Honorable Irwin Cotler
International Human Rights Lawyer
Montreal, Quebec
Canada
cotlei@parl.gc.ca
cotlei1@parl.gc.ca
Dear sir,
I am writing to you to respectfully solicit your legal advice and support to put an end to the injustice suffered by millions of coffee farmers worldwide. In fact, as you may know, the coffee sector has collapsed worldwide following the crash in coffee prices on the world market which lasted from 2000-2005, reaching their lowest level in over a century in 2001. As a direct result, millions of coffee farmers and their families around the world have been thrown deeper into mass poverty, misery, hunger and suffering.
Cynically, however, meanwhile coffee multinationals, traders and retailers are generating millions in profits every year from the sale of coffee worldwide…
“The world coffee economy has evolved over the last few years in a manner which may be qualified as erratic, disorderly and even contradictory. The relative supply scarcity of the mid 1990s, caused largely by climatic conditions, was followed by a short period of moderately high prices that compensated for the losses incurred by the dismantling in 1989 of the International Coffee Agreement’s quota system. However this situation prompted a surge in production that altered substantially the global supply structure and was the cause of the worst coffee crisis ever seen in terms of growers’ incomes.
In contrast, the evolution of the coffee economy in importing countries has shown a
completely different and in fact very positive pattern. The industry has flourished, new
products have been developed, the value of the retail market has more than doubled, and
profits have risen. This is something to celebrate, but the question must nevertheless be
asked as to how long such a state of affairs can be sustained.
The extent of the drop in prices and earnings in the crisis years 2000 - 2004 is very clear In the ten years 1980 – 1989 the ICO Composite Indicator Price for coffee averaged127.92 US cents per lb. and coffee-producing countries earned an average of US$10.2 billion in annual export revenues from coffee. In the five years 2000 – 2004 the average price had dropped to 54.33 cents - the lowest in real terms for 100 years - and annual export earnings to US$6.2 billion.
Certainly the figures for coffee are clear : In the late 1980s and part of the 1990s earnings by coffee producing countries in terms of exports f.o.b. were around US$10-12 billion per year but they have now dropped to around US$5.5 billion. This contrasts with the continued growth in the value of retail sales in consuming countries from around US$30 billion in the 1980s to around US$80 billion at present." Nestor Osorio, Executive Director of the International Coffee Organization (ICO).
Source: www.ico.org
I have attempted to identify the main root (economic) causes which have directly led to the collapse of the coffee sector and to the ruin of millions of coffee farmers worldwide:
Economic factors
1) Market imbalance & structural over-supply
Short, medium and long-term market imbalance between world supply & demand, resulting in a structural over-supply of coffee, which in turn translates into low, constantly declining and *unremunerative ( *below production cost) coffee prices on the world market.
World coffee stocks (2006/07)
51.6 million bags (60kg) = 62 % of 2006/07 consumption = +6 months stock
Source: ICO 2006/07 annual report
2) Speculative trading
Coffee prices are characterized by extreme volatility due to speculative trading of coffee on the futures commodities exchange markets of London and New York which is based on forecasts of future market fundamentals such as supply & demand, world stocks, climate and geopolitical situation in coffee producing countries, currency exchange rate fluctuations, etc., which in turn set and determine coffee prices which do not reflect or take into account real production costs.
3) Currency exchange rate fluctuations
Currency exchange rate fluctuations have a direct impact on both the price and the cost
of coffee and thus on the revenue and profitability of both coffee farmers and coffee producing & exporting countries. As you know, the US dollar has lost over 30% of its value vis-à-vis the Euro over the last 5-6 years. Since coffee prices are quoted in US dollars, a devaluation of the US dollar translates into a decrease in real revenue from coffee exports, with devastating consequences for both coffee farmers and coffee producing and exporting countries.
4) Increase in the price of oil
The price of crude oil is another crucial determining factor in the costing and profitability of coffee farmers. As you know, oil prices have exponentially increased over the last 6 years – from $US 20$ in 2002 to over $ US 120/barel currently– significantly increasing the cost of production, as prices of inputs have skyrocketed.
The deadly combination of the devaluation of the US dollar and the exponential increase in the price of oil over the last 5-6 years exponentially increases the cost of production of coffee producers on the one hand while significantly decreasing both the real price of coffee and the revenue and profitability of coffee producers on the other.
Tragically, however, the 2007 International Coffee Agreement (ICA) does not contain any provisions to address and resolve these crucial economic factors which have led to the collapse of the coffee sector and to the ruin of millions of coffee farmers around the world.
