Ethiopian farmers sell their coffee for $1 a pound. It sells in the US for $10 a pound. That’s a quite typical indication of how trade works against producers of many commodities and goods around the world. It's cheap and nasty, anyway you look at it.
Now, Ethiopia has found a weapon against this blatant exploitation.
A revolution is brewing in terms of trade, according to
The Christian Science Monitor (link courtesy David Silverberg). Ethiopia is trademarking its coffees, and licensing sales of brands. That’s good business practice, and it’s been done against the resistance of major distributors like Starbucks. This is “branding”, identifying products, in its most definitive form, and Ethiopia stands to significantly improve revenues and market identity as a result.
Legally, it means doing business on Ethiopia’s terms. The commodity has upgraded itself into a product. This process can apply across a huge range of national products around the world, which is why this is such a breakthrough.
That certainly won’t hurt Ethiopia’s dirt poor farmers. The Christian Science Monitor article also has a graphic slideshow with its article, showing the traditional way of making coffee, with roasted corn as a side dish. The pictures are more or less the stereotype of “Africa” as we’ve always seen it. The need for practically everything, in terms of modern life, is obvious.
(Although having seen that, I have a strange urge for coffee and roasted corn… Actually, they could package that as a sales idea. I’ve eaten some foods from traditional recipes, and they’re always delicious.)
Ethiopian coffee has a very good reputation among coffee gourmets. In fact, Ethiopia is where coffee was discovered, over a thousand years ago. There’s a beautiful story in this link from
Coffee Wholesale USA about its discovery, and some background to the Ethiopian coffee brands.
The reality is that Third World producers are confronted with a buyers’ market in which prices are kept down by what are effectively buyers cartels. They simply cannot get anything like market prices. It’s much like the outworker scenario for luxury goods, rock bottom production prices and top dollar for finished product at the retail end. That means that those economies can’t really earn enough money to capitalize and develop themselves. It’s systemic in global trade, and it cripples cash flow for producers in consumer goods like coffee.
You can’t
have an economy, if your buyers keep taking the food out of your mouth, literally. All businesses run down under low profit markets, let alone subsistence level trade conditions.
(See also clixy123’s article about
Black Gold. Big money, indeed.)
Historically, organizations like the IMF spent most of the 80s and 90s telling the developing nations to “grow something”, and no attention was paid to the real market conditions. Currently we’re seeing things like the
Doha round of talks where the developing economies are trying to get access to cash-rich markets like the US and Europe, which are trying to keep them out while trying to break into their markets. One of the reasons China has been so successful in Africa is that they’re doing realistic deals that are stimulating these extremely needy economies.
In the most unambiguous sense, the existing terms of trade are doing no more than enforcing poverty. Price fixing, however it’s achieved, is illegal, globally, and it promotes exploitation. It has held back Africa and Asia, for decades. It’s also allowed a form of protectionism, disguised as “free trade”. The West gains nothing from supporting the process. We continue to pay top dollar, which does nothing but raise prices domestically. It’s a form of parasitism, each way, against producers and consumers.
Bluntly, it’s obscene.
Ethiopia has found a way through this atrocity, and the good news is that other producers are already taking note of how it’s done.
If the Third World nations get a bit of support, particularly from consumers, they can develop themselves effectively.
