TED Case Studies
Number 652 , December, 2001 
Vietnam, Coffee Exports and the Environment, by Janine Johnston I. General Information
II. Legal Cluster
III. Bio-Geographic Cluster
IV. Trade Cluster
V. Environment Cluster
VI. Other Clusters

 

I. Identification

1. The Issue

Coffee farmers are suffering starvation and social degradation as a result of the global coffee crisis. Coffee production levels rise while coffee prices decline. It is not a new phenomenon: commodity producers thoughout history have lived at the mercy of internationally dependent, volatile markets. Coffee, in particular, has tended to entice farmers with high prices on the New York exchange for several years at a time only to crash wehn newly planted trees begin to bear bountiful harvests--of despair. The latest blut on the market has been blamed on the caffeinated propulsion of Vietnamese robusta beans onto the market in the last ten years. However, such an explanation falls far short of accurately unraveling the international web of factors spawning the global coffee crisis. While Vietnam has rapidly claimed a commanding presence in the market, the failure of global cooperative measures among coffee producing and consuming nations as well as maneuvering by the coffee market's foremost giant, Brazil, significantly contribute to the global coffee crisis. Coffee farmers from Latin America to Africa find that they have little reason to harvest their beans. Drought in Latin America is exacerbating the situation, but participants along the entire production-consumption chain are wondering which viable solutions remain.

2. Description

The Second Most Widely Traded Commodity

Typically commodities are the most volatile products traded on a global scale and many of the least developed countries of the world depend wholly on their export. Coffee is the second most widely traded legal commodity on the international market, second only to oil. Coffee supports the economies of some fifty producing countries and garners an average of $55 billion in worldwide sales (Loyd and Fadel).

Coffee: The Plant, Arabica and Robusta

The word, "coffee" is derived from the Latin name of the genus Coffea. The genus is one of 500 genera in the Rubiaceae family and there are 6,000 species of tropical trees and shrubs within the genera. Of those 25 species are found in the Coffea genus, all of which are indigenous to tropical Africa and islands in the Indian Ocean. Coffea species are woody and range from small shrubs to tall trees over 32 feet in height. The oval fruits usually contain two flat seeds and are called, cherries. Coffee drinkers are typically interested in two major and two lesser species within the genus. Specialty (high quality) coffee is extracted in its pure form from arabica beans of the species Coffea arabica. Brazilian arabica beans are appropriately known as "Brazils", while "Other Milds" come from other producing countries where they grow best at higher elevations. In contrast, robusta beans come from Coffee canephora var. robusta (Consumers Choice Council, 09/03/01). Robusta implies more highly caffeinated and bitter beans (P. Tiffen, /10/16/01) that are used to "make arabica go farther" (CCC 09/03/01). There are many well known varieties of arabica including: Typica, Bourbon, Caturra, Mundo Novo, Tico, San Ramon, and Jamaican Blue Mountain grown in Latin America and Jamaica. Robusta beans however are grown in increasing quantities in West and Central Africa, throughout Southeast Asia (including Vietnam), and in Brazil where they are known as Conilon.

Arabica beans represent about 70% of world production, but that is decreasing as the proportion of robusta beans increases. Robusta trees tend to have higher yields and are more resistent to disease. Every 3-4 years both arabica and robusta trees are ready for harvest, and they are viable for 20 to 30 years. Arabica trees grow better in seasonal climates with a temperature range of 59-75 degreees Farhenheit; while robust trees prefer warm tropical conditions with more constant temperatures between 75-85 degrees Fahrenheit. While arabica trees are hardier in terms of temperature, both species die if exposed to freezing temperatures. Finally, both need about 60 inches of rainfall annually (CCC 09/03/01).

Coffee Market Key Stakeholders

Multinational Stakeholders

Coffee beans are shipped and warehoused in natural fiber bags, and usually coffee sales consist of inspected samples offered by importers and brokers (NYBOT http://www.nybot.com/library/econ.htm 12/17/01). Four multinational corporations dominate coffee roasting and sales, namely Procter and Gamble Company (Folgers), Philip Morris Companies Inc. (Maxwell House), Sara Lee Corporation, and Nestle. Meanwhile Dunkin' Donuts owned by Allied Domecq PLC sells two million cups of a day--more cups of coffee than any other company in the US (Neuffer 07/29/01). Such corporations manage to maintain high profits, while coffee farmers and pickers increasingly receive a smaller and smaller financial remuneration for their efforts. Proctor and Gamble sells about $1billion in coffee sales annually through the Folgers brand. While the company has raised millions of dollars to support education programs, build and remodel schools and donate computers to schools, they have refused to consider fair trade certification (see Legal Cluster) (Nolan 10/10/01). In doing so, they are addressing the future needs of coffee producing communities through education, however frequently, impoverished people place greater priority on their basic needs such as food and shelter, which can only be addressed by a systemactic shift in the coffee production chain.

"Sara Lee is the number-two coffee company worldwide in the roast and ground segment with brands such as Chock full o'Nuts, Hills Bros. and Superior in the U.S. and Douwe Egberts in Europe and U˝iao in Brazil."(Sare Lee Corporation http://www.advisorinsight.com/pub/indexes/500_mi/sle_ir.htm). Starbucks is also a formidable force but only in the specialty coffee market. It controls about 1% of the total US market, while dominating the specialty coffee market. (London 12/03/01) Starbucks and Sara Lee, each offer one Fair Trade blend and that of Sara Lee's Superior blend is triple certified fair trade, organic and shade grown.. Meanwhile the big three coffee importers: Folgers, Maxwell House, and Nestle have not begun to address the more fundamental causes of the on-going coffee crisis. In addtion, while the specialty market is small in terms of quantity of beans imported (17% of total US green bean imports) but it does control 40% of the $18.5 billion US coffee market or $7.8 billion (Giovannucci, 2001: 7). Starbucks was reported to be having a "blockbuster year" in June 2001, recording $629 million in sales in the second quarter. But while the green bean price fell, Starbucks raised its prices (Peraino, 2001). Therefore both the mainstream and specialty markets are reeping significant benefits from the current coffee market. The plummeted prices paid to farmers as a result of the New York exchange market quotes translate into larger profit margins for multinational corporations. While those multinational corporations may increase their competitive advantage with socially responsible measures such as education funding, they are not addressing the fundamental injustice of their profit margins by avoiding sustainable initiatives such as fair trade, organic and shade grown certification schemes.

Surge in Supply Led by Vietnam?

 

Graph 1: World Coffee Production: 1968-2001

Source: World Bank International Task Force on Commodity
Risk Management in Developing Countries

P. Tiffen & E. Brylla, Nov. 16, 2001

The so-called C-market price (New York commodity exchange market price) of coffee has been in continual decline over the last several years just as world production has been increasing steadily (See Graph 1). In 2001, the New York Board of Trade (NYBOT) C-market price dropped from 60 cents per pound in December, 2000 to 44 cents per pound in the fall of 2001 (NYBOT). As is true of most commodities, prices are dependent upon financial speculation and weather. In 1994, a frost in Brazil created a surge in coffee prices as the world's foremost producer was unable to supply the same quantity as in previous years (Neuffer) . Frost and drought are so important to the international coffee market that the international coffee organization has included a chart listing them since 1902 (ICO, 12/17/01).

