From managed to unregulated market
In recent years the coffee industry has been transformed from a managed market, in which governments played an active role, to a free-market system. This has allowed the major coffee companies to buy raw coffee at cheap prices. Coffee companies buy coffee from the lowest-cost producers, mix a variety of such lower quality blends and sell them as standardized coffee for purchase at the supermarket.

Glutting the market
At the urging of the World Bank and International Monetary Fund (IMF), Vietnam began placing huge amounts of inexpensive raw coffee into the market. At the same time Brazil increased its production. This created a glut of lower quality coffee and a drastic fall in the price for the coffee farmers.

Export-led development
The coffee glut is one example of how the World Bank and the IMF have encouraged poor countries to pursue export strategies of growth. But as many impoverished countries have attempted to export the same commodities, they have flooded the market. In addition, such "primary" (unprocessed) products bring very little "value added" profits to the exporting countries. Transnational companies, such as the major coffee companies, make the big profits, while small farmers lose their livelihoods.

Trade rules by the wealthy for the wealthy
Rich country governments contribute to the crisis by promoting unjust trade rules and policies. They use their economic and political power to encourage more countries to export coffee and other primary products at low prices, and require them to remove tariff barriers in order to import more of the processed goods that the rich countries produce. This further undermines national industries and small "start-up" manufacturers, further increasing unemployment.

No aid for farmers
The World Bank and IMF—controlled by the governments of wealthy countries—require developing countries to drastically cut government spending. The result for farmers is a lack of roads and transport to local markets, no technical backup, no credit and no information about prices. This places most farmers at the mercy of intermediaries who offer a "take it or leave it" price. Most farmers cannot move out of coffee, or other over-produced commodities, because they don't have the funds, technical knowledge or viable alternatives.

—Adapted with permission from articles by Oxfam America

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