The official stated mission of the International Coffee Organization (ICO) & the International Coffee Agreement (ICA)
ICO Mission
“ The International Coffee Organization (ICO) is the main intergovernmental organization for coffee, bringing together producing and consuming countries to tackle the challenges facing the world coffee sector through international cooperation. It makes a practical contribution to the world coffee economy and to improving standards of living in developing countries by:
• enabling government representatives to exchange views and coordinate coffee policies and priorities at regular high-level meetings
• improving coffee quality through the Coffee Quality-Improvement Programme and specific projects
• increasing world coffee consumption through innovative market development activities
• initiating coffee development projects to improve quality and marketing
• encouraging a sustainable world coffee economy
• working closely with the private sector through a 16 strong Private Sector Consultative Board which tackles issues such as food safety
• providing objective and comprehensive information on the world coffee market; and ensuring transparency in the coffee market through statistics.
Source: www.ico.org
International Coffee Agreement 2007
“The International Coffee Agreement 2007, the seventh Agreement since 1962, was agreed by the 77 Members of the International Coffee Council, meeting in London on 28 September 2007. It was formally adopted by the Council through Resolution 431. The Agreement will strengthen the ICO’s role as a forum for intergovernmental consultations, facilitate international trade through increased transparency and access to relevant information, and promote a sustainable coffee economy for the benefit of all stakeholders and particularly of small-scale farmers in coffee producing countries.
The new Agreement is an important instrument for development cooperation and will provide the legal framework for core activities undertaken by the Organization in the future. Around 15 of the ICO’s 45 exporting Members are least-developed countries (with low incomes and high economic vulnerability), and the 25 million small coffee farmers and their families who produce 90% of the world’s coffee are particularly affected by fluctuations in market prices and imbalances in supply and demand. The Preamble specifically acknowledges the contribution of a sustainable coffee sector to the achievement of internationally agreed development goals, including the Millennium Development Goals, particularly with respect to poverty eradication.”
Source: ICO website www.ico.org
Strangely, however, while the 2007 International Coffee Agreement aims “ to promote a sustainable coffee economy for the benefit of all stakeholders and particularly of the 25 million small coffee farmers and their families who produce 90% of the world’s coffee who are particularly affected by fluctuations in market prices and imbalances in supply and demand”, the 2007 ICA does not contain any provisions to address and resolve “fluctuations in market prices and imbalances in supply and demand”, which have led to the collapse of the coffee sector and thrown millions of coffee farmers and their families around the world deeper into poverty.
Moreover, both historical evidence and statistical data on the coffee sector clearly reveals that the ICO and its members have in fact done nothing over the course of the last 17 years - since the collapse of the supply-management mechanism in the 1989 ICA- to achieve market equilibrium between demand and supply and to secure stable and remunerative coffee prices for millions of coffee farmers around the world, contrary to their stated mandate and to the poverty eradication rhetoric preached in their literature.
In fact, statistical data collected and published by the ICO clearly reveal a structural long-term market disequilibrium between supply and demand – worsened by exponential increases in production by both Brazil & Vietnam from 1997-1999 (+30 million bags) within a background of stagnant consumption - resulting in a structural over-supply of coffee on the world market in 1999/2000 (coffee excess stock levels: +60 million bags = +50% of annual demand) ) which in turn inevitably led to the crash in coffee prices observed from 2000-2005 and to the subsequent ruin of millions of small coffee farmers worldwide.
“The coffee price situation arises from an imbalance between supply and demand that has now lasted for four years, exacerbated particularly by substantial increases in production (compared with the early 90s) and slow rates of increase in consumption.”
Nestor Osorio, ICO Executive Director, G8 Summit , June 2003 (source: ICO)
And although the root economic (and political) causes leading to the collapse of the coffee sector have been clearly identified and repeatedly debated over the last 7 years in numerous ‘high-level” international conferences and forums by governments, industry leaders, NGO’s, academics, etc., it is tragic to observe that no solutions have been developed and implemented to this day to resolve the problem. As noted above, the root economic causes which have led to the collapse of the coffee sector and to the ruin of millions of coffee farmers worldwide are not even addressed in the new 2007 International Coffee Agreement…!
