AGRICULTURE ORGANIZATIONS PROPOSE NEW PROGRAMS TO ADDRESS CRISIS AMONG COFFEE GROWERS

SourceMex

     Agriculture organizations and federal legislators have
proposed a new legislative initiative to support Mexico's
coffee growers, who are facing an extended crisis because of
extremely weak international prices.
     The current crisis in the coffee industry dates back to
2001, when surplus production from Vietnam began to enter the
market, causing a sharp downturn in prices (see SourceMex,
2001-07-25 and 2001-10-03).
     The market has inched higher at times during the last
three years, but prices have remained well below the levels
needed for growers to even recover their cost of production. 
Until recently, during the past three years, prices for green
coffee beans have failed to even approach the threshold of
US$85 per 100 pounds, said Fernando Celis Calleja, director of
the Coordinadora Nacional de Organizaciones Cafetaleras
(CNOC).
     The initiative would create the Ley de la Cafeticultura
to either supplement or replace the federal government's
current price-support plan, which critics say has only helped
a small portion of growers.  The program would offer direct
supports and loans to growers who have been unable to obtain
financing.
     The existing price-support plan was introduced by
President Vicente Fox's administration in 2001 with the main
goal of bridging the gap between the cost of production and
global prices (see SourceMex, 2001-12-19).
     In a report published in mid-October, the Secretaria de
Agricultura, Ganaderia, Desarrollo Rural, Pesca y Alimentacion
(SAGARPA) said the government had distributed 4 billion pesos
(US$347 million) to 400,000 coffee producers in 12 states
during the three-year life of the program.  The funds have
served not only to support prices but also to improve the
quality of coffee and to assist growers with marketing and
promotion activities.
     
Existing program called inadequate
     The SAGARPA report runs contrary to the assessments of
some grower organizations like the Confederacion Nacional
Campesina (CNC), which contend that government supports failed
to reach almost half the coffee growers in Mexico during the
past three years.  The CNC said the government's program is
overly bureaucratic, depriving many growers of supports
because they lack the appropriate paperwork required by the
Consejo Mexicano del Cafe (CMC) during the marketing period.
     Eleuterio Gonzalez, director of the Union Nacional de
Productores del Cafe (UNPC), a CNC affiliate, said a survey by
his organization indicates that only about 271,000 of the
477,000 coffee growers registered with the government actually
received direct SAGARPA supports, which are disbursed through
the CMC.  "The coffee growers who live in the sierras and more
remote regions are the ones who least benefit from the
government programs," said Gonzalez.
     Gonzalez said coffee growers are pushing for SAGARPA and
the CMC to make the support programs more equitable.  "All we
ask is that the government create a policy that is more
integrated and which will bring a greater sense of order to
the market," said the UNPC leader.
     The depressed coffee market has greatly reduced the ranks
of small-scale coffee growers, forcing many to abandon their
life-long activity to pursue other lines of work.  One study
by federal legislators from Veracruz indicates that more than
12,000 coffee growers in the state have abandoned their plots
to emigrate to the US.  "This is a very worrisome trend," said
Deputy Marcelo Herrera Herbert, a member of the center-left
Partido de la Revolucion Democratica (PRD).
     In some regions of Veracruz, such as Tlapacoyan, the
exodus has left such a gap that coffee production has
disappeared altogether, said the CNOC.
     CNOC president Celis said, however, that expatriates from
coffee-growing regions are sending funds back to their
communities, which in turn are helping sustain coffee
production among small-scale growers.  With most of the men
gone from these communities, women and children are the ones
now in charge of growing and picking the coffee beans, said
Celis.
     The CNOC has joined the UNPC and other organizations in
criticizing what they see as the government's inadequate
policies.  Among other things, the CNOC has taken issue with
the government's production forecast of 4.5 million 60-kg bags
for 2004-2005.  Celis said the forecast does not reflect the
poor weather conditions that affected the coffee-growing
regions during the flowering stage of the crop.
     The CNOC leader said the overly optimistic production
forecast is another example of the government's misleading
assessment about the Mexican coffee industry.  "It is
irresponsible for the government through SAGARPA and the CMC
to conceal the crisis that is affecting our sector," said
Celis.
     
