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Coffee crisis in Central America

With almost all of the news media’s attention focused on Afghanistan for the past several months, the public has received very little information from other parts of the world. However, over the past several months, the SJC has received messages from Mexico and Central America about famine in many parts of the region caused by drought and extremely low coffee prices. Even in the best of times, workers in the coffee fields are very poorly paid and often endure extremely difficult living and working conditions.

Just this week, Gloria Papenburg, SJC coordinator of our Central America work, returned from Guatemala where she took part in meetings on Plan Puebla Panama . She took advantage of her visit to Guatemala to go to San Marcos and see for herself what is happening. She confirms that the situation is very serious for the coffee workers and their families.

We had been questioning ourselves as to what we might be able to do in the short and medium-term to help, even if only in a small way, when we received notice that a number of U.S. based groups were planning a Fair Trade Coffee Day of Action on December 8^th. By the time you read this article, that day will have passed. However, it is not the date that is important but the action.

Guatemala may be the world's seventh-largest coffee producer, but plummeting coffee prices have created an economic crisis. Guatemalans have seen devastating impacts; in fact some farmers are now only earning about 50 cents per pound. And while Guatemalans struggle to survive against falling prices, North American consumers have seen higher costs at their local coffee shop, and western corporations dealing in coffee have seen soaring profits.

A report in spring 2000 by the Commission for the Verification of Corporate Codes of Conduct revealed that half of all Guatemalan coffee pickers in its survey were earning less than half of the legal minimum wage of $2.48 per day. This makes it difficult, and sometimes impossible, for them to provide adequately for their families. Many go without running water, electricity, proper nutrition and education. Since then, the plight of these workers has worsened considerably.

As a result of the low coffee prices, tens of thousands of Mexican coffee farmers have fled their fields in search of incomes to feed their families. The Salvadoran government acknowledged the loss of over 30,000 jobs due to the price slump. In Nicaragua , thousands of displaced coffee workers have set up makeshift refugee camps in regional cities to demand work, land, and food for their families. Some 30,000 Panamanian indigenous families that

depend on seasonal coffee-picking wages to supplement subsistence agriculture, face hunger from plummeting prices. The World Food Program has estimated that 150,000 refugees have been created as a result of this crisis. Hundreds have died, and thousands may follow.

Many attribute the price slump to World Bank and Asian Development Bank policies implemented in the late 1980s and early 1990s, which gave generous loans to Vietnam to promote their coffee industry. Vietnam quickly went from being one of the world's smallest coffee producers to the second largest. Most countries, especially those in Central America, cannot compete with Vietnam 's labor costs.

Hope

However, fair trade farming is offering new hope to Guatemalan coffee farmers. Fair trade farming offers them a stable, guaranteed price year-round and offers farmers a way to improve their lives in an environmentally sustainable way.

The good news is that consumers have the power to begin making a difference in farmers' lives NOW! If we act together to educate consumers and promote Fair Trade Certified coffee, we can expand the desperately needed market for fair trade coffee and send a powerful message to the coffee industry that consumers demand coffee free from social and environmental exploitation. Due to a lack of demand, very few coffee producers who strive to meet laudable labor and environmental standards are able to sell their product at the fair trade price.

Fair Trade Certified coffee is independently monitored in Canada by TransfairCanada (http://www.transfair.ca). Here are some of its benefits:

 It pays farmers a decent price for their harvest (about five times what they are getting today)

 It creates direct trade links between consumers and the farmers and their cooperatives

 It provides access to affordable credit, helping farmers stay out of debt

 It promotes sustainable practices, such as organic farming, that help protect the environment

Sample Actions

Fair Trade Coffee Days of Action - December 8 - 9, 2001. Thousands of people across the country will take part in our day of action as organizations and individuals. Please consider participating in one of the following ways:

1) If you are a coffee drinker and have not yet got into the habit of buying only Fair Trade coffee, start now. If you are not a coffee drinker but have friends who are, buy Fair Trade coffee (and other Fair Trade articles) as gifts for Christmas. To find the Fair Trade outlet nearest to you, please contact Equiterre at (http://www.equiterre.qc.ca or 514-522-2000).

2) If you belong to a church or community organization, set up a table where you can sell Fair Trade coffee. A number of suppliers in the Montreal area can help you with this. Take time to educate the buyers as to the importance of buying Fair Trade products.

