CAFÉDO BRA ILZ

BRAZILIAN COFFEE - THE BITTER TASTE OF CRISISBRAZILIAN COFFEE - THE BITTER TASTE OF CRISIS

MAKE

TRADE

FAIR

INTR

ODUC

TION

CAFÉDO BRA ILZ

BRAZILIAN COFFE - THE BITTERTASTE OF CRISIS

In April 2002, Oxfam International launchedworldwide its Make Trade Fair campaign, which dealswith the relations between trade and poverty. As part ofthis initiative, the "What's that in your coffee?"campaign is being launched in an attempt to revealwhat lies behind the world coffee crisis and to identifythose who are most negatively affected by commoditiesbeing deregulated.

In Brazil, Oxfam International linked up with theIntegrated Workers' Union (CUT) and the NationalConfederation of Agricultural Workers (Contag), whichwere also working on this issue , to act together toaddress this real situation. The three institutionsinvited the Social Observatory to join in the effort toshow the social side of the crisis in Brazil, and tocoordinate a report that sought to give a voice to thosewho are least heard - men and women who suffer eachand every day.

This document is divided into three parts. The reportgives an overview of the crisis, the human labourinvolved in the productive chain, and the paths taken bycoffee. The second part is geared towards presentingthe proposals made by these partners, both nationaland international. The third part incorporates thepositioning of the transnational groups - actors whoincreasingly restrict the choices and the independenceof individuals.

Our hope is that this contribution becomes aninstrument that mobilises both society and the State inreally implementing public policies that invert theharmful consequences of unfair trade, where thosemainly affected are the sectors that are traditionallyexcluded.September 2002

ContagCUTOxfam International

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Table of contents

PART 1 REPORT

Introduction ______________________________________ 4

Overview of the crisis ________________________________ 7

Labour in the production chain __________________________ 23

The paths of coffee _________________________________ 31

PART 2 PROPOSALS FOR THE COFFEE CRISIS

Proposals from family farmers and rural wage earners ___________ 44

A coffee rescue plan ________________________________ 46

PART 3

What the companies say ______________________________ 51

ThanksThis report was prepared by Dauro Veras, Débora F. Lerrer and photographer Sérgio Vignes. Theauthors would like to thank the teams of the National Confederation of Agricultural Workers(Contag), of the Integrated Workers' Union (CUT), and of Oxfam for their precious support, aswell as the union leaders, experts, coffee growers, representatives from organisationsin the indus-try, civil servants and wage earners who assisted us in this task. We would like to thank inparticular Astrid van Unen, Céline Charveriat, Cézar Barbieri, Constantino Casasbuenas, Gerôni-mo Brumatti, Kátia Maia, Laura Tuyama, Osvaldo Teófilo, and Sophia Tickell for their support.

3Cândido Portinari, painter (1903-1962)

““I was impressed bythe workers' feet on

the coffeeplantations.

Feet that couldtell a story.

4

IBy the time it reaches the end

consumer, coffee is converted from acommodity (a raw material) into asophisticated item combining flavours fromvarious regions of the world. Of each 100cups sold in developed countries, less thentwo correspond to the remuneration ofcoffee growers. According to theInternational Coffee Organization (ICO),global retail coffee sales amounted to US$30 billion a year in the early 1990s, of whichproducing countries kept only one-third(US$ 10-12 billion). In 2001, only US$ 5.5billion of the US$ 70 billion sales worthreached producing countries. The coffeebusiness more than doubled in one decade,but the revenue of those who produce it

It is late afternoon in Amsterdam, the Netherlands.Mario van der Luijtgaarden orders an expresso afterleaving his workplace. He pays 1.70 euros1 for the cupof coffee which he drinks in just a few minutes. Ninethousand kilometres away, Maria da Penha Gonçalvesis working hard to prune coffee trees in GovernadorLindenberg, in the state of Espírito Santo, Brazil. At theend of her working day, which can last up to 12 hours,she is paid R$ 5.00 - the same amount Mario paid for hisexpresso and half of what her husband - a rural workerhimself - earns. Between Maria's sore hands and Mario'ssteaming cup, the coffee follows a path that enriches ahandful of people and keeps many in poverty.

Distribution of revenue from coffee

1991Total = US$ 30 billion

1991Total = US$ 30 billion

2001Total = US$ 70 billion

2001Total = US$ 70 billion

Producercountries

30%

Consumercountries30%

Producercountries

8%

Consumercountries92%

Source:International Coffee Organization (ICO)

5

dropped by half and their share in its profitsdropped fourfold2.