Table 1. Coffee: Exports by ICO Exporting Members (Vietnam) to All Destinations

October-September
(in thousand 60Kg. bags) 1 bag = 137.276 lb.
1994/95 1995/96 1996/97 1997/98 1998/99
Vietnam 3207 3679 5422 6602 6558

Source: International Coffee Organization, December 1999
Horticultural and Tropical Products Division, FAS/USDA
(Commodity Expert)


Meanwhile, in the last year prices have fallen dramatically as a result of a glut on the market partially attributed to Vietnamese coffee production. Many sources cite Vietnam as the sole culprit in the current crisis, "This year, Vietnam has flooded the market with cheap, low-quality beans, driving prices to an eight year low." (Neuffer, 2001). Without a doubt, Vietnam has emerged as one of the most prolific coffee producing countries within the last couple of decades (See Table 1) and its entrance into the market has created negative reverberations down the chain of production that are felt by coffee farmers in countries from all areas
of the world. The central highlands region of Vietnam, namely Gia Lai and Dac Lac are the two regions where the coffee boom in Vietnam has exploded. Interestingly, this is also the area in which some of the worst civil unrest in decade's of Vietnamese history has been taking place (See Other Cluster).

 

Vietnam

2. Gia Lai
Province

3. Dac Lac
Province

 

 

 

 

 

 

 

Global Social Implications

Farmers in Latin America, Africa, and even Vietnam are suffering from the diminishing wages they receive as a result of the collapsed coffee commodity market. Their suffering is leading to desperation in many parts of the world. Coffee farmers typically earn 15 to 25 cents per pound of coffee cherries, which is hardly enough to cover the cost of production. As a result, many Central American and Mexican coffee farmers have opted to abandon the labor-intensive coffee industry. Their decision is having dire effects on the economies of the region as hundreds of thousands of workers are being displaced. The collapse in coffee prices arrived at the same time that severe drought and food shortages are plaguing Central America. Hunger is rampant, the United Nations World Food Program estimates that up to 1 million Central Americans, primarily in Nicaragua and Honduras, are going hungry. Coffee farmers whose existence depends on the coffee harvest being that they do not grow other crops, are especially at risk. (O'Neill, 2001). In Guatemala a farmer can expect about $8500 before costs for his entire crop in one year and that same crop will be worth $750,000 by the time it passes through the numerous hands of the coffee. The President of Guatemala's National Coffee Association, Manfredo Topke Delgado, states that farmers have no choice but to offer pickers coffee instead of cash, left the February 2001 crop to rot on the bushes, and left many farms to the weeds. In Guatemala, coffee production is a contentious class issue. The landed class owns 3,400 plantations many of which are "hidden behind high walls and protected by armed guards". An independent study found that in three of Guatemala's coffee regions, almost half the workers were paid less than the minimum daily wage of $2.48. But now the same farmers are likely not being paid at all or are being compensated with coffee beans. Desperation is running high. In May of 2001, Guatemalan coffee farmers marched on their capital in Guatemala City to demand cheaper credit from Congress and offers were made to burn unsold low-grade coffee (Neuffer, 2001) . Some farmers are considering burning the lowest-grade coffee for fuel or using it for compost, while many in the lowlands are attempting to grow other cash crops such as bananas palm trees (Franklin, 2001)Topke was quoted in the Boston Globe in July 2001, "As we see it, we have to compete. The name of the game is be efficient or you're out. When they ask, are you doing a terrible job vis a vis laborers, there's not much else that people can do." (Neuffer, 2001).

While prices of coffee reached an eight year low in 2001, the out-migration of coffee farmers began from the state of Veracruz, Mexico after the harvest in October and November of the 2000/01 crop. The coffee pickers knew that they needed to find other alternatives when there was neither cash nor financing to pay for harvesting and the international prices were progressively decreasing (Wallgren, 2001). The hopeless situation gained international notoriety when fourteen Mexicans were found dead of exposure in the Arizonan desert in May 2001, and at least half of them were coffee farmers from Veracruz, Mexico searching for alternative means of survival (McMahon, 2001). According to a Dow Jones Newswire, "Coffee is an important part of the Veracruz economy," said a local official in Veracruz. "It's a real bad social problem, and it's sadly not surprising to hear that many of these immigrants were coffee producers or coffee workers." . To its credit, Starbucks has been working with Conservation International in Chiapas, Mexico to expand shade-grown coffee production (See Legal Cluster) and several fair trade cooperatives have also been established in the same area.

Nicaragua is a case in point. Coffee exports comprise 25% of export revenues in Nicaragua. 320,000 households get some or part of their income from coffee. There are 60,000 permanent coffee laborers and 280,00 harvest laborers in the coffee industry. However, as a result of drought, lack of funding for inputs and the coffee crisis there was a 30% drop in the coffee yields of the 2000/01 harvest (Tiffen, 2001). The Washington Post reported in Sept. 2001 that coffee farmers in Nicaragua were literally starving as a result of both a drought and low coffee prices, which was in turn influencing the political spectrum. As in Mexico, the situation was encouraging a mass exodus of people (including coffee farmers) from Nicaragua, Honduras, Guatemala, and El Salvador. According to a report in the Seattle Post-Intelligencer thousands of Nicaraguans from coffee plantations were lining the highways with refugee camps where black tarps serve as their temporary homes. As a result of their desperation, leading up to the recent elections people were regaining interest in "the Marxist icon" Daniel Ortega, leader of the Sandinistas during the war-torn decade of the 1980s in Nicaragua (Jordan). In July 2001, the then President Arnoldo Aleman offered to bus refugees back to their homes and provide them with jobs building roads and bridges (Mulady, 2001). Few jobs were provided, but nonetheless Ortega conceded defeat in the elections to his opponent Enrique Bolanos (Aguilar, 2001). Paul Rice, current Executive Director of Transfair USA, a fair trade certification organization worked in Nicaragua for 11 years as a rural economic and cooperative development specialist (Transfair USA website 12/17/01). He stated after a visit to Nicaragua in 2001, "There were 4000 farm workers who had come down from the big farms. They hadn't been paid salaries since February. It was a dramatic scene, all these coffee workers camped out with their families and children." (Mulady, 2001) Thus the ravaged price of coffee on the international markets has deleterious effects on socio-political aspects of farmers' lives around the world as their economic disadvantage worsens.

