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What are the indirect consequences of the coffee price crisis?

“The coffee price crisis is not an isolated incident that only affects coffee growers, it indirectly stimulate global drug production and trafficking, crime and illegal migration. “

Colombia

On November 24th 2016, Colombia’s government and the guerrillas FARC signed a historic peace treaty that supposedly ends more than 50 years of a bloody arm conflict in the country. During more than 35 years, FARC guerrillas used cocaine and drug trafficking to spread and finance their operations. Despite being a very lucrative business for local and international drug dealers, it didn’t benefit farmers in the same degree. Coca is still today for most farmers just a humble way to make a living regardless the violence and terror that comes along with it.  It is estimated that at least 100 thousand households depend on Coca growing as a way of subsistence.

Even if the treaty is successful, one of the main challenges for Colombia during the demilitarization of rural areas would be to find a way to substitute illegal Coca plantations, that in spite the peace negotiations, have grown 40% in the last 5 years.

The popularity of Coca plantation is a direct response to the devastating prices of agricultural commodities in international markets, consequence of subsidies some developed nations apply to certain crops to incentivize and complement domestic farmers income. While these policies benefit farmers in their native countries, they end up distorting international markets by inorganically maintaining commodity prices to levels no other nation could reproduce.

This phenomenon limits the number of crops profitable enough to potentially replace Coca plantations in Colombia. One of the ideas being discussed and driven by the Colombian government and the UN is the Alternative Development Initiative that particularly focus on substituting illegal coca crops by using cocoa, honey and predominantly coffee.

Although, Colombia has wide experience growing and commercializing coffee and the country has excellent reputation for producing the most consistent and quality coffee beans in the world, current coffee market prices are not helping out in this situation. The international coffee market scene keeps incentivizing low prices and scaling production, neglecting quality coffee focused origins like Colombia.

SEE ALSO: Could coffee be a sustainable crop?

Likewise, cocoa and honey production do not offer a definitive solution to the problem due to the technical and practical difficulties both crop represent once they are adopted in a larger commercial scale.

Peru

The same as Colombia today, Peru dealt with their quote of terror and violence in the past; during the 80s the predominant paramilitary group “Sendero Luminoso” used to run the cartels and Peru was the largest producer of Cocaine and “Pasta Base” (Crack) in the world. With a lot of effort, the US and local Peruvian authorities fought the guerrillas and eradicate hundreds of hectares of illegal crops by turning coca farmers into coffee growers. While, Peru has been a coffee growing country for a long time, the transition of a vast number of farmers into the coffee industry during the 90s, boosted production, turning Peru into the 8th largest global producer and the number #1 for organic coffee in the world.

Unfortunately, same as Colombia, Peru has been hit hard by the coffee price crisis and now illegal Coca plantations have grown to its highest in 25 years. Farmers and workers claim they can make more than double by producing coca leaf instead of coffee, aggravating even more the situation.

Although, it is clear, the best way to coup with the current coffee price crisis at origin would be to subsidize, at least temporarily, coffee production in order to buffer the devastating effects low market prices have on farmers; yet, neither Colombia nor Peru count with sufficient funds to do so.

Therefore, we should anticipate that illegal crops and drug trafficking would continue to increase in the region for the next few years.

Central America

For years, coffee producing regions have experienced a decline in labor; local workers and second generation farmers have realized coffee is not a good economic option worth pursuing anymore. Current active coffee farmer’s average age is 56 and there is no new generation to take over their place once they retire. Unsurprisingly, younger people in rural areas in Central America are looking for better ways, others than coffee, to make a living and current coffee price crisis have made this situation even more clear and urgent.

The preferred destination for most of them is USA. Therefore, in recent years, human trafficking has surpassed the profitability of drugs in southern US border and most illegal migrants come from Mexico, Guatemala, El Salvador and Honduras. All of them important coffee origins indeed.

Among these migrants, there are potential coffee farmers and workers that could represent the future of the industry but instead, they are forced by the circumstances to an undignifying way of life that until some extend is our fault due to our passive attitude towards the crisis they are currently experiencing.

SEE ALSO: Is Fair Trade good for farmers?

Conclusion

Although, coffee has been used to replace illegal crops and successfully lift out of poverty thousands of people in recent history; current surplus, low prices and consumption trends make difficult for coffee crops to remain an effective tool to adopt during rural development work anymore.

It is evident, the coffee price crisis is now too big and out of hands for farmers and coffee producing countries to deal with it on their own. Remains to be seen whether, the rest of the industry reacts on time to save it or just wait immobile and long enough to witness it collapse.

 
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