“For many months now the ICO has attempted to alert the international community of the consequences of a problem caused in essence by the continued excess of supply over
demand. The problem was analysed in depth at the World Coffee Conference in 2001, more recently at a Round Table held jointly by the ICO with the World Bank in May 2003 and at regular sessions of the International Coffee Council. The issue has been raised at the Johannesburg World Summit on Sustainable Development in 2002, with the governments of developed countries and with international bodies such as the WTO. Although a number of interesting ideas have emerged, it is vital not to lose sight of the pressing need to take substantive measures to maintain greater market equilibrium. Basically the process of analysis has been completed and must now give way to implementing solutions.
The situation revealed here, taken from the perspective of poverty reduction, is
clearly a matter of concern. The impact on poverty of the coffee price crisis, which lasted nearly 5 years from 2000 to 2004 and has only to a modest degree been reversed, has been well documented. *Evidence provided by coffee producing countries to the ICO is compelling (*see copy attached)
The economic impact of coffee on many producing Least Developed Countries
(LDCs) can scarcely be exaggerated. In 1999, before the crisis years, coffee exports
accounted for over 50 per cent of the export earnings of four African LDCs, Burundi,
Ethiopia, Rwanda and Uganda. It has been estimated that some 125 million people
worldwide are dependent on coffee. For several countries in Africa, Asia and Latin America where coffee accounts for a large percentage of exports it has been estimated that losses in earnings from coffee have more than nullified total aid inflows in terms of value.
Coffee farmers have shown enormous resilience and one way or another most have managed to survive and continue to produce. But not all and not at any cost. It now seems likely that, if ways are not found to improve trading conditions in producer countries, this precious commodity, and what is worse, the human beings who grow it, will progressively decline to the point that, in a not too distant future, there may be insufficient coffee and certainly an insufficient quality range of coffee, to trade and to drink”. Nestor Osorio, Executive Director, ICO
Source: ICO documents (www.ico.org)
In view of the above, I strongly feel that legal action must urgently be taken to prevent and to legally put a definite end to the ongoing mass economic genocide of millions of coffee farmers around the world, and to bring those responsible for this “crime against humanity” to justice. In my view, there is no fundamental difference between the mass political genocides which occurred during the Holocaust, or those which occurred more recently in Rwanda and in Darfur, and the mass economic genocides which are taking place everyday around the world as a direct result of unfair and exploitative global trading rules and practices dictated and imposed by a few to the rest of the world.
As Mahatma Gandhi rightly stated:
“You cannot build a non-violent society based on exploitation.
Exploitation is the essence of violence”
The lives of billions of people around the world are at stake. And although global trade injustice is not limited to the coffee sector, I feel that the global coffee sector constitutes a good starting point and a practical example to reveal, address and resolve the injustice suffered by millions of coffee farmers worldwide so as to legally put a definite end to other mass economic genocides occurring daily with impunity throughout the so-called Third-World.
“ The adversity endured by coffee growers in Africa, Asia and Latin America has also been encountered in other agricultural commodities originating in developing countries. In fact the drop in earnings from these commodities constitutes one of the most important causes of world poverty. Several studies coincide in assessing the fall in prices of the major agricultural commodities as between 50 and 86 per cent in the last 20 years, with coffee showing the greatest fall. This loss in income has had a significant impact on the economic and social life of many developing countries.
This issue highlights the role of international commodity bodies such as the ICO in the
context of genuine partnership between developed and developing countries since these
bodies represent a unique forum where all stakeholders are represented on an equitable basis and where the needs and priorities of the major players can be fully represented.”
Nestor Osorio, Executive Director, ICO
As the Brandt Commission wrote (and warned) 30 years ago:
“ Structural over-supply in the commodity markets lies at the heart of global poverty and instability” (Willy Brandt, Brandt Report, North-South/Common Crisis).
I therefore hereby respectfully solicit your legal advice and support in this matter as a staunch defender of justice and human rights.
As Martin Luther King said:
“Injustice anywhere is a threat to justice everywhere”
Please find below a copy of correspondence exchanged between myself and the ICO on the issues raised above. I remain at your disposal for further information. Detailed information on the ICO and the coffee sector can be found at: www.ico.org
I thank you for looking into my inquiry and I look forward to hearing back from you in the near future.
Truthfully,
Arya A. Tajdin
Founder & Executive Director
Yajna Centre
Dar es Salaam, Tanzania
Enclosed:
1) Copy of correspondence exchanged between myself and the ICO
2) Copy of report submitted to the ICO by coffee producing countries on the devastating economic, social and political consequences of the coffee “crisis” in their respective countries.
3) Copy of 2007 International Coffee Agreement
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