In Africa, where 39 of the world's 49 poorest countries are located, the global coffee crisis has increased poverty. Many countries in Africa rely heavily on coffee as a source of foreign exchange earnings. In March 2001, a conference was held in Nairobi, Kenya at which the ICO Chief Economist stated that African coffee industry needs aid because it is increasingly loosing its share of the market. While Africa controlled 27% of the world market in the 1980s with an average of 26 million bags, it is averaging 17 million bags or 15% of the current market. Declining farm incomes may be leading to lower investment in harvesting as farmers employ fewer workingmen to pick cherries. While cherries are seen "drying by the side of the road in some areas, many farms remain unharvested and overrun with weeds." (OT Africa Line, 2001)

Uganda is highly dependent on the coffee industry. coffee exports account for 47% of its export earnings. Nearly 2.5 million people are involved in coffee production, making the industry the largest employer of hired labor. Liberalization of the Ugandan economy and the coffee industry has lead to greater price volatility internally, which has lead to suffering at the household level and the financial services level as banks struggle to survive. As a result credit for domestic companies and local cooperatives has significantly faltered. (Tiffen, 2001) Low coffee prices and thus lower production is further immiserating Africans across the continent dependent on coffee farming.

(See Other Cluster for Vietnam specific social implications as well as Colombia )

 

Global Environmental Implications

Coffee production on large plantations typically involves the deforestation of large tracts of land. In addition, the processing of coffee beans can require the use of large quantities of water into which organic coffee waste is dumped. Deforestation can cause soil erosion, lower biodiversity by destroying the habitat of countless living species, and significantly limit carbon sequestration due to the loss of dense forest that tends to absorb large quantities of carbon. While there is little research about the direct effect increased coffee production in Vietnam is having on the environment, many lessons can be learned from research conducted in Latin America. Tropical rainforest destruction continues throughout Central and South America as farmers clear-cut hillsides and fields to grow coffee with greater sun exposure. Coffee tends to grow faster with more sun but also requires more pesticides. The pesticides affect the growers more severely than the consumers since processing removes most of the chemicals. However, the end result is that the prevalence of pesticide use on large plantations worsens the social implications in producing countries of the present coffee market. In addition, the Smithsonian Institution has lead research into the effect that clear-cutting for sun-grown coffee has had on migratory birds that winter in the Mesoamerican Biological Corridor of Latin America. This area of high of extremely rich biodiversity is the traditional habitat for the wintering birds, but as it is destroyed the birds are deleteriously affected as are numerous mammals and reptiles (CEC 1999). (McMahon, 2001)

The global environmental implications of coffee production are strikingly described in the following exerpt from Stuff the Secret Lives of Everyday Things by John C. Ryan and Alan Thein Durning:

Dense manicured rows of Coffea arabica trees covered the farm, growing under the strong tropical sun. For most of this century, coffee grew on this farm in the shade of taller fruit and hardwood trees, whose canopies harbored numerous birds, from keel-billed toucans to Canada warblers. In the 1980s, farm owners sawed down most of the shade trees and planted high-yielding varieties of coffee. This change increased their harvests. It also increased soil erosion and decimated birds, including wintering songbirds that breed near my home. Biologists report finding just 5 percent as many bird species in these new, sunny coffee fields as in the traditional shaded coffee plantations they replaced.

With the habitats of birds and other insect eaters removed, pests proliferated and coffee growers stepped up their pesticide use. Farmworkers wearing shorts, T-shirts and sloshing backpacks sprayed my tree with several doses of pesticides synthesized in Germany's Rhine River Valley. Some of the chemicals entered the farmworkers' lungs; others washed or wafted away, only to be absorbed by plants and animals.

Workers earning less than a dollar a day picked my coffee berries by hand and fed them into a diesel-powered crusher, which removed the beans from the pulpy berries that encased them. The pulp was dumped inot the Cauca River. The beans, dried under the sun, traveled to New Orleans on a ship in a 132-pound bag. For each pound of beans, about two pounds of pulp had been dumped into the river. As the pulp decomposed, it consumed oxygen needed by fish in the river. (1997)

 

Potential Solutions

 

What can be done to raise coffee prices on the international commodities market? How can the vacillating pattern of coffee prices be normalized? What historical lessons can be used to better the next steps taken? And what international measures are needed in order to ensure that more of the profits of relatively inelastic demand for coffee in the richest countries of the world is shared with the people who grow and pick the coffee beans? The international coffee market has a long history of price volatility. Throughout the years greater price stability was sought through many techniques. Today, perhaps the failed International Coffee Agreements can be re-visited. Concerted efforts by producing countries to withhold low-grade or triage beans, burn such stock or use it for compost, fodder or fuel might be considered. International commodity risk measures such as price insurance through local and international institutions may present solutions. Finally, sustainable coffee initiatives provide viable models of coffee production that are both socially and environmentally sound while involving support from not only producer but also consumer stakeholders.


3. Related Cases

Cases:

  1. Coffee: Coffee Exports from Costa Rica by Pamela Oakes
  2. Coffeecolombia: by Azuma Miura
  3. Guatcoff: Environmental and Cultural Implications of Guatemalan Coffee Production by Cecelia Stoute
  4. Shadecof: Shade Coffee by Tom DeLorme
  5. Cocoa: Cocoa Trade in Cote D'Ivoire byAnge-Berthe Gnoan
  6. Vietpest: Vietnam Pesticides by Hang A. Pham
  7. Vietwood: Vietnam Deforestation by Brian W. Hill
  8. Costbeef: Costa Rican Beef Exports by Antonio Santiago and Jay Allen Schmidt
  9. Snowpea: Non-Traditional Agricultural Exports and the Pesticide Problem in Guatemala by Stephanie Weinberg
  10. Tea: India Tea and the Environment by Beryl Kim

Key words:

  1. Coffee
  2. Vietnam
  3. Southern North America

4. Author and Date:
  Janine Johnston, December 2001

II. Trade Clusters

12. Type of Measure: Quotas imposed by International Coffee Commodity Agreements (the last one was suspended in July 1989).

13. Direct v. Indirect Impacts: Indirect [IND]

14. Relation of Trade Measure to Environmental Impact (See Description Cluster: "Global Environmental Implications Section")

a. Directly Related to Product: Yes

b. Indirectly Related to Product: No

c. Not Related to Product: No

d. Related to Process: Yes, habitat loss and labor force implications

15. Trade Product Identification: Coffee

16. Economic Data

17. Impact of Trade Restriction: Low

18. Industry Sector: [N] [FOOD]

19. Exporters and Importers: Vietnam and Various (US, EU,

International Coffee Organization Statistics

Vietnamese Coffee Exports and The World c-Market Price for Coffee

The propulsion of Vietnam begun after 1980. In that year Vietnam exported 8,000 tons of coffee (with a yield of 0.4tons/ha), while in 1994 its exports rose to 430,000 tons (with a yield of 2.26 tons/ha) (UNDP legal cluster). Between 1990 and 2001 coffee production shot up from 1% of world production to 18% (Procafe, 2001). Similarly, between 1990 and 1999 merchandise exports from Vietnam rose from $2,404 million in 1990 to $11,523 million in 1999. Vietnam has three key competitive advantages: labor, land and finances. However coffee production is having negative consequences on the labor force and land of Vietnam as is true of many parts of the world (see Enviromental and Other Clusters).

