Causes, Effects and Solutions: The Coffee Crisis

The coffee crisis started around 2001, when in just two years, coffee prices fell from $1.40 per pound in 1999 to just 45 cents by the summer of 2001. Many farmers reported receiving as little as 15 to 20 cents per pound from local middlemen. The impact on coffee-growing communities was disastrous.

According to the World Bank, in Central America alone more than 600,000 coffee farmers and workers lost their jobs due to the coffee crisis. In many areas of the world, farmers were forced to turn to illicit crops such as coca (used to make cocaine) to make a living. Coffee traders also went out of business. National economies suffered and some banks were on the verge of collapse. Government funds were squeezed dry, putting pressure on health and education and forcing governments further into debt.

The crisis affected communities and families: In some villages in Central America, nearly all the men had gone to look for work, leaving their families behind. This continues still today. In 2001, six Mexican coffee farmers seeking work died from exposure and dehydration while attempting to cross into the United States. Families dependent on the money generated by coffee pulled their children, especially girls, out of school. In March 2002, the World Food Programme announced that the coffee crisis combined with drought had left 30,000 Hondurans suffering from hunger. In Ethiopia, where 700,000 families depend on coffee, the coffee crisis created economic instability that made it even more difficult to deal with the country’s HIV/AIDS crisis.

—Adapted with permission from articles by Co-op America and the Interfaith Fair Trade Initiative.

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