The crisis arose as a result ofadjustments in the world coffee productionafter the end of the International CoffeeAgreement in 1989. Up until that year, thecoffee trade was managed - there was abalance between supply and demand. Sincethen, it has been governed by marketrules. At the same time, transnationalroasters became protagonists in thisscenario, amassing the profits derived fromthe transformation of green beans intoroast and ground coffee or instant coffee.The "Big Four" roasters - Nestlé, KraftFoods, Procter & Gamble, and Sara Lee -began to define how the retail market wouldoperate, based on the trade of widelyknown brands. Together with the fifthlargest roaster in the world, Tchibo, whichtrades the product in Germany, they buyalmost half the world's coffee beans3 . InBrazil, Sara Lee dominates one-fourth ofthe domestic roasting market4 and Nestléis the leader of the domestic instant coffeemarket5.

This scenario is further affected by anexcess in production. The price of coffeehas dropped almost 50% in the past threeyears to a 30-year low, impoverishing 25million producers throughout the world.The crisis is causing losses to over 3million Brazilians in rural areas. If weinclude all the coffee production chain, theimpacts of the crisis may affect over 8million men and women6 . This trade model,based on unequal rules, is affectingfarmers who grow other commodities as

well. Trade barriers and taxes created bythe governments of developed countriesmake it difficult for exports from peripheralcountries to access their markets. A surveycarried out by the Brazilian Chamber ofCommerce (Camex)indicates that theBrazilian agribusiness loses US$ 7.8 billiona year as a result of this protectionism. Inthe coffee trade alone, these lossesamount to US$ 1.8 billion7.

In Brazil, this situation is aggravatedby the huge concentration of income, oneof highest in the world according to theUnited Nations Development Program(UNDP). In a list of 116 nations, Brazil onlyranks lower than African countries likeSierra Leone, Central African Republic, andSwaziland8 . The unequal distribution ofresources in rural areas increases socialinequities. Although family farmsrepresent 85% of all rural estates, occupyone-third of the total area, and account for38% of the domestic agricultural/livestockproduction, they only receive 25% of allcredit allocated to agricultural activities9.

In this report, you will find relevantaspects about the coffee crisis and real-lifestories that illustrate the disastroussituation prevailing in the industry. Its mainobjective is to give a voice to the varioussocial actors affected by the coffee crisisas a means to contribute toward aninformed debate and the search forconcrete actions. It is also intended toencourage the media and researchers tofurther investigate the issues that,because of lack of time and space, arepresented here in general terms. There aremany more stories to be told in connectionwith the social crisis caused by what ishappening in the coffee market.

Coffee growers earn less than 2% of the final price of a cup

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European consumers pay a lot for their coffeeG

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1 The exchange rate used for converting euros into reais is an average quotation on 20/08/2002, namely, 1 euro = 3 reais.2 The global coffee crisis - a threat to sustainable development. London, 25/08//2002. Study by ICO's (International Coffee Organization)

executive director, Néstor Osório, presented at the World Sustainable Development Summit in Johannesburg - August 2002. http://www.ico.org/ed/crisis.pdf

3 Information contained in the Oxfam International report Poverty in your coffee cup: what's behind the coffee crisis, September 2002.4 RIAS (Rabo International Advisory Services). Raising the income of coffee growers. Study published in July 2002 at the request of the

Sustainable Economic Development Division of the Foreign Ministry of the Netherlands. http://www.minbuza.nl/english/5 ABICS (Brazilian Soluble Coffee Association)6 FAEMG (Agricultural Federation of the State of Minas Gerais), estimates for 2002, according to the document Agronegócio do Café7 Folha de São Paulo newspaper, August 19th, 2002, page B-1.8 UNDP (United Nations Development Program) - Human Development Report 2002 - http://www.undp.org.br/; Folha de São Paulo newspaper,

24/07/2002, page A-109 Novo retrato da agricultura familiar - o Brasil redescoberto. Incra/FAO 2000. http://www.incra.gov.br/sade/doc/AgriFam.htm

When the text refers in a general sense to workers, rural producers, farmers, coffee growers, exporters, etc., the terms apply to bothmasculine and feminine genders.

Conversion of currency uses the average quotation of 20/08/2002 (US$1,00 = R$3,10; 1 Euro = R$ 3,00)

Notes

References

7

Overview of theC R I S I S

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- The data about coffee cultivation inBrazil is still far from thoroughconcerning the role of small producersand farm families and principallyabout fixed and seasonal salariedworkers. Many coffee-raising propertiescount on the presence of other families(sharecroppers or partners) who arenot always included in the numbers. Itis important to make this reservationabout the data that will be usedthroughout the report.

b) Brazilian Ministry of Agriculture/Conab(National Supply Enterprise) - estimatefor June 2002

c) FAEMG (Agricultural Federation of theState of Minas Gerais) - estimate for2002

d) It is estimated that about 3 millionseasonal workers are hired during theharvest period.

e) Associated to the OCB (BrazilianCooperative Organization) - 2001 Not allcooperatives are linked to the entity.