As stated previously, the World Bank has been implicated in the propulsion of the Vietnamese coffee market over the last decade. But the World Bank contends that its lending policies have little or nothing to do with the coffee situation in Vietnam and thus the world.

While the World Bank has a large and very succesful lending program in Vietnama for projects covering human development...none of its investmens have been designed promote coffee production--this contradicts a number of media reports suggesting that the World Bank has been involved in financing the massive expansion of coffee production in Vietnam, leading to a decrease in global coffee prices.

Coffee's main supporter in Vietnam is the Government, through a large state-owned enterprise and several provincial governments, notably in the Central Highlands, which have boosted Vietnam's coffee output from less than 6 million bags in 1997 to more than 12 million bags in 2001 rendering it the second largest coffee exporter after Brazil. Expansion is also fueled by small-scale producers going into coffee production on their own with very little information or experience of world commodity markets. The major expansion of coffee production in Vietnam started long before the World Bank resumed lending to the country in 1994. (World Bank, 2001)

It is credible that the Bank had little to do with funding Vietnam's development of its coffee market. Perhaps the Government saw an opportunity at a time when the market was high, as many others have done, and opted to gear its command-driven policies toward the efficient expansion of the coffee market. While the coffee producing countries are in dire straits and part of the blame lies with Vietnam, it is not the sole culprit, nor does it hold the panacea. See the Legal Cluster for possible internationally engaging solutions.

Meanwhile, a closer look at the trade aspects of the coffee commodity market follows. The graph below demonstrates the volatility of coffee prices from 1983 until 2001. One can see the steady decline over the last seven years and the new lows to which the prices have fallen.

Graph 2. Coffee Prices: 1983-2001

Source: World Bank International Task Force on Commodity
Risk Management in Developing Countries

P. Tiffen & E. Brylla, Nov. 16, 2001

The average price of coffee from 1994 to the present as estimated from the NYBOT Interactive Historical Chart below. (See Chart

Chart Average Coffee Price from 1994/95 to 2000/01

Average Price on New York Bureau of Trade in $US ($/100lb.)
1994/95 1995/96 1996/97 1997/98 1998/99 1999/2000 2000/01 To date
166 136 121 226 104 87 73 55

Source: NYBOT Trade Signals Historical Interactive Chart
KC NYBOT Contin. (Monthly) 10 years

Compare the average coffee prices above with the fluctuations in production since 1994/95 below in Graph 3.

Graph 3. Production Changes Worldwide Since 1994/95 (USDA Data)

Source: World Bank International Task Force on Commodity
Risk Management in Developing Countries

P. Tiffen & E. Brylla, Nov. 16, 2001

Since 1997 there has been a continuous and steady decline in the price of coffee on the international commodity market. In Graph 2 one can see that the average price has decreased substantially over the last five years. The coffee year begins October 1 and ends September 1 (International Coffee Agreement 1994). Thus, despite the halt of trading due to the bombing of the World Trade Center on September 11, 2001 has seen the lowest price for coffee within the last ten years.

. In 2000, Vietnam produced 450,000 tonnes of robusta beans. While in many parts of the world, specifically Colombia and Indonesia which were negatively affected by El Nino and La Nina phenomena, the coffee output in 1999/00 declined (FAO). Although the robusta market is considerably smaller than the arabica, prices and the quality of robusta is much lower than arabica, the glut of Robusta beans affects the overall c-market price.

 

While production worldwide declined (although it increased in Viet Nam and a few other producing countries) coffee trade expanded in 1999/00 (FAO). Overall, world exports in green bean coffee were greater than 5.1 million tones, almost 14 percent greater than the average for 1995-97. Vietnam exports were 270 tonnes between 1995-97 and 464 tonnes in 1999(FAO). Similarly, as seen in Table 1 above Vietnam exported an average of 3,207 60 kilogram bags of coffee in 1994/95, which rose to 6,558 60 kilogram bags by 1999/00(USDA).

Comparisons of Coffee Exporters and Importers

Leading Exporters Quantity of 60 kg. bags: (See Table Below)

Brazil is by far the number one exporter of coffee beans both arabica and robusta. It has fairly consistently out performed all other producing countries. In 1998/99 it exported a record 22,771,000 60kg bags of coffee. Traditionally, Colombia, land of Juan Valdez, has followed Brazil as the second most abundant producing country. However, what is not shown on the Table 3 below is that in 2000/01 Vietnam overtook Colombia as the second most prolific coffee producer and was the number one producer of robusta beans in that same harvest year. During the calendar year of 2000 Vietnam produced 11, 177,885 60 kg. bags of coffee (Commodity Expert 17/05/01).

Table 3. The Top Ten Exporters
Coffee: Exports by ICO Exporting Members to All Destinations

October-September
(In thousand 60-Kg. bags) 1 bag = 132.276 lb.
Country 1994/95 1995/96 1996/97 1997/98 1998/99
Brazil 16544 12728 18627 16325 22771
Colombia 9342 10785 11176 10911 10291
Vietnam 3207 3679 5422 6602 6558
Indonesia 3143 6098 6358 5367 5417
Guatemala 3564 3713 4224 3889 4557
Mexico 3258 4579 4389 3883 4136
Uganda 2793 4214 4237 3032 3648
India 2070 3572 2476 3691 3568
Cote d'Ivoire 2253 2900 3574 4567 2705
Honduras 1637 2054 1825 2299 2087

Source: International Coffee Organization, December 1999
Horticultural and Tropical Products Division FAS/USDA
(Commodity Expert 13/12/99)

Below in Graph 4. is a depiction of the regional changes in production

Graph 4. Regional Changes in Production

Source: World Bank International Task Force on Commodity
Risk Management in Developing Countries

P. Tiffen & E. Brylla, Nov. 16, 2001

The regional changes in Graph 5. are mirrored by the production changes in the largest three producers as seen below in Graph

Graph 5. Production Changes in Largest Three Producers


Source: World Bank International Task Force on Commodity
Risk Management in Developing Countries

P. Tiffen & E. Brylla, Nov. 16, 2001

Case Importers :

USA, Germany, Japan, France, Italy, Spain, Canada, UK, Poland, Netherlands

Leading Importers Quantity of 60 kg. bags: (See Table Below)

The United States is the number one importer of coffee in the world. In recent years the specialty coffee market is the only portion of the market that is consistently growing but it is growing by 5-10% per year (Giovannucci, 2001). Germany is the second largest importer of coffee and Japan the third largest. (See Table 4.)

