sweet-toned, delicately complex aroma: flowers, hints of honey, cedar and tart cherry, perhaps chocolate. In the cup very gently acidy, light in body but buoyant and silky in mouthfeel, and giddily floral- and honey-toned with complicating hints of chocolate, tart coffee fruit and Riesling-like white wine. Fades rather quickly in the finish but exquisitely clean with memories of chocolate and flowers. An exceptionally pure and balanced coffee.Who should drink it: A refined and refreshing coffee with great natural sweetness and balance. Avoid adding anything to it.

10 years after the Acteal Massacre….

January 2, 2008

Posted by Chris Treter

Few coffee co-ops we’ve come across in our adventures have the tragic yet inspirational story of Maya Vinic. On Dec. 22nd, 1997, many in the refugee camp of Acteal were off tending to their coffee fields while the women, elders, and children were praying and fasting for peace in their chapel. That morning, dozens of armed paramilitary climbed the cliff that marks the edge of the camp and surrounded the wooden chapel. Over the course of 5 hours they killed 45 mostly women and children; their penalty for pacifically struggling for indigenous rights and refusing to side with the paramilitary against the Zapatistas.

Most who were on the ground (see the documentary “The Damned War in Chiapas” if you don’t believe me!), knew that such a massacre could be imminent. In fact, although the government was informed by the community of Acteal a full month before the massacre that threats were being made, nothing was done to prevent it. The survivors tell us that the only thing the government did that day was block the road to traffic while the massacre took place and then tried to cover up its’ traces that evening.

The truth and the continued search for justice is being uncovered and pursued thanks to the perseverance of the survivors and their families, most of which make up the coffee growing co-op of Maya Vinic. Maya Vinic was formed in 1999 because they were members of the same coffee growing co-op as the paramilitary who attacked them. In the countless visits we’ve made to visit Acteal and the farmers of Maya Vinic we have repeatedly heard from them about the injustices they faced at the hands of paramilitary farmers.

This past week, as the farmers of Maya Vinic commemorated the 10th anniversary of the massacre, human rights groups are giving warning that the same conditions that existed in Chiapas in 1997 are present today. Many fear an escalation in violence is imminent. In his last public speech, Subcommandante Marcos, the masked military leader of the Zapatista Army of National Liberation (EZLN) declared that the time has come to end speaking in public forums and return to a preparatory and more clandestine stance to deal with increased paramilitary and military activities in the state. Upon the announcement, he stated, “The signs of war on the horizon are clear. War, like fear, also has a smell. And now we are starting to breathe its fetid odor in our lands.”

In my many visits to Chiapas in the past two years I have traveled with CAPISE (The Center for Political Analysis and Social and Economic Investigations ) to hear the testimonies of various communities effected by paramilitary activity. Now, my contacts tell me that the situation has become increasingly more difficult. Threats of displacement and death are becoming common place. Visit these links to learn more:

– To learn more about the situation read “Zapatista Code Red,” by Naomi Klein

– To get up to the minute details and action you can take to support human rights in Chiapas visit Indymedia Chiapas

– Want to travel to Chiapas and document human rights violations? Then contact CAPISE


The Indigenous Arhuaco of Colombia’s Sierra Nevada de Santa Marta

December 30, 2007

Posted by Chris O’Brien

In two weeks, I’ll join my fellow blogger-soon-to-be-authors Chris and Jody Treter for a visit to two coffee producing communities in Colombia. The first is the indigenous Arhuaco of the coastal Sierra Nevada de Santa Marta mountains in northern Colombia. The Arhuaco are one of four indigenous groups believed to be descendants of the ancient Tayrona civilization which thrived around 900 CE and may go as far back as the beginning of the first millennium. We’ll be meeting Arhuaco representatives from the Tayrona Indigenous Federation.

In preparation for the trip I’ve been learning what I can about these people and their environs. I started by reading a chapter about them in Dean Cycon’s book Javatrekker and a few dribs and drabs floating around on the web.

Some themes emerge in what I read. First, as with many indigenous people around the world, coffee was used against them as a colonial weapon of oppression. But today they are tentatively embracing it as a potential tool of economic empowerment by seeking relationships with fair trade coffee partners.

Second, by all accounts they are distrustful of and unwelcoming to outsiders. I suppose they have their reasons.

And finally, they have a deeply held religious belief that their mountains are the heart (or, depending on what you read, the navel) of the world. As such, they feel that the health of the Sierra Nevada range is critical to the survival of the world. Apparently, for decades now they have been diagnosing local ecosystem changes as symptomatic of global warming.

According to our trip host, Cooperative Coffees, the Tayrona Federation have the following eight objectives in commercializing their coffee. Here they are as quoted verbatim from the Coop Coffees website.

  1. Give to the Confederación Indígena Tayrona, as legitimate representative of the insterests of the Arhuaco people, the economic capacity to commercialize their own coffee.
  2. To strengthen indigenous institutionality of the Arhuaco natives, represented by the Confederación Indígena Tayrona.
  3. To strengthen economic self/sustainability in the Arhuaco community as a strategy to prevent deplacement of the indigenous population of the zone.
  4. To control the entering to the zone of external agents to the community that produce internal disarticulation.
  5. To assure that the coffee producing Arhuaco community members receive the benefits to which an organic producer has right.
  6. To refrain from cultural dissolution or crackeling of the community.
  7. To create the mechanisms that permit the Arhuaco community to have better sales processes in their agricultural products.
  8. To acquire knowledge based on experience of commercialization of agricultural products.

I’m very eager to learn whether selling coffee through fair trade relationships is helping them realize these goals. The beer activist in me is also very keen to see if there are some unusual versions of chicha being brewed up in them there mountains.