Economic upheaval over coffee

Working in the coffee fields of Nicaragua, Euxenio Rugama used to earn $1 a day. Those, it now seems, were good times.

Today, with global coffee prices plummeting, Mr. Rugama, like many fellow field workers and small farmers around the developing world, is broke. In May, the desperate odyssey of six bankrupt Mexican coffee farmers hoping to find work in the US came to a fatal end when migrant smugglers abandoned them in the Arizona desert.

From Latin America to Africa and Asia, falling profits from the aromatic beans, the developing world's second-largest export commodity after oil, are triggering enormous social and economic consequences. The worst price bust in nearly a century is causing hundreds of thousands of coffee farmers to either abandon coffee or quit farming altogether.

Meanwhile, some in the coffee business have accused Vietnam, the newest player in the global market, of setting off the decline by overproducing.

Along with the economic issues, environmental questions are also being raised. Some analysts note that high coffee prices in past years led many farmers to plant on terrain ill-suited for coffee cultivation. And with so much coffee production now in sensitive rain-forest regions, the prospect of large swaths of coffee acreage being converted to pastureland or other uses alarms environmentalists.

The economics of the coffee crisis are simple. With global production up but consumption flat or falling, prices began to slide two years ago.

Behind the equations and the fingerpointing are wrenching cases of fading traditions and displaced families from Sumatra, Indonesia to Chiapas, Mexico.

In Mexico alone, more than 300,000 coffee farmers are estimated to have left their land, including the six farmers from the Gulf state of Veracruz, in the last two years. El Salvador, another exporter of people to the US, has lost 30,000 jobs.

Thousands of coffee farmers and field workers in Nicaragua descended upon nearby cities recently to protest the collapse in coffee prices. "Hunger is what pushed us here," says Rugama, who joined hundreds of protesting farmers in the city of Matagalpa.

Desperation is also forcing Kenyan coffee farmers to abandon longtime growing methods that have given the country a reputation for producing some of the world's best beans. "Farmers are not able to pay for [chemicals and fertilizers], which means you end up getting poorer quality coffee," says Ashford Miriti, general manager of the Coffee Board of Kenya. What ensues is a downward spiral, he adds, because "low quality coffee isn't fetching much."

The lessons of the current coffee are still being debated, but experts say that the crisis points out what happens when a big new player enters the fray in a global market that is experiencing little or no growth.

Vietnam, a minor producer through most of the 1980s, more than quadrupled its coffee production over the past decade, from 92,000 tons in 1990 to 487,000 tons in 1999, surpassing Colombia last year as the world's second-largest coffee producer after Brazil. Over the same years, the average coffee price rose from under $1 a pound to more than $2 a pound at the end of the decade - before plunging below 60 cents now.

On Saturday, Vietnam officials said production there would be cut 20-30 percent to help reduce oversupplies and boost prices, according to state-controlled media in Hanoi.

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