Table 4. The Top Ten Importers of Coffee
USDA: World Coffee Consumption by Importing Countries

October-September
(In thousand 60-Kg. bags) 1 bag = 132.276 lb.
Country 1994 1995 1996 1997 1998
USA 17326 17363 18049 17771 19204
Germany 10214 10032 9777 9870 10375
Japan 6089 6224 5922 6095 6343
France 5112 5313 5531 5550 5437
Italy 4768 4639 4731 4866 4936
Spain 2791 2749 2941 3035 3385
United Kingdom 2640 2200 2380 2419 2241
Canada 2407 2109 2291 2229
Netherlands 2122 2293 2548 2390 1631
Poland 1832 1728 1851 2192

Source: International Coffee Organization, December 2000
Horticultural and Tropical Products Division, FAS/USDA

A comparison of human development to economic development:

 

Human Development and Economic Indicators for Top Ten Coffee Exporting Countries

       
 
HDI Value
GNP/cap
GDP Index
Country
1994, 1997
1995 $
1997
Brazil
0.783, 0.739
3640
0.70
Colombia
0.768
1910
0.70
Vietnam
0.557, 0.664
240
0.47
Indonesia
0.668, 0.681
980
0.59
Guatemala
0.572, 0.624
1340
0.62
Mexico
0.786
3380
0.74
Uganda
0.404
240
0.41
India
0.544
340
0.47
Cote d'Ivoire
0.422
660
0.42
Honduras
0.575, 0.641
600
0.52

Sources: Human Development Report 1999
World Development Report 1997

Interestingly, the human development index as well as the GNP and GDP of the top ten coffee exporters are not comparable with the degree to which they export coffee. Although Viet Nam is becoming a major exporter of coffee it has a very low GDP/GNP in the years cited.

 

III. Legal Clusters

5. Discourse and Status:

The socially and environmentally unsustainable imbalance created by the current international coffee market clearly necessitates a new system of exchange. There are several possibilities:

  1. International Coffee Agreements (ICAs)
  2. Producer Price Stabilization Schemes
  3. Oversupply Controls
  4. Product Differentiation
  5. Sustainable Coffees (Fair Trade, Organic and Shade Grown)

International Coffee Agreements (ICAs)

The first International Coffee Agreement was signed in 1962. It was a five year agreement meant to fix export quotas in coffee producing countries in order to stop the extended decline of prices. The agreement was renewed every five years until 1989 when the final agreement expired. In that year the Association of Coffee Producing Countries (ACPC) was established to create a quota system designed to maintain prices.
The International Coffee Agreement 1994 in turn established the International Coffee Organization, a multilateral organization of equal representation between producing and consuming countries was initiated with the following objectives according to Article I of the Agreement:

1. to ensure enhanced international cooperation in connection with world coffee matters;
2. to provide a forum for intergovernmental consultations, and negotiations when appropriate, on coffee matters and on ways to achieve a reasonable balance between world supply and demand on a basis which will assure adequate supplies of coffee at fair prices to consumers and markets for coffee at remunerative prices to producers, and which will be conducive to long-term equilibrium between production and consumption;
3. to facilitate the expansion of international trade in coffee through the collection, analysis and dissemination of statistics and the publication of indicator and other market prices and thereby to enhance transparency in the world coffee economy;
4. to act as a centre for the collection, exchange and publication of economic and technical information on coffee;
5. to promote studies and surveys in the field of coffee; and
6. to encourage and increase the consumption of coffee. (International Coffee Agreement 1994)

This agreement was renewed for two years November 23, 1999 (The Council of the European Union). Within the last year coffee producing countries have agreed to reduce the role of the ACPC as a result of the impotence of coffee retention measures it implemented and to strengthen the role that the ICO will take in harmonizing consumer-producer relations in order to stabilize the market (Commodity Expert 25/09/01). In addition, while the World Bank and IMF have been implicated as accomplices to the initiation of the current dismal state of coffee prices as a result of loans they extended to Viet Nam, ironically ACPC members are now discussing a plan to request that the World Bank get involved in a program to reduce worldwide production temporarily in order to boost prices. This measure is being considered despite the fact that Brazil's Agriculture Minister Marcus Vinicius Pratini de Moraes was quoted in the Brazilian press during the first week of August 2001 stating,

"Coffee is experiencing problems because the World Bank and the French government have financed Vietnam, throwing onto the market 15 million bags without any controls. It is unacceptable for the World Bank to do this…there is no retention programme which can turn the situation around."

What Minister Pratini de Moraes did not recognize is the strength of the Brazilian market share. He did not mention the fact that Brazil is currently moving most of its plantations to lowland areas where production can become more mechanized. It is less susceptible to frost in such areas but more prone to effects of drought. However, irrigation systems can allay drought damage, thereby fortifying Brazil's vice-like grip on the coffee market.(Tiffen, 2001)

Several reasons have been identified for the failure of the agreements. As more countries are embracing liberalized trade at the policy level as promoted by developed countries, the agreements are seen as barriers to free trade. Consuming countries must support the intiatives by demanding certificates of origin in order to enforce the quotas (but they will fail to do so if they view an ICA as inhibitive to liberalized trade) (Hamrlik, 2001: 59). Also commodities agreements over a commodity market that is dominated by a few producing countries (as is the case with coffee in relation to Brazil and Colombia, traditionally) tend to fail if the controlling countries choose not to participate (Coote, 1996). Brazil has been implicated for failing to uphold the agreements. Brazil's relative power in the industry also explains the failure to develop a coffee cartel, as a cartel necessitates fairly equally powerful producing members. While it is too early to say whether Vietnam would follow Brazil's lead or perhaps serve to balance Brazil's lop-sided control of power in the coffee industry, Vietnam did attempt to adhere to oversupply agreements as discussed below (see Oversupply Controls.)

Producer Price Stabilization Schemes

The World Bank is working on an international task force to devise commodity risk management measures. They are proposing a price stabilization plan that would involve price insurance negotiated through local institutions from banks to local cooperatives. A minimum price would be offered to producers who are generally excluded from access to such market-based solutions such as price insurance. The Bank plans to identify the local institutions that may have the greatest efficacy at reaching the farmers who are most in need of such mechanisms and then to develop a broad-based strategy to deliver the needed financial support to them. The primary objective of the scheme is bridging the market gap between providers of risk management instruments and small farmers in developing countries. In the terminology of the World Bank, the International Task Force on Commodity Risk Management in developing countries approach is as follows:

Pilot projects are being carried out in Nicaragua, Tanzania and Uganda. However, this is a relatively new initiative that has yet to prove its viability. Only time will tell whether such a broad-based approach is feasible and which aspects of it are more so than others.

Oversupply Controls

Before its dissolution in the fall of 2001 the Association of Coffee Producing Countries (ACPC) in accordance with the ICO were suggesting means of curbing the oversupply of coffee through a global coffee retention scheme. By September 2001 there was a general agreement to slowly release the retained stocks, the quantity of which was not known. From Colombia to Costa Rica to Indonesia to Vietnam and back to Brazil, countries chose to begin releasing their stocks. Vietnam released the 2.5 million bags it had retained between November 2000 and mid-August 2001 by mid-September (Commodity Expert 25/09/01). Colombia, Mexico, Costa Rica, El Salvador, Honduras, and Nicaragua all participated in the retention scheme and asserted their interest in supporting another proposal to limit the exportation of so-called triage or low quality arabica beans. However, Vietnam is not a member of the ACPC although it did participate in the retention scheme. Nonetheless, efforts to raise the quality and thus quantity of arabica beans traded may open up new markets for robusta beans. Guatemala refused to participate in either of the schemes for that reason. (Commodity Expert 17/05/01) Guatemalan farmers suggested using their triage for industrial fuel or even compost (Franklin 2001).