f) ABIC (Brazilian Association of CoffeeCompanies) - 2001.

g) FAEMG - estimate for 2001

h)It is estimated that about two-thirds ofthese properties are smallholdings

i)ABICS (Brazilian Association of InstantCoffee Companies)

j) CECAFÉ (Brazilian Council of GreenCoffee Beans Exporters) estimated for2002

A super-harvestof problems

A super-harvestof problems

Coffee-producing complex andoccupied areab

- Under formation: 1 billion coffee trees, 314thousand ha*/ - Under production: 4.9 billioncoffee trees, 2.3 million ha

Geographic distributionc 11 states and 1,850 municipalities

Jobs generatedc 8.4 million (directly and indirectly)d

Main producing statesb Minas Gerais (50.8%), Espírito Santo (20.1%),São Paulo (12.4%) and Bahia (4.4%)

Cooperatives in operatione 49 (28% of the coffee market)

Estimated present harvesta(July 2002 / June 2003 harvest year)

44.7 million bags- Arabica: 35 million- Robusta: 9.7 million

Last harvest (2001/2002)a 27.6 million bags

Average productivity a 19 bags per hectare

Domestic consumptionf 13.6 million bags

Per capita consumptionf 4.8 kg/inhabitant/year

Producing farmsg 300.000h

Roastersf 1,336

Brandsg 3,000

9Soluble coffee manufacturersi

220Exportersc

24.3 million bags (21.8 million bags of green coffeebeans, 2.5 million bags of soluble coffee and25,809 bags of roast coffee): 54.5% of the harvest

Exportsj

* One hectare is equal to 10 thousand square meters.

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Capital-deprived traders are going bankrupt forlack of clients. Coffee growers are abandoning theircrops - which fall prey to pests - firing their employe-es, and are selling their assets to pay off their bankloans. Partners3 and leaseholders are leaving rural are-as to swell the ranks of migrants on the outskirts ofcities. The time bomb seems to be set to go off early in2003, after the harvest is sold. By then, the new go-vernment of Brazil may face serious difficulties in thecoffee production sector. The sector may face a peri-od between harvests without any money followed bya small crop - coffee plantations yield a large crop inone year and a small harvest the following year - andthen another period between harvests marked by thelack of capital.

What does the current coffee crisis mean? Whatare its social dimensions? In order to answer thesequestions, our teams interviewed, over two months,dozens of people affected by the problem : rural wageearners, household farmers, partners, legal and illegaltraders, medium and largehold farmers, exporters, in-dustrialists, trade-unionists, economists, doctors, gover-nmental authorities and other people. The interviewswere carried out in coffee-producing regions locatedin the south of the states of Minas Gerais and EspíritoSanto, the two main producing states, where the diffi-culties faced by coffee growers were observed.

Degrading working conditions, contamination bypesticides, ill nourishment, and unemployment are be-coming increasingly common in rural areas. There are

Brazil will harvest the largest volume ofcoffee in its history in the 2002/2003harvest year: 44.7 million 60-kilogrambags, according to official estimates1.Leader in the production and export of theagricultural product, the country'sproductivity has evolved remarkably: 19bags per hectare, compared to 14 bags/hain 2001 and 13.6 in 2000. The bumper crophit the headlines, but a vital piece ofinformation was hidden by the figures:coffee growers have nothing to celebrate.Prices are at a 30-year low. Since 1997,Brazilian coffee has lost half of its value.As a result, income in rural areas has alsodropped and alarming signs can bedetected in coffee-producing regions. Thecrisis also affects other coffee producingcountries2.

Coffee plantation workers in the State of Espírito Santo

Maria da Penha Gonçalves, rural worker

““I fall asleepthinking about theempty pan. Coffee

has given usnothing but

trouble.

10

Why production has increasedCoffee has little worth now because of a combination of

over-supply, stagnated global consumption, and large stockskept by importers. These three factors tend to jeopardize anyattempt to recover prices in the short term, according to an

Ronaldo Chiste, household farmer.

““Five years ago Icould buy a cow

with a bag ofcoffee. Today Ineed five bags.

also manifestations of hope and creativity. Even without su-pport in terms of credit and technology, small producers investin crop diversification as an income alternative and as a me-ans to ensure their food security. Organic coffee production isbecoming a feasible market niche for some farmers, despitethe obstacles that hinder their access to this market. Both amongwage earners and among household farmers, businesspeopleand professionals engaged in the coffee trade, there are peo-ple who are interested in finding solutions to the crisis. Thisreaction is still somewhat disjointed, but some progress hasbeen registered.

