4.4 Incremental leaps in inequitable income distribution

peasants is seen in the coffee industry. Once a thriving coffee-growing region, sectors of southwestern Colombia witnessed a dramatic shift in the return from this once lucrative commodity. At its peak in 1955, coffee accounted for roughly 84 percent of Colombian export income (Kofas, 1986: 17; Arrubla, 1970: 136; Mandel, 1968: 460). The 1970s and 1980s saw roughly 300,000 to 350,000 farmers cultivating coffee and 2 million Colombians benefiting from the industry in some form (O’Shaughnessy and Branford, 2005: 29; Harding, 1996: 40). As neoliberal policies encouraged unfettered international trade, however, tariffs were increasingly removed, and the US withdrawal from the International Coffee Agreement (ICA)44 in 1989 drastically altered the historic yet modest returns for coffee producers (Harding, 1996: 41).45

For many years, the cultivation of coffee beans had provided farmers in the coffee-growing regions with a measure of security and stability in the midst of Colombia’s violence. However, the international market price for coffee – Colombia’s leading legal export for most of the 20th century – plummeted in the post Cold War era, forcing many farmers to seek alternative means of survival. Consequently, increasing numbers of farmers began replacing their coffee plants with coca plants ... The dilemma now faced by Colombia’s coffee growers began with a World Bank development project in Vietnam that, during the 1990s, encouraged Vietnamese farmers to grow coffee. The program was so ‘successful’ that in 2001 Vietnam surpassed Colombia to become the number two coffee producing country in the world behind Brazil. However, a resulting global glut in coffee caused the market price to plummet from over $2 a pound at the end of the 1980s to 58 cents by the end of 2001. Consequently, coffee growers around the world, including those in Vietnam, are now desperately struggling to survive by growing a crop that sells for less than it costs to produce. (Gibbs and Leech, 2009: 51; Leech, 2002a: 51)

William Avilés demonstrated the negative effect of the ICA’s marginalization on producers in the highlands of Colombia.

The liberalization of the international price of coffee in 1989 after the collapse of the International Coffee Agreement, which ended restrictive quotas on supply, brought the price of coffee to a thirty-year low by 2003,

Table 4.4 Incremental leaps in inequitable income distribution

Decade Distribution of income (richest 10% and poorest 10%) 1950s 11:1 1980s 18:1 1990s 40:1 2000s 80:1

exacerbating already extensive rural poverty. The collapse of coffee prices led thousands of small coffee farmers to switch to growing poppies for heroin production, as coffee input fell by 25 percent.

(Avilés, 2006: 90)

According to Colombian political economist Héctor Mondragón, responsibility for reduced coffee returns is squarely on the shoulders of international financial institutions (IFIs) such as the World Trade Organization and international lending institutions (ILIs) such as the International Monetary Fund and World Bank. These institutions had countries reduce or eliminate national protection arrangements, leaving farmers unable to maintain any level of subsistence and subsequently resorting to unconventional agricultural production.46

Thanks to free trade, the Colombian farmer has no other options. The agricultural sector has been ruined. We import 8 times more food than we did ten years ago. Starting last year, we’ve been importing coffee, to meet our export quotas. The quotas can’t even be met because the price is too low. Latin America is destroying the coffee harvest. In the last 2 months, coffee prices dropped 22% for the grower. It was already at a low – 1/3 of the price 10 years ago. Selling coffee is now a losing proposition. Production costs are higher than the sale price .… The US broke the world coffee pact, which provided some stability for growers and consumers alike, in order to make the WTO happen. Before that Colombia had a fund used to stabilize the price of coffee. Now such a fund is illegal. (Mondragón, 2001; see also Ross, 2006: 62)47

Gabriel Silva, an official from the National Federation of Coffee Growers of Colombia (Federación Nacional de Cafeteros de Colombia, FEDECAFE), stated that from a US$4 cup of coffee bought in North America, “around one cent will go back to the farmer” (ABC, 2004). In 1997, Colombian-based coffee farmers were reportedly paid US$3.80 for every pound of coffee they produced, while in 2004, the producers received about 0.70¢ (ABC, 2004). Accounts from popular US and British business reports, however, show that the true returns are lower still. In the fall of 2005, the Associated Press (2005) quoted Silva saying that during the 2003–04 coffee season the price per pound was roughly 0.77¢, but Stephen Farr’s (2004) Bloomberg report found that Colombian coffee’s highest return in years, in January 2004 (during the 2003–04 season), was “$690 a metric ton.” A metric ton equals 2,204.6 lbs, so a little arithmetic shows that this was 0.31¢ per pound. A more efficient example of coffee growth would be to gauge whether or not the localized producers are deriving an increase in direct revenue gains: according to my meetings with small-scale coffee farmers in the coffee zones between 2003 and 2007, they are not.48 Losses as a result of neoliberal economic policies were not confined to the coffee sector, but occurred throughout the entire agricultural industry (see Table 4.5). Thus the rural population have had few options to sustain their