The Natural Resources Institute suggested several creative alternatives. NRI claims that for every million bags of coffee removed from the global market global prices will rise by two US cents per pound of coffee. Destruction of low quality beans before they reach the market according to the NRI could improve consumption by bettering quality. One means of disposal commercialised in Central America is feeding the plant to cattle, goats and pigs, especially on small-scale mixed crop-livestock farms where animal feed is frequently in short supply. As mentioned previously, coffee plants can also serve as mulch to fertilize land. Finally, although prohibitively costly, coffee beans could be made into fuel briquettes-a widely used practice in Bangladesh according to one source (OT Africa Line, Sept. 2001). Such briquettes could serve as a sorely needed source of fuel in deforested areas. The prohibitive costs are incurred in transferring the beans to the briquette manufacturing locations. Likewise and perhaps more unrealistic at present--caffeine might one day be extracted from the husks of the bean. (ibid.)

Product Differentiation

One means by which certain members of the coffee industry could help their own corner of the market is through product differentiation. Colombia has been most successful at creating a unique profile for itself as a high quality supplier through the use of slogans such as "Juan Valdez" and "100% Columbian Coffee"(Hamrlik, 2001). However the Colombian Coffee Federation was forced to cut funding for its ad campaign nearly by 50% in the spring of 2001, due to the drought and collapsed prices. More recently, another country has sought to differentiate its own market. El Salvador is attempting to set itself apart by emphasizing that 95% of its plantations harvest coffee under shade grown conditions and 60% of the coffee cultivated land in El Salvador is planted with gourmet Bourbon arabica beans (ProCafe, 2001). Potentially a country such as Vietnam could do the same for itself by attempting to market high quality robusta beans to garner a competitive advantage. New processing techniques are now available that can take the bitter edge off the taste of robusta beans. In a frantic, sleep deprived world, perhaps a new market could be carved out for the more highly caffeinated robusta beans. However, such a campaign would do nothing to quell the internal strife within the coffee industry. Thus it would make little progress toward lifting the entire market up to a more stable state: conducive to a sustainable existence for small farmers.

Sustainable Coffees (Fair Trade, Organic and Shade Grown)

In order to protect both the farmers who grow coffee and the environment in which coffee is grown three initiatives seek to ensure that coffee production is more sustainable. So called, sustainable coffees: namely fair trade, organic and shade grown have established or are in the process of establishing a third party certification system to ensure that coffee is grown under socially just conditions, free of chemicals or grown under a canopy of trees that sustains biodiversity. Each certification system has a label indicating to consumers that the coffee is grown under socially responsible and environmentally sustainable conditions. What is certification?

The certification systems are a decentralized means of monitoring the production of coffee internationally. They conform to the stipulations of the World Trade Organization's Sanitaritary and Phytosanitary Measures Agreement which state that

Member countries are encouraged to use international standards, guidelines and recommendations where they exist. However, members may use measures which result in higher standards if there is scientific justification. They can also set higher standards based on appropriate assessment of risks so long as the approach is consistent, not arbitrary. (WTO, 11/23/010)

Sustainable coffees defined:

Fair Trade coffee- purchase directly from cooperatives of small farmers that are guaranteed a minimum contract price.
Organic coffee- produced with methods that preserve soil and prohibits the use of synthetic materials.
Shade Grown coffee- grown in shaded forest settings and therefore supports biodiversity and song birds in particular.

Fair trade, organic and shade grown certification intiatives set international standards and guidelines by which coffee is grown more equitably and with fewer pesticides that have been shown to have negative effects on the food chain, the natural functioning of biomes, and on thus on human health. They are most effective for coffee production in areas where plantations are small, cooperative run endeavors, with funding for certification, which can be expensive. At present, they are only being supported by the specialty coffee markets in consumer countries. However the specialty coffee market in the United States is the largest in the world, is growing by 5-10% per year, and controls 40% of national coffee sales annually. To date these initiatives have focused on coffee production in Latin America and on a limited basis in Africa. Organic, shade grown, and fair trade coffee production have not reached much of Africa nor Southeast Asia, and their dissemination may be hampered by the political situation in the producing country. An essentially command controlled country like Vietnam, may not be conducive to farmer owned cooperatives that sustainable coffee initiatives seek. Nevertheless, they provide models for a more equitable and holistic trading system toward which global trading systems should strive.

The Fair Trade Criteria

The fair trade initiative seeks to guarantee that coffee farmers are paid a living wage in the local context. It fosters long term relationships between importers, roasters, retailers, and the producing cooperatives.

(standards used by Transfair USA and other members of the International umbrella group, Fairtrade Labeling Organizations [FLO])

The Organic Criteria:

Organic Production and Processing is based on a number of principles and ideas. All are important and this list does not seek to establish any priority of importance.

The Shade Grown Criteria:

Migratory songbirds are the motivational factor behind this sustainable coffee initiative. By preserving the tree canopy in the Mesoamerican Biological Corridor, the survival of nearly 150 songbirds is more secure. Little mention is made of all of the other living species that are all conserved by protecting the shade canopy, however that is an added benefit to shade grown coffee. Also, Jorge Cuevas, owner of a farmers cooperative in Oaxaca, Mexico has said that shade grown coffee is known to taste better since the cherries take longer to develop(April 2001). A study conducted by the Commission for Environmental Cooperation coaborated this fact, asserting that shade grown coffee typically grown at higher elevations tends to a higher sugar content lending it a smoother, richer, better taste. In addtion to its environmental and taste benefits, shade grown coffee is healthier as it usually requires the use of less pesticides (CEC, 1999).The criteria for shade grown coffee can be found at the Smithsonian Migratory Bird Center website (click above).

The three sustainable initiatives are found together in select set of coffee beans. Much discussion and thought is being put into triple certification of coffee: fair trade, organic, and shade grown (London, 2001) . Fair trade coffee frequently tends to be organic, but organic is not necessarily grown under fair trade conditions. Arguments have been made that organic coffee may be more sustainable as a cause coffee because consumers may grow fatigued with pity for farmers sooner than they will cease to care about a product that is perceived to be of higher quality as a result of being chemical free or grown under a canopy (Hamrlik, 2001). In many cases, the sustainable coffees are not mutually exclusive and by all accounts they set a precedent for a more equitable and sustainable coffee market.

Agree [AGR] or Disagree [DIS] : AGR

Stage (ALLEGE, INPROG, or COMP): INPROG

 

6. Forum and Scope:

International Coffee Organization, International Fairtrade Labelling Organization, and Mulitnational

7. Decision Breadth:

Potential number of countries affected: all coffee producing ~60 and consuming countries.