3) Take it a step further and encourage the various organizations of which you are a member to use Fair Trade coffee. What about your place of work, or school? You can start the ball rolling for an education event some time after Christmas. The SJC would be happy to provide speakers, audio-visuals, perhaps even our brand-new Trade Kit presentation. Give us a call.

4) Join the ongoing campaign to promote Fair Trade coffee. Contact Équiterre (http://www.equiterre.qc.ca or 514-522-2000) for further information and assistance. Équiterre promotes fair trade in order to support families trying to improve their lives while also caring for the environment.

- Ernie Schibli, SJC Public Education Coordinator

Looking for sense in World Bank/ IMF demands

The gap between common sense and technical expertise doesn't surprise many of us. In some cars, the computer module is right underneath where you pour in the windshield washer fluid. In others the ignition safety switch on the bottom of the transmission, sitting unprotected inches above the pavement. Go figure.

The best way to avoid bad product design is to ask the people who actually use and work with the results. In some parts of the world, technocratic arrogance can bring problems that are much worse than a nuisance trip to the garage.

The World Bank and IMF have been pushing the privatization of public services, like water, electricity and telecommunications, around the world with such pressure and haste that there has been no chance for people affected to just say, "Hang on a minute. This doesn't make sense."

When the water system for a rural community near Durban , South Africa was sold to a private operator a year ago, critics predicted that poor people wouldn't be able to pay the higher rates. They didn't, and their water was cut off. So they turned to other, unsafe sources for their water, which triggered a cholera outbreak that lasted into the spring. The epidemic infected 90,000 people, and killed 200.

Nicaragua is facing delays in getting promised debt relief, in large part because it didn't sell off some public utilities. The country has already chopped thousands of jobs through public sector reform and privatization, and was hoping for a little debt relief later this year.

Common sense might suggest that starvation from drought, crop failure, and the collapse of coffee farms would be a good reason to keep the debt relief on schedule, but the IMF stopped the clock on the Nicaragua debt program anyway.

The World Bank and IMF are telling every country in which they are involved that they have to hand over their natural resources, such as oil, gas and mining, to private hands. The situation is worse for countries hoping for debt relief. Like Nicaragua , most of them are falling behind schedule because the IMF and World Bank are unhappy with their compliance with one aspect or another of the conditions they have to meet, despite the local reality.

Zambia is one of the few countries still on track for debt relief. In recent years, it has had to sell its interests in copper mining at a discount price, even though mining brings in 75% of the country's export earnings. By the end of 1999, 238 of 311 state firms in Zambia had been privatized, with about 100,000 workers losing their jobs. Women and girls were most affected, and the negative impact spilled over into the informal sector. Local businesses have collapsed, and there has been a rise in unemployment and poverty.

The real question isn't whether or not a private firm can do a job better than a state-owned one. It's a matter of what makes sense in the local context. In their eagerness to push corporate ownership of natural resources and public services, the World Bank and IMF ignore the damage they do locally.

In Colombia , teachers who protest cuts to the education budget are targets of assassination. So too are municipal employees who fight the privatization of public services. Last year over two hundred trade unionists were assassinated. Many of them were killed because they opposed programs of privatization, cuts to public services and government spending, and the dismantling of labour standards.

If the World bank and IMF did have the best interests of the poor at heart, we would be seeing them support more of a "trickle-up" approach to economics that empowers the people affected. Instead, they are forcing vulnerable countries open to private investment without regard for the damaging, even fatal, consequences for the people who live there and for the environment.

Where is the sense in that?

- Derek MacCuish

Globalization in India— Impacts of the World Bank and multinational corporations

Effects of World Bank programs:

Wages have been decreasing since 1992, having gone from an average of US$3.3 to US$1 a day. Employment rates have decreased and quality of employment also declined. There is increased employment in the casual sector by 32%, with more unstable employment in poor conditions. Women predominate in low-wage jobs.

Inadequate health care has resulted from privatization of health care, creating a two-tier system and leaving 53% of the population receiving less than minimal health care. There is an urban bias with 66% of hospitals in urban areas.

A budget deficit has resulted from several factors. Due to the new export-led economy, more money is being spent on imports than exports. India has a debt burden of about US$100 billion; one third of that is mostly to the World Bank. India spends US$12 billion a year in debt servicing and 20% of that is just interest payment. Capital drain is a consequence of corporations entering the domestic market and pumping their profits out of the Indian economy. Economic growth has been reduced to 4%, lower than the growth rates of the 1970s.