DOMESTIC CONSUMPTION OFCOFFEE IN BRAZIL 1965-2000

Milli

ons

of 6

0-Kg

bag

s

Sources: IBC (consumption up to 1985); ABIC (consumption since 1990);IBGE (population)

National consumption Per capita consumption

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evaluation of the International Coffee Organisation (ICO).While global production has grown at an average annual rateof 3.6%, demand has increased by only 1.5% . The producti-on for 2001/02 (October-September) is estimated at 113 mi-llion bags while consumption is estimated at 106. Global sto-cks are in excess of 40 million bags - which are sufficient tokeep the international market supplied for several months, andreduce the bargaining power of the farmers4.

Frosts in July 1994 in the state of Minas Gerais affectedthe Brazilian production and pushed world prices up. Therewas then a rush to plant coffee in Brazil, Vietnam, Indonesia,Mexico, and other countries. Because coffee plants take fiveyears to reach their production peak, they are producing anexcess now. In just a few years Vietnam has become the se-cond largest coffee producing country in the world. An ICOestimate for the 2002/2003 crop points to a record world pro-duction, with Brazil accounting for about 37% and Colombiaand Vietnam for 9% each. The three countries together willaccount for over half the global production. The monoculturefever proved to be a mistake, as many family plots stoppedproducing food and incurred debts to expand their crops.

In 1994 a bag of arabica coffee in the Alta Mogianaregion (state of São Paulo) was selling for US$ 150-200. Nowit only sells for US$ 35-40. The daily wage of a wage-earningworker in the region, which was US$ 18 then, is lower thanUS$ 6 today5. In other places, this daily wage is even lower.In August 2002 a rural wage earner in the state of EspíritoSanto was receiving about US$ 3 a day and wage-earningwomen were being paid half that amount. A small proprietorwho grows robusta coffee (conillon) with his family in the sta-te makes the following comparison: five years ago, the priceof one bag was enough to buy a 105-kg bull. Today, a farmerhas to sell five bags to buy the same amount of meat6.

Out of every 100 cupsof coffee sold in thedeveloped countries,

less than twocorrespond to payingthe coffee growers.

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Supply control under discussion

Supply management is a controversial is-sue. It is not easy to give up producing coffee,a product marked by some unique features: it isa perennial crop, the investments cannot be re-covered in the short run; it is a biannual crop -that is, coffee plantations produce a good har-vest in one year and a lower one in the follo-wing year - subject to climatic conditions. Mostfarmers are highly dependent on the productionof coffee for cultural and economic reasons. Inaddition, coffee can be stored for several yearswithout losing its quality. It works like a truecurrency among producers and it is an item thatcan be sold for delivery in the future - pre-har-vest marketing.

Proposals for retaining coffee led to hea-ted discussions within the industry involving te-chnical arguments, economic interests, and ideo-logical positions. Since 1989, after the collapseof the International Coffee Agreement, the ICOlost the power to regulate the supply through quo-tas and agreed price ranges and allowed the freemarket to run its course. This quota system washeavily criticized. But since then prices have beendropping constantly, except in 1995 and 1997,because of frosts that affected the Braziliancrops. There is a pressing need to intervene inthe market to prevent the trade in this commodi-ty from being dominated by oligopolies.

In 2000, the Association of Coffee-Produ-cing Countries (ACPC) decided to promote a pro-gram for retaining 20% of the production, but theplan didn't work and was strongly criticized bymany Brazi l ians producers and exporters 7.Among other causes, the failure of the plan wasattributed to a lack of commitment on the partAsian producers with the goals contemplated in it.

However, we should not think that all pos-

“

Adriene Barbosa de Faria, Mayor of Três Pontas andPresident of the Association of Cities of Minas Gerais.

“Impoverishment isgeneral and the social

services of citygovernments are

overloaded.

Excess Coffee

World production in 2001/2002 • 113 million bags• Average growth of 3.6% a year

Global consumption in 2001/2002 • 106 million bags• Average growth of 1.5% a year

Global stocks • 40 million bagsSource: ICO - estimate for October 2001 and September 2002.

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sible approaches are also doomed to fail. TheICO itself supports a proposal based on marketmechanisms that seeks to reduce the amount ofcoffee being traded. The plan is based on a qua-lity enhancement scheme. However, any initiati-ve aimed at promoting a better balance betweensupply and demand can only work if, in additionto producing countries, consuming countries andthe roasters take part in it.

The power of the oligopolies

In this scenario of over-supply, the corpo-rations that dominate the global roasting and dis-tribution market have been enjoying huge bene-fits. They operate on a large scale and set upoligopolies, according to some studies8. The re-sulting concentration increased the fragility ofmore isolated farmers, particularly of smallholdfarmers. "Initially there was a concentrationof traders; then there was a concentration ofroasters and, finally, a concentration of dis-tributors," explains professor Renato Flôres Jú-nior, from the Post-Graduate Economics Schoolof the Getúlio Vargas Foundation. He says that

the process developed in successive waves."Today we have an oligopoly of traders

and another very small oligopoly of roasters,which in part also belong to the oligopoly ofthe farmers/distributors. This scenario is alsomarked by a new development, namely, largesupermarket chains with brands of their own,"the economist says9. On the other hand, familyfarm coffee growers do not have enough infor-mation on the market, technology, capital, trans-portation and storing logistics or the capacity toinvest in creating and disseminating their bran-ds. As a result, they have to bear higher costs inorder to access foreign markets and cannot com-pete on equal grounds with large corporations.

