Coffee sails globally, sinks locally

By P Sainath Wayanad is coffee territory, producing 82% of Kerala's coffee. It has been a huge income and foreign exchange earner for years. But it is now deeply embroiled in the agricultural crisis sweeping the region., writes P Sainath WAYANAD (KERALA), February 2005: "What do you mean you have no fresh coffee?" we asked. But the waiter was firm. "We have Nescafe." This is coffee territory, yet you cannot get the local brew in any restaurant here. Drop in at the Coffee Board in Kalpetta to enquire why this is so -- and they offer you a cup of tea. "We do have a filter," our host apologises, "but there's no powder in the office just now." There are tonnes of coffee powder everywhere else. Wayanad produces 82% of Kerala's coffee. It has been a huge income and foreign exchange earner for years. But it is now deeply embroiled in the agricultural crisis sweeping the region. And its volatile reign extends far beyond the district. Coffee is the second most highly traded commodity in the world after oil. (Third if you count narcotics.) "The collapse of coffee prices has ruined countless farmers in the district," says M P Veerendrakumar. He represents Wayanad in the Lok Sabha and is a former Union Labour Minister. "So many lives are tied to that crop," he says. There are over 70,000 hectares under coffee here and some 60,000 small growers. "The slide in prices is a key element in the farmers' suicides that have occurred." Almost all the suicide-hit households we surveyed here were small growers of coffee and pepper. Maria Kutty with her 1.5 acres in Irulam. E D Vasu with 75 cents in Edavaka. Mohammed Ali with 58 cents in Porunnannur. These were just three of many farmers sunk by the prices of coffee and pepper. Their debts rose as farm-gate prices fell. They, and some 120 others like them, committed suicide during 2004. "Maria took her life after a local bank sent her a notice," says a neighbour. All this is well known here. Yet, last December, India ?s Commerce and Industry Minister Kamal Nath told the Lok Sabha that the Indian government had received no information on coffee-grower suicides in Kerala. "Retail prices are not doing badly,"
www.infochangeindia.org

points out Veerendrakumar. "It's the producer's price that has plummeted." Coffee prices dropped to a low of Rs.15-16 a kg for the raw cherry by mid-2004. "This from a high of Rs 70 - 80 a kg for the cherry. And up to Rs 130 a kg for the beans only a few years ago." Coffee still makes big bucks at the global level. But Wayanad's growers have lost over Rs 800 crore on it since 2001. "Foreign and domestic cartels and trading houses are behind the price crash," says P A Muhammed. He is Convenor of the South Indian Farmers Coordination Committee. And he knows it's a worldwide story. In 1992, points out Martin Khor of Third World Network, "producer countries earned $10 billion from a global market worth around $30 billion. In 2002, they made less than $6 billion in a market that had doubled in size." That cataclysmic drop in share of revenue from 33 % to less than 10 % within a decade hit poor producers worldwide. Wayanad briefly saw a great rise in prices in the late 1990s when frost hit the Brazilian crop. "And also because," says a senior government official who has tracked exports for two decades, "of sheer rigging. Four major companies dominate the world market. When faced with a worker's strike in Brazil , they hike prices for Kerala coffee. So there's a boom. When the crushed Brazilians return to the fields, the companies pull the plug on us. Now they have two major, cheap sources." Wayanad's exposure is worse than most because its coffee has no internal market. Unlike Karnataka and Tamilnadu, Kerala is not a coffee drinking land. Wayanad is home to one of the best Robusta varieties anywhere. Yet there is little effort to promote coffee within the district or State. Expensive but poor quality instant coffee rules the roost here Hotel owners can buy high quality, fresh Wayanad coffee powder for Rs.90 a kg. "But the price of one kilo of instant coffee from Nestle," points out Muhammed, "is between Rs.900 and Rs. 1,400 a kg." And imports of instant brands that use the cheapest beans -- and lots of advertising -- are on the rise. "Nine-tenths of the price you pay for your instant coffee," says the journal New Internationalist, "goes to powerful companies who ship, roast and retail the product. Just one-twentieth reaches the people whose lives are spent growing and harvesting it." Why buy costly instant stuff when top quality fresh coffee is available? "It is absurd that Wayanad coffee is not drunk here," says A P Sreekumar, a big grower and district Congress leader. "But there has never been any branding for our coffee. It's never been promoted locally." Our host at the Coffee Board goes further. "This is the land of
www.infochangeindia.org

coffee and no one knows how to prepare it." Others charge the Board with only serving exporters. Not growers. There is also little processing of coffee within the district. "If you try doing it," says Muhammed, "the buyers boycott you." Most in Wayanad are clear that state action is urgent and essential. More so in areas like credit and a minimum support price. Also by revising import policies and helping growers do their own curing and processing. "The cartels have strong local links. And sometimes they encourage over-production," says the senior government official. "That works well to keep prices down. At the same time, their control over the market and our lack of access ensures their profits don't fall. Only our prices do." The global market has too much coffee. Often hundreds of millions of kg more than it needs. "Eight per cent more coffee is being produced than consumed," says Oxfam. The price crash has devastated Wayanad's growers. "They may be getting three paise on each rupee that coffee generates," says Mr. Veerendrakumar. "How can the farmers survive?" Last year, too many of them decided they just couldn't. (P Sainath is Rural Affairs Editor of The Hindu. He received the A H Boerma Award, in 2001, for his contributions to the development debate in the Indian media. This article first appeared in The Hindu) InfoChange News and Features, February 2005

www.infochangeindia.org