The World Bank

India joined the World Bank in 1944 and is the Bank's largest borrower: more than US$47 billion as of June 2000 in market-based loans. India began massive borrowing from the World Bank in 1991 and was forced to accept conditions that included cuts in social spending, privatization of natural resources and agriculture, and free trade to allow multinational corporations to compete against local businesses.

Privatized agriculture

This sector is the Bank's largest portfolio with US$10.2 billion financing.

The removal of agricultural subsidies has forced fertilizer prices up 40%; the domestic price of rice has risen 50%. MNC's and agricultural technologies create a dependent market by the use of patents, allowing them to dictate which crops are produced based on profitability rather than need.

Growing interest rates make it impossible for small producers to get loans, and the majority of those pushed off the land are untouchables.

Coastal communities

The World Bank has funded US$96.8 million in shrimp farming.

Over 80,000 hectares of land have been converted to shrimp farming. Over 5,000 hectares of perumbok (common) land has been taken over by commercial interests. Large-scale shrimp farming uses a wide variety of pesticides, many with links to cancer and genetic damage. It was initially claimed that shrimp culture creates employment. But less than 10 people are required to work one-hectare and it is mostly children who are being hired as ‘feed boys’.

One estimate in the late 1990s showed that while annual revenue through shrimp exports in Tamil Nadu was US$868 million, the economic loss in terms of lost livelihood in the traditional activities of fishing and farming, as well as environmental destruction, was more than US$1.38 billion.

Orissa

G-7 funders of Orissa's industrialization include a U.S. government loan of US$232. France provided US$607 million towards the construction of an aluminum-smelting complex, Nalco. Japan has invested US$125 million in coal. The U.K. has invested US$40 million in the upgrading of the Hirakud .

Orissa was the first state in India to privatize water, power, and agricultural sectors after a World Bank loan of USUS$350 million in 1996. Fewer than 20% of people living in rural Orissa have electricity access since rates have gone up by 500% after privatization. The development of coal mining industries has had the most significant impact. Greenhouse gas emissions skyrocket as Orissa's coal-fired power plants will be emitting 164 million tons of carbon dioxide equivalent annually by the year 2005.

Active resettlement programs displace many people without being given comparable land or even fair compensation. Dead rivers carry toxic effluent and coal ash through villages where people still rely on the blackened water for drinking, bathing and irrigation. Water tables have dried up due to mining and industrial pollutants have contaminated groundwater. Cancer, bronchitis, and other lung and skin diseases are soaring. In 1995, scientists found an astonishing 67% of men and 64% of women are suffering from fluorosis, a crippling skeletal disease caused by the inhalation of fluoride fumes and hydrofluoric acid.

Agricultural productivity has dropped for farmers that are dependent on this polluted water, and fishing communities have been wiped out. The increasing reliance on strip mining has brought on a decline in jobs. Harassment and suppression of workers rights has escalated.

In Talcher, a labor organizer attempting to raise the minimum wage those employed in the mines from 9 rupees a day to 14 rupees (or less than 50 cents) a day was beaten unconscious, and his house set on fire.

Narmada Struggle

The struggle against the construction of mega-dams on the River Narmada in India is symbolic of a global struggle for social and environmental justice. The Narmada Valley Development Project (NVDP) has been conceived without adequate participation from the people who are going to be affected. The construction and planning of many dams of the NVDP has disrupted the lives of millions of people without just and adequate compensation.

The World Bank loaned US$450 million towards the project, with the majority of the money going into the Sardar Sarovar dam. However after mounting criticism, it delayed remaining finances and set up an assessment board. The 1991 Independent Review of the project was chaired by an ex-head of the UN Development Program, Bradford Morse, concluding that: “The Sardar Sarovar Projects as they stand are flawed, that resettlement and rehabilitation of all those displaced by the Projects is not possible under prevailing circumstances, and that the environmental impacts of the Projects have not been properly considered or adequately addressed. Moreover, we believe that the Bank shares responsibility with the borrower for the situation that has developed."