"It is a perverse specialization criteri-on," stressed the then minister of Finance of Co-lombia, Juan Manuel Santos, in a speech to theICO General Council on May 21 of this year:"Producing countries in the South are speci-alizing in high levels of poverty and in takingrisks; developed countries are specializing intrading their products wi th ful l coverage.That is, in addition to the fact that the ma-rkets don't work, the cost-benefit ratio hasbeen inverted as well: the lower the risk, thehigher the profit".

After the harvest, coffee goes through the stages of drying and processing

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A trader classifies coffee to be sold to exporters

In addition to being the largest coffee producerin the world, Brazil has the unique feature of being alarge consumer as well - it is the second largest con-sumer in the world, ranking second only to the UnitedStates. In 2001, the Brazilian population consumed 13.6million 60-kg bags, representing a per capita averageof 4.8 kg (in beans)10. Coffee is a symbol of hospitali-ty and a daily stimulant consumed in millions of homesand workplaces. Growing coffee is a practice deeplylinked to the history and culture of the country. There isan emotional relationship between the farmers and theplant that is often decisive when they are faced withthe dilemma of diversifying their crops or not.

Another unique feature of coffee in Brazil isthe relatively low weight of the product in the country'seconomy: it accounts for less than 3% of Brazil's ex-port earnings11. This fact reduces the country's vulne-rability to price variations as compared to countrieslike Burundi (where coffee accounts for 79% of theexports), Ethiopia (54%), Uganda (43%) and Hondu-ras (24%)12. But there is a fundamental similarity be-tween Brazil and other producing countries: the socialrole coffee plays in generating jobs and income. Theannual turnover in the production chain is estimated atabout US$ 1.6 billion - 4.5% of the agriculture/livesto-ck GDP - and it accounts for about 8 million direct andindirect jobs13.

Coffee is grown in eleven states and 1,850 mu-nicipalities in Brazil. Minas Gerais is the main produ-cing state, followed by Espírito Santo, São Paulo, Bahia,and Paraná. The number of coffee-growing farms isestimated at between 221,00014 and 300,00015. Al-though no final official data are available, calculationsindicate that over two-thirds of these farms are familyfarmers. Despite the intensification and expansion oflarge mechanized plantations, coffee production stillplays a major social role.

Profile of the coffeechain in Brazil

Profile of the coffeechain in Brazil

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Family farmsFamily farms are the main generator of jobs

in rural areas. Although family plots occupy lessthan one-third of the land, they employ 77% of thelabour force - about 13.8 million people, as shownin a study carried out in 2000 by the National LandReform Institute (Incra) in partnership with theUnited Nations Organisation for Food and Agricul-ture (FAO)16. The segment accounts for 85% ofBrazil's farms and for 38% of the domestic agricul-tural/livestock production. However, it only recei-ves one-fourth of all financing allocated to agricul-ture in the country.

According to a survey carried out by Incra andthe FAO, family plots produce 25% of Brazilian co-ffee. This rate varies in different regions of the coun-try. In the South the rate is 43%; in the Mid-West63%; in the North 94%; in the Northeast 23%, andin the Southeast the main producing region, 23%. Inaddition to their owners, partners, leaseholders, andrural wage earners cultivate these production units.When there is enough space, the children of the fa-milies frequently continue to work the same landafter they get married. The study indicates that, ifduly supported with credit and technology, rural pro-perties engaged in family agricultural activities havemany advantages in relation to large farms: they aremore productive, economically feasible, and preser-ve the environment better.

However, family farmers who depend on co-ffee as their main source of income have been lo-sing space for lack of support. They face hugeobstacles, such as the lack of scale in their produc-tion; difficulties in accessing the market; the actionof middlemen and the lack of an agricultural policyto facilitate their access to new technologies, tech-nical assistance - funding for infrastructure andharvest costs. Given the characteristics of their pro-duction , family plots could be producing higher-qua-lity coffee if they had the necessary technical su-pport, thus addressing one of the challenges facingdomestic coffee production.

The profile of the Brazilian production haschanged in recent years and has tended to becomeconcentrated17. In keeping with market logic, thecoffee growers who are not competitive enough aregiving up because they are unable to sustain them-selves. At the same time, large farmers have beeninvesting heavily in mechanization and irrigation,particularly in new agricultural areas in the statesof Bahia and Minas Gerais. Mechanization has eli-minated jobs in rural areas and has caused negativeimpacts on the income of family farmers.

Rural wage earnersAccording to the National Confederation of Agri-

cultural Workers (Contag), there are about 5 million menand women selling their labour to agricultural undertakin-gs in Brazil. Most of them work without relying on thebenefits afforded by labour conventions or collective agre-ements. Many workers live on the outskirts of cities andtravel long distances when job opportunities become avai-lable. They face serious problems, such as low pay, dis-crimination of women, illiteracy, poisoning by pesticides,and various degrading situations. Coffee production rankssecond in the list of rural activities hiring people at themargin of the law after cattle-raising, according to thedirector in charge of wage earners at Contag, GuilhermePedro Neto: "Less than 10% of the people who workin coffee plantations are registered workers".

Rural wage earners in Brazil can be classified inthree groups according to how they are hired: 1.5 millionare hired with open-ended contracts, although they arenot necessarily formally registered. This is a commonpractice in cattle-raising. Another 1.5 million work forfour to eight months a year harvesting sugarcane, cotton,and fruits. These harvest workers are protected by col-lective labour agreements or conventions. The third andmost unprotected group is made up of 2 million individu-als who work without any guarantee in short-term jobs -10-20 days - in beans, tomato, cashew, and coffee plan-tations, among others. Like nomads, they move around tothree or four different states every year, following cropcycles in a via-crucis of uncertainty and suffering. Theirtransportation, lodging, and food are of the worst quality.

Some workers in this group are lured into workingin farms where they end up being treated as slaves, acruel practice that persists in the 21st century. Slave la-bour is defined as when the employer resorts to threatsor violence to keep the employees on his or her property.They are forced to buy their food and clothes at highprices on the same farm where they work. Because theycan never repay their debts with the money they earn,they are prevented from leaving the property and areforced to work long hours. The Ministry of Labour hasbeen carrying out inspection with the Public ProsecutionService to catch these farmers, but they are seldom puni-shed by the court system.

Although slavery is not a practice widely adop-ted in coffee plantations in Brazil, the number of casesreported recently is worrying. Contag's director forwage earners reported that coffee production wasmentioned as one of the five agricultural activities withthe highest number of reported cases of slave labourin 2001. Inspectors detected slave labour situations infive farms in Espírito Santo, the second most impor-tant producing state in Brazil.

16

Half of all jobs generated by the coffee in-dustry in Brazil are in Minas Gerais,which leads thedomestic production. The annual turnover of coffeein Minas Gerais amounts to US$ 800 million - 18%of the agriculture/livestock GDP in the state - and

Where

generates 4.6 million direct and indirect jobs18. Al-most all the coffee grown in the state is of the hi-gher-quality arabica variety, which is well acceptedin consumer markets. Most of the coffee producti-on in Minas Gerais is concentrated in the south,where the average altitude is 950 meters and thetopography is irregular. The savannah region (Cer-rado) of Minas Gerais has only recently begun tobe cultivated by farmers who have been investingin large-scale mechanized production schemes.

Coffee production began in the southern re-gion of Minas Gerais in the mid-19th century in lar-ge farms that led to the creation of various munici-palities. Some of the main coffee-producing citiesare Três Pontas, Guaxupé, São Sebastião do Para-íso, Varginha, São Tomás de Aquino, Itamogi, Alpi-nópolis and Santa Rita do Sapucaí. Plantations inthe region have been growing remarkably since 1976with funds provided by the Brazilian governmentafter the historical crop failure caused by frosts inthe state of Paraná in 1975.

But the southern region of Minas Gerais is

COFFEE PRODUCTION IN MINAS GERAIS IN FIGURES

Cultivated area

Where

Source: FAEMG 2002

Rural properties where coffee is grown

1 million hectares- 99.8% arabica- 0.2% robusta150 thousand (30% of all farms in Minas Gerais)

Population of the state 17.9 million

Direct and indirect jobs 4.6 million

Main producing regions - Southern region (52.9%)- Alto Paranaíba and Triângulo Mineiro (the so-calledTriangle region of the state) [Cerrado] (18,7%)- Zona da Mata and Jequitinhonha (28.4%)

Coffee-producing municipalities 697

Participation in the state's agriculture/livestock GDP 18.18% (US$ 800 million)

17

Brazilian coffee is grown

not free from frosts itself. A strong frost in 1994reduced the production in the following year, con-tributing to a temporary increase in the price of co-ffee. There was euphoria and a considerable ex-pansion in coffee plantations, but a few years laterthe crisis returned to the 697 coffee-producing mu-nicipalities of the state. According to some reports,the cultivated area has now decreased It is esti-mated that 20% of all coffee plantations of MinasGerais have been abandoned and that 30% are onlyminimally maintained - minimum weeding or limi-ted use of herbicides, without correct fertilization.19