8. Legal Standing:

Memorandum of Understanding (MOU)between trading partners--producer group cooperative and importer/wholesaler/roaster/or retailer.


I. Within the WTO Appellate Body there are two "Pending Consultations" related to coffee. They are "WT/DS209 European Commission- Measures Affecting Soluble Coffee" and "WT/DS154 European Commission-Measures Affecting Differential and Favorable Treatment of Coffee". Soluble coffee refers to instant or freeze dried coffee. Both cases clearly relate to coffee and may or may not be related to the purported "dumping" of coffee on the market by Vietnam. But each case, should it reach the Active Panel stage and the Appelllate Body and Panel Report Adopted stage will set legal precedents with regard to the second most widely traded commodity in the world-coffee--in international law as set by the WTO.


II. Vietnam's relatively recent admission into the WTO sparked a study by the UNDP to assess the degree to which Vietnam is conforming to the Green and Amber Boxes. It is entitled, "Overview of the Agricultural Sector in Vietnam: Implications of the WTO Agreement on Agriculture". It concludes that Vietnam has generally made great strides in transitioning from a centrally-planned to a market-oriented economy over the last decade. Both Green (permissible subsidies) and Amber (subsidies to be reduced) Box Domestic Support mechanisms in Vietnam seem to be aligned with the WTO provisions. While its economy is in a stage of transition and development, it has nonetheless reformed its agricultural policies, especially those related to export management, according to international rules and conventions. The report contends that the majority of future adjustments related to Vietnam's WTO membership will deal with market access issues. The greatest challenge Vietnam faces in negotiations with other WTO members, the UNDP states, lie in the level of tariff concessions it concedes. With regard to coffee, customs charges are levied that raise revenue for the Government, and add to the Agricultural Price Stabilization Fund, renamed the Export Support Fund. The fund "sets an extra fee on exported and imported goods that have large differentials between local and export prices, or between local and import prices, in order to stabilize domestic prices."(47) Such customs may violate tariff binding provisions under the WTO. (http://www.undp.org.vn/projects/vie95024/agriculture.pdf 10-30-00)

IV. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: Asia

b. Geographic Site: Southeast Asia

c. Geographic Impact: Vietnam

10. Sub-National Factors:

No, however in Dak Lak Province, Vietnam--indigenous rights (see Other Cluster)

11. Type of Habitat:

TROPICAL [TROP]

 

 

V. Environment Clusters

20. Environmental Problem Type: Deforestation, pesticide pollution, biodiversity reduction, habitat loss

Logging and slash-and-burn agricultural practices contribute to deforestation and soil degradation; water pollution and overfishing threaten marine life populations; groundwater contamination limits potable water supply. (CIA, 2001)

The central highlands (where most of the coffee production takes place) contains upwards of 42% of the nation's remaining forests (http://www.forestsandcommunities.org/Country_Profiles/Vietnam.html

21. Name, Type, and Diversity of Species

Name: Grey-shanked Douc Langur (Pygathrix cinereus), broad-leaved hardwood trees, bamboo, Elds Deer (Cervus eldi), Banteng (Bos banteng), Douc Langer (Pygathrix nemaeus) and Concolor Gibbon (Hylobates concolor),Kouprey (Bos sauveli)

Type: Large mammals, tree and other plant species (including medicinal species), more than likely many other fungal and perhaps bacterial species that might be useful to biological research and to the native peoples according to their traditions.

Diversity: High degree of endemism

22. Resource Impact and Effect: The production of coffee can be relatively environmentally friendly. Although coffee plants produce the greatest quantity of beans in high sunlit conditions, they produce more rich tasting beans under a shade canopy (Cuevas 2001). Unfortunately, the production of robusta beans, the lower quality variety of coffee beans is usually done in deforested areas in order to maximize the harvest by increasing sun exposure. Vietnam, the foremost producer of robusta beans as of 2000, grows the majority of its beans on recently denuded mountain slopes (Johnson 2001).

Within the last 50 years more than half of Vietnam's forests have been destroyed. The following description of Vietnam's environmental degradation comes from another TED case, vietwood by Brian W. Hill.

Vietnam's forest cover has shrunk from 44 percent of the country's
total land area in 1943 to 28 percent or 9.3 million hectares
today. During the Vietnam War, US military actions destroyed an
estimated 4.9 million hectares of forest cover. Currenty, the
country's remaining two million hectares of natural forests are
being reduced at a rate of 100,000 to 200,000 hectares per year.
Reforestation is not keeping pace with forest cover losses stemming
from unplanned agricultural clearances, forest fires, the
collection of firewood, and the harvesting of timber. If present
rates of deforestation continue, Vietnam's natural forests will
disappear by the first part of the next decade.

The Central Highlands were traditionally one of the most undisturbed areas of Vietnam. But that is changing as coffee production increases in the area. Nevertheless, the government has set aside Yok Don national park located in the central highlands. It is the only protected example of Dry Dipterocarp forest in Vietnam. The park has a total area of 60,000 hectares. Immediate threats to biodiversity in the park include hunting, fire, encroachment and livestock grazing. The park covers an extensive forest area estimated at over 400,000 hectares, some of which has been allocated to logging and surrounds the national park. In addition the park is adjacent to intact forests on the western side in Cambodia. This location holds potential for trans-boundary protection of a large area, which is particularly important to the conservation of large mammals. The park holds suitable habitat for the Kouprey (Bos sauveli) and local villagers report its existence although scientific verification of such claims is pending. Nevertheless, the Giant Muntjac (Megamuntiacus vuquangensis) is verfiably present in the park and is hunted by villagers. Other rare species in the park include Elds Deer (Cervus eldi), Banteng (Bos banteng), Douc Langer (Pygathrix nemaeus) and Concolor Gibbon (Hylobates concolor). (Cuc Kiem Lam, http://www.undp.org.vn/projects/vie95g31/

Vietnam is sometimes compared to a dragon as it is a long, narrow country, about 1700 km in length (with 3000 km of coastline). Temperate northern and montane regions intersect with the tropical southern region. Vietnam's geography is quite variable, including tropical rainforest, dry broadleaf deciduous forest, marine coral formations and large inland rivers. Topography is built upon karst, basalt, sandstone, as well as sand dunes. Such geographic an topographic variety creates local isolation, which in turn has produced a patchwork of endemic species (BAP, 1996). The areas of the greatest plant endemism include the Hoang Lien Son range, the Central Highlands and Da Lat Plateau. The endemism of these areas spans many vertebrate species such as birds, fresh water fish and mammals. According to the Biodiversity Action Plan (BAP, 1996), Vietnam has a higher proportion of endemic species than any of its neighbors in Southeast Asia.