A deal was made and on March 30, 1993, India formally requested the Bank to cancel the remaining US$170 million but the World Bank is still legally bound to ensure that the project authorities comply with provisions of rehabilitation and resettlement. These conditions, however, are being widely broken. The Narmada Bachao Andolan (Save the Narmada) believes that over one million people will lose land. Of these, only around 7000 people have been resettled, in Gujarat and Maharashtra (no oustees have been resettled in the third state affected, Madhya Pradesh). Those who have been resettled face a multitude of hardships and many have returned to their original villages. Problems faced include lack of grazing lands, firewood, drinking water, and cremation facilities; poor quality, flood-prone cropland, land that is not irrigable and plots which are less than the two hectares promised; and families being split up among many different resettlement sites. The stress and impoverishment caused by resettlement has increased death rates among the oustees, especially of children.

The corporations:

Union Carbide

On the midnight of 2-3 December 1984, over 40 tons of deadly methyl isocyanate, hydrogen cyanide and other gases leaked from a hazardously designed pesticide factory in Bhopal owned by US based multinational Union Carbide Corporation. Over 500,000 men, women and children were exposed to the poison clouds and at least six thousand people died within the first week of the disaster. The current death toll is well over 16,000. Hundreds of thousands of survivors continue to suffer from multi-systemic injuries. Union Carbide has impeded the search for specific lines of treatment for the survivors' illnesses due to withholding of medical information.

The corporation holds the record of causing the worst industrial disaster in the USA . In the building of the Hawk's Nest Tunnel in 1930 in W. Virginia , 5000 workers, 65% of whom were black, were employed by this company. As many as 2000 workers died of silicosis during construction. In 1981 the Corporation was fined US US$50,000 for spilling 25,000 gallons of propylene oxide, a cancer-causing chemical in the Kanawha River in West Virgina . That same year it was found that 402 employees in Carbide's Eveready battery factory in Indonesia were suffering from kidney diseases from exposure to mercury. In 1984, an Environmental Protection Agency investigation revealed at least 61 leaks of methyl isocyanate at Union Carbide.

Enron

On June 3, 1997 police officers forcibly entered the homes of several in Veldur, a fishing village in western India , and dragged them into police vans, beating them with sticks. The crime committed by these women was to lead a peaceful protest against a massive new natural-gas plant being for a Houston-based company named Enron.

The Enron project raised controversy for a number of reasons: there was no competitive bidding for the project. The project costs and power tariffs were higher than other power projects and the cost of electricity from Enron would be higher than before. The Maharashtra Electricity Board promised to buy all the high priced power produced by Enron even if cheaper power was available. No environmental impact assessment has been done. Natural gas is 90% methane, which is 20 times more damaging to the global climate than CO2. Each well produces thousands of tons of toxic drilling mud that contains arsenic, lead, and radium that severely affects the health of people.

The company has been accused of influence peddling, corruption, and environmental damage in Brazil , Argentina , Mozambique , and the United States .

DeBeers

In the summer of 1998, a freelance cameraman accompanied a member of the Universal Alliance of Diamond Workers to Jaipur and Surat to investigate the way in which gemstones were shaped and polished. They filmed six-year-old children at work on dangerous polishing wheels, people living and sleeping at their workplaces, and trash, human feces and industry waste clogging the open sewers that run between the warren of gemstone workshops. In one factory almost half the workers were under-age.

India is the world's biggest diamond and gemstone cutting center, polishing 70% of the global diamond yield and providing 17% of India 's export earnings. The major supplier of these diamonds is the Central Selling Organisation (CSO), which is controlled by DeBeers. De Beers is the biggest player in the world diamond trade, controlling the sale of 70% of the world's diamonds.

The daily pay for polishing the top part of a diamond is 2 rupees, less than 8 US cents, in 1992. This is below the Indian income tax level. Most of the cutters are not protected by India 's Factory Act, which applies only to workplaces employing more than 9 workers. In order to avoid regulations such as minimum wage, owners register every pair of ghantis (a cutting table with three or four workers) as a separate workplace.

As diamonds are ground, fine dust enters and infects the lungs. Diamond cutting is among the top 10 hazardous and the employment of children under 15 is banned. However, the number of children employed in recent years has been rapidly expanding. In the late 1980s about 11 per cent of the diamond cutting workforce were below age. By 1994 the number had grown alarmingly to about 16 per cent, about 64,000 children. While India has taken various legislative initiatives to prohibit child labour, it is still thought to provide 20% of India 's gross national product.