The second largest coffee-producing state inBrazil, Espírito Santo, accounts for one-fifth of thedomestic production with a cultivated area of over500,000 hectares. Coffee is grown in seven of everyten rural properties in the state. The activity em-ploys more people than any other single activity inthe state: it generates 362,000 direct jobs and 150,000indirect jobs. A marking feature in the state is thatmany family farmers grow coffee on farms smallerthan 10 hectares. On half of the farms, coffee is

grown under partnership arrangements, with sha-recroppers cultivating land owned by other personsand sharing the proceeds with them. Women playan important role, accounting for one-third of thehired labour in coffee plantations.20

Coffee was responsible for the developmentof many cities in the state of Espírito Santo, such asLinhares, São Mateus, Nova Venécia, São Gabrielda Palha, Vila Valério, Águia Branca, Colatina andSão Domingos do Norte. Initially, farmers plantedmore arabica coffee, but many of them ended upopting for the lower-quality robusta variety that ismore resistant to warm and dry weather . This va-riety today accounts for 60% of the production inthe state. Coffee growers frequently use irrigationbut few of them use machines because of the irre-gular topography of the state, due to their low pur-chasing power, and the small area of their lands.The state is susceptible to diseases and pests suchas the red cochineal, Dysmicoccus cryptus, yellow-leaf disease, and borer.21 Only 5% of the farms arefully fertilized.22

COFFEE PRODUCTION IN ESPÍRITO SANTO IN FIGURES

Cultivated area

Brazilian coffee is grown

Source: CETCAF 2002

526,810 ha- 40.4% arabica- 59.6% robusta

9.37 hectaresAverage size of the farms

56,169 (68.2% of all farms in Espírito Santo)Farms in which coffee is grown

3.1 millionPopulation of the state

500,000Direct and indirect jobs

Total: 362,340 (65.8% men and 34.2% women)Permanent - family: 86,050Permanent - hired: 48,170Temporary - harvest: 159,890Temporary - out of the harvest season: 38,230

People involved in coffee-growing(gender and type of labour)

Arabica: 52,687 families- 44% owners- 51% partners- 5% employees

Robusta: 78.031 families- 47% owners- 47% partners- 6% employees

Profile of the labour

18

São Paulo, the state whose coffee plantationsfunded the Brazilian industrialization process, accountsfor only 12.4% of the domestic production today. Itsplantations are concentrated in the Mogiana region inthe north. The main coffee-producing municipalitiesare Franca, Cristais Paulista, Jeriquara, Pedregulho,Rifaina, Itirapuã, Patrocínio Paulista, São José da BelaVista, Altinópolis, Batatais and Restinga. Coffee pro-duction, which was introduced in the region two cen-turies ago, boosted the development of all these cities.Mogiana produces arabica coffee, which is cultivatedat an altitude of 900-1,000 meters. São Paulo plays animportant role in the coffee business because of itsport infrastructure for shipping the domestic producti-on and because it has the largest coffee industrial com-plex in the country23.

The state of Bahia accounts for 4.4% of thedomestic production. It is a non-traditional coffee-pro-ducing area. Coffee plantations are concentrated inthree regions in the state: the upland region, where thearabica variety prevails; the shore, where robusta isgrown, and the west (Cerrado), where many compa-nies have been growing arabica coffee in mechanizedand irrigated farms. The state of Rondônia, the mainproducer in the Amazon, is another non-traditionalcoffee-producing area. It used to be the territory ofGuaporé and only became a state in 1981. Peoplefrom other parts of the country began to settle hererecently. Coffee is grown in 160,000 hectares in thestate and its production amounts to 1.4 million bags,90% of which of robusta coffee.24

The state of Paraná was a major producer inthe past. In the 1960s its coffee plantations occupied1.8 million hectares, but today they only cover 156,000hectares and account for only 4.3% of the total Brazi-lian production. Introduced in the 1930s, coffee led tothe development of large cities like Londrina and Ma-ringá. But the state is subject to frosts. In order toavoid climatic risks, coffee growers migrated to otherregions and the activity lost importance in relation toothers such as citrus and grain production. However,coffee is still grown in 210 municipalities, generating3.2% of the agricultural income in the state. About76,000 people have jobs directly or indirectly linked tocoffee production. Coffee companies also play an im-portant role in the state. Two of the main exporters ofsoluble coffee in Brazil, the Cacique and Iguaçu cor-porations, are headquartered in the state25.

Wholesale, roasting, and retailThere are about 220 coffee-exporting corpora-

tions in Brazil today. According to a study carried outby the Dutch consulting firm Rabo International Advi-sory Services (RIAS)26, many of these are small ormedium-sized family-owned corporations that are well-known on foreign markets and invest little in logistics.