The Vietnamese people depend heavily on this biodiversity. While their survival is subject to sustained preservation of the forest, the poor local people seem to have no choice except to exploit and so degrade forest resources. Today, over one third of Vietnamese people - predominantly the ethnic majority 'Kinh' people - depend on forest products.(Ngoc Thanh,

23. Urgency and Lifetime: Low and Hundreds of years

24. Substitutes:Sustainable harvesting of existent forest species, perhaps coupled with shade grown coffee. This will improve the taste of the coffee while preserving the forest's biodiversity.


 


VIOther Factors

25. Culture:

Vietnamese Indigenous Turmoil

The government of Vietnam, with funding from large aid organizations such as the World Bank, has invigorated the Vietnamese economy under the auspices of its new economic plan begun in 1986 (Tran), doi moi, in part by redistributing land to impoverished, landless farmers primarily from one ethnic class, the Kinh. The Kinh people (the dominant ethnic class comprising most of the government) have been encouraged to move from the North and the South to the provinces of Dak Lak and Gia Lai in the central highlands. Until recently, the Kinh people superstitiously avoided the central highlands and the area was thus left to Vietnam's numerous hill tribes (Ksor Kok).


However, as a result of recent land distribution, deforestation and ethnic tension have both been exacerbated. While the population of the central highlands area experienced a 12% annual growth rate in the 1990s and the population doubled to 1.9 million. Meanwhile the ethnic make up of Dac Lac has shifted from 50% ethnic minority in 1975 to only 25% today. In February, masses of enraged highlanders marched through Dac Lac and Gia Lai in protest of the arrests of two Jarai tribesman, in the most dramatic show of unrest since 1997 when a thousand villagers protested land distribution in the northern province of Thai Binh. Again in August, smaller groups of hill tribe minorities burned two hectares of coffee plantations and clashed with police as well as settlers. (Johnson 2001)

In the central highlands where 200,000 hectares of land are now covered with abundantly fruitful coffee plants.. "The central highlands' troubles are a microcosm of all the contentious issues facing Vietnam-land disputes, corruption, a shaky economy and accusations of religious repression."(Johnson 2001) Vietnam's deforestation begun in the war, continued with the search for fuelwood and timber in the abject poverty that ensued, and is culminating with the country's current economic thrust both to export coffee from the central highlands and rice from the Mekong Delta (Oxfam). The rush to increase exports has created extreme regional disparities within Vietnam and transformed its environmental, ethnic, and economic geography. Nonetheless, the World Bank estimates that out of its population of 70 million 80% are rural inhabitants and nine out of ten are poor.

The ethnic tension in the central highlands of Vietnam is not likely to be relaxed by the trends evident in the Vietnamese coffee labor force either. Over the last nine years there has been a marked trend--farmers are getting paid less and less for their work. Disputes over land tenure based on ethnic differences are only exacerbated by mounting economic pressure. In December of 1991 farmers were paid 26.2 cents per pound, while in December of 2000 they received 16.20 cents per pound. The labor market did fetch higher wages between 1994 and 1999, but that trend seems to have reversed in the year 2000. (See Table 7)


Table 7. Prices paid to growers in exporting Member countries in US cents per lb (Robusta): Vietnam

  Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1991 43.68 42.12 41.53 40.95 40.67 39.58 38.79 37.44 31.36 30.92 26.27 26.20
1992 28.11 32.38 29.75 29.77 30.28 29.93 30.85 31.16 32.36 30.92 26.27 26.20
1993 34.19 34.00 33.82 33.83 33.40 33.47 33.48 33.73 32.87 37.93 37.78 37.93
1994 38.13 46.14 4.41 47.90 72.42 91.18 119.99 126.94 116.83 118.47 113.56 99.14
1995 95.12 97.90 104.38 111.26 107.60 101.54 94.98 94.69 90.53 86.55 80.34 72.09
1996 59.72 67.96 70.02 70.02 72.09 65.89 57.64 58.85 49.36 45.09 36.08 40.64
1997 36.51 47.97 53.73 55.96 58.16 66.84 69.89 62.82 59.97 52.77 49.97 56.46
1998 67.54 64.68 67.45 69.87 78.61 77.21 58.65 57.03 61.98 61.98 60.75 61.59
1999 65.36 66.94 63.62 54.51 48.90 49.17 45.52 44.83 45.38 42.10 40.46 41.39
2000 35.51 33.89 31.61 30.00 29.01 28.34 27.04 25.09 24.03 20.59 17.21 16.20

Source: International Coffee Organization 11/15/01
http://www.ico.org/asp/statschoice2.htm

Global Social Implications in what used to be the second most prolific coffee producing country:

Future disputes may be brought before the Appellate Board of the World Trade Organization as a result of recent developments in Columbia. On Oct. 30, 2001 the Washington Post asserted that the critical state of the coffee commodity market may be forcing some Columbian farmers to turn to coca farming in order to support their basic needs. While Wilson cautiously reports, "Although hard numbers are impossible to come by, evidence and informed estimates suggest that only about 1,000 of the country's 560,000 coffee farms have scrapped coffee plants in favor of coca or opium poppies," the coffee crisis is not expected to lessen in severity any time soon. Thus the trend toward coca farming may continue and gain strength in the coming years of tanked coffee commodity prices. If so, it may be reasonable to expect that Columbia and perhaps Vietnam could bring a case against developed countries under the auspices of the following portion of the Agreement on Agriculture:

Having agreed that in implementing their commitments on market access, developed country Members would take fully into account the particular needs and conditions of developing country Members by providing for a greater improvement of opportunities and terms of access for agricultural products of particular interest to these Members, including the fullest liberalization of trade in tropical agricultural products as agreed at the Mid-Term Review, and for products of particular importance to the diversification of production from the growing of illicit narcotic crops.

Perhaps a case could be constructed by a developing country Member against a developed country Member or perhaps another developing country Member by utilizing this provision of the Agreement on Agriculture. The state of the coffee commodities market as a result of the glut on the market may be encouraging desperate farmers to move toward the cultivation of illicit narcotic crops rather than diversifying away from them.

http://www.ejil.org/journal/Vol9/No1/sr1e.html#TopOfPage
http://www.undp.org.vn/projects/vie95024/agriculture.pdf

26. Trans-Boundary Issues:

27. Rights: As is often the case, when tensions rise internal fissures grow wider. The hill tribes of Vietnam have suffered a long history of repression in Vietnam and Cambodia. The French who colonized Vietnam from 1895-1954 labeled the hill tribes, the montagnards or mountaineers because they have been marginalized to the highlands by the dominant kinh people over centuries. While the Vietnamese government regularly labels the same people comprised of forty distinct ethnic groups, moi, or savages. The Montagnard Foundation has established its own website to educate the world about what it claims are the abuses lobbied by the Vietnamese government against the hill tribes or degar, meaning "sons of the mountains". It states that coffee has sown "bitter seeds of hate" by encouraging the government's torturing, repressing and persecuting (including sterilizing women) the degar people. (Montagnard Foundation) While such claims remain largely undocumented, Freedom House has documented a governmental effort to crackdown on "banned evangelical Christian 'house churches' that claim many minority converts". (Johnson 2001)

28. Relevant Literature



12/19/2001