New program offers direct support, loans to growers
     The CNOC and the UNPC have teamed up with legislators
from the special committee on coffee (Comision Especial del
Cafe) in the Chamber of Deputies to draft the Ley de
Cafeticultura.  The proposal recognizes that the government
has boosted funding for coffee producers, but this funding has
been unable to increase the productivity and the quality of
Mexican coffee beans and has failed to raise coffee growers
and their families out of poverty.
     The legislation would create two entities: a special
agency to tend to the needs of coffee producers and a Banco
del Cafe, which would provide financing to producers at low
interest rates.
     UNPC director Gonzalez said the main benefit of the new
law is to create a legal instrument that protects coffee
producers.  "If we do not change our way of being, we are
condemned to disappear," Gonzalez said in a meeting with
members of the Chamber of Deputies and the Senate.
     The proponents of the law have asked the Fox
administration for its support.  "Approval of this law would
be a giant step to boost the coffee sector and in particular
the small-scale and indigenous producers, who have suffered
the most from the globalization trend in the past 15 years,"
CNC president Heladio Ramirez Lopez said in a meeting with CMC
director Roberto Giesemann.
     Giesemann defended the existing program implemented by
the Fox government three years ago, but also acknowledged the
need to take other actions to boost the Mexican coffee
industry.  In particular, he noted that Mexico has failed to
attain the high levels of productivity, which had reached as
high as 6 million 60-kg. sacks 12 years ago.  In recent years,
production has averaged only about 4 million sacks annually,
with exports bringing about US$250 million annually.  In
contrast, coffee-export revenues were reported at US$450
million in 1990-1991 (see SourceMex, 1991-06-05).
     Coffee exports in 2003-2004 are estimated at 2.42 million
sacks, the lowest level in 25 years.  Celis said this
projected level of exports is a significant decline from
levels even four years ago, when exports reached 5.3 million
sacks.
     Deputy Jorge Baldemar Utrilla Robles, who chairs the
special coffee committee in the lower house, blamed the
decline in exports in part on the unwillingness of the
government to promote Mexican coffee more aggressively. 
During the 1980s and into the 1990s, coffee exports were one
of the principal sources of revenue for Mexico, said Utrilla,
a member of the former governing Partido Revolucionario
Institucional (PRI).
     Utrilla Robles said the new coffee law would promote
domestic consumption, which could absorb a significant
percentage of the Mexican-grown coffee beans.  He said
Brazilians consume 4.4 kg of coffee per capita, compared with
only about 700 g per capita in Mexico.  "If we could raise
domestic consumption by about 1.5 kg per person each year, our
total domestic sales of coffee beans would rise to about 3
million bags," said Utrilla.
     Domestic consumption has increased slightly in recent
years because of the arrival of specialty coffee shops like
Starbucks, Coffee Station, and The Coffee Factory (see
SourceMex, 2002-09-25).
     
Growers criticize Nestle, others for buying policies
     Some organizations say the government and multinational
companies can do more to help increase demand for Mexican
coffee.  One protest in mid-October targeted Swiss-based
multinational company Nestle for the low prices the company
pays growers for its domestic purchases.  The protest, held
outside the Mexico City headquarters of Nestle, said the
company imports lower-quality beans to use in its instant
coffee to avoid paying growers in Mexico a fair price for
their beans.
     "Nestle got preferential treatment under NAFTA, allowing
it to exercise a near monopoly over instant coffee in Mexico,"
the protest organizers wrote in a leaflet.
     Some small-scale growers and cooperatives in Mexico have
been able to turn their fortunes around by catering to the
growing demand for organic fair-trade coffee in the US and
Europe.  Many of these growers reside in impoverished states
like Oaxaca, Guerrero, and Chiapas.  Some communities in the
region controlled by the Ejercito Zapatista de Liberacion
Nacional (EZLN) use sales of organic coffee to earn income
(see SourceMex, 2004-09-15).
     The trend toward organic coffee has also drawn some
multinational companies like Starbucks and Coffee Company
International.  These companies have teamed with organizations
like Conservation International (CI) to promote production and
marketing of organic coffee.  Some small-scale growers,
however, have resisted the involvement of Starbucks in the
organic-coffee movement and have refused to sell their beans
to the multinational company.  Sixto Cruz, a spokesman for the
Triunfo Verde cooperative in Chiapas, accused Starbucks and
others of engaging in "trade imperialism."
     Other nongovernmental organizations (NGOs) that have been
involved in the organic fair-trade coffee movement agree with
that assessment.  "If Starbucks and CI were really serious
about creating a more sustainable industry, they would be
talking about reinstating the global controls on coffee
prices," said Ronnie Cummins, director of the Minnesota-based
Organic Consumers Association (OCA), in an interview with
United Press International.  "Starbucks is also bypassing
well-established international three-party certification
standards for organic and fair-trade in favor of using their
own version of the terms."  [Note: Peso-dollar conversions in
this article are based on the Interbank rate in effect on Oct.
27, reported at 11.51 pesos per US$1.00] (Sources: Agence
France-Presse, 01/08/04; United Press International, 09/28/04;
El Universal, 10/04/04; Associated Press, 10/11/04; Notimex,
05/16/04, 06/10/04, 10/12/04; The Herald-Mexico City,
10/12/04; Agencia de noticias Proceso, 06/07/04, 10/18/04; La
Jornada, 05/12/04, 06/04/04, 10/04/04, 10/22/04)