Coffee traders usually outsource transportation andstorage facilities. Because they focus on the supply -just like the farmers do - they face obstacles to opera-te on scale. As a result, they have small profit marginsand are more vulnerable. They are starting to increa-se their concentration but the process is still incipient.

On the other hand, the roasting and retail seg-ments are more focused on consumption. They addvalue to coffee by means of blendings27, brands andspecial distribution channels. Their profit margins aremuch higher than those of the coffee growers. Thestudy indicates that four international corporations areroasting coffee in Brazil today - Sara Lee (USA),Melitta (Germany), Strauss-Elite (Israel), and Sega-fredo (Italy). Together, they control 38% of the ma-rket. Of the over 1,30028 roasters in Brazil, only SaraLee and Melitta are present in practically all the nati-onal territory.

Small and medium-sized roasters still play animportant role locally, but they are losing space to thelarge ones. Sara Lee bought many local corporationsin the past three years. The five brands it controls to-day (Café do Ponto, Pilão, Caboclo, União, and Sele-to) have a 25% share of the domestic market.29 TheStrauss-Elite group, which is the eighth largest manu-facturer of roast and ground coffee in the world, arri-ved in Brazil in 2000 to buy the Três Corações roaster

19

of Minas Gerais. But the brand had losses in São Pau-lo and Rio de Janeiro. The strategy of the companynow is to focus on the market of Minas Gerais andstrive to rank second in domestic sales.30

In the retail sector, coffee accounts for a smallpercentage of the sales, but it is an important productto attract more consumers. For this reason, large su-permarket chains work with small margins and pres-sure vendors to reduce their margins as well. Fivemajor retailers control 42% of the market, accordingto the RIAS consultants. They observed, however, thatthe concentration in Brazil is less intense than in Euro-pe, where the three main retailers control over half ofthe market and the five largest roasters control 60%.

The specialty or gourmet coffee is a growingniche. In the past two years this market grew 20%.31

The government and businesspersons have been dis-cussing how to add value to coffee locally, but the lar-ge roasters are not enthusiastic about the idea. "Itwould make sense to produce [roasted coffee] lo-cally for export, but this is a vision for the future,"said the president of Sara Lee's Brazilian coffee divi-sion, Maurílio Lobo Filho, in an interview to the Finan-cial Times32. Meanwhile, Brazil continues to exportits best coffee as a commodity and consuming lower-quality coffee. In the harvest year of 2001/2002 theexports of roasted coffee totalled only 25,809 bags.33

THE TEN COUNTRIES THATIMPORT MOST OF BRAZIL'S

GREEN COFFEEAccumulated volume January-July 2002 (in thousands of 60-Kg bags)

ArgentinaGreeceFrance

SloveniaBelgium and Luxembourg

Spain

JapanItaly

GermanyUnited States

Source: CECAFÉ (Brazilian Council of Green Coffee Beans Exporters) -30/08/2002

CustódioRio DoceGuaxupeCooxupé

NicchioCoimex

EstevesStockler

UnicaféTristão

THE TEN LEADING EXPORTERSOF GREEN COFFEE

Source: CECAFÉ (Brazilian Council of Green Coffee Beans Exporters)- 30/08/2002

20

One cannot understand the history of Brazilwithout associating it to coffee. When coffee be-came more important than sugarcane or cotton inthe 19th century, it began to influence the lives ofmillions of people. The history of coffee productioninvolves ecological, demographic, social, economic,and political changes. It is associated with the des-truction of large tracts of native forests, with theslave labour of Africans, with bloody land conflictsthat claimed the lives of many indigenous peopleand squatters, and with migrations of Europeans andJapanese. The "green gold" expanded agriculturalborders and created fortunes and cities. It genera-ted many jobs in rural areas. But it was also usedas currency in power negotiations, left farmersbankrupt, and brought poverty to workers.

The arrival of the plant to Brazil is controver-sial. Some seeds might have come from India in thelate 1600s. A possible second introduction occur-red in 1727, when an official of the Brazilian Navy,Francisco de Mello Palheta, smuggled seeds fromFrench Guyana and planted them in the state ofMaranhão. According to some reports, the first se-edlings were taken to Rio de Janeiro by a judge inthe mid-18th century. In 1790, one ton of coffeewas already being produced for the local market.Over the next one and a half century, the bean be-came the main product of Brazil.

“A ferro e fogo”Professor Warren Dean (1932-1994) of the His-

tory Department of the New York University wrote akey book for understanding the role of coffee in chan-ging the Brazilian natural landscape. In “A ferro e fogo”37

, he described how the practice of slashing and bur-ning native forest areas to make way for coffee plan-tations was the main cause of the devastation of theAtlantic Forest in the 19th century, although it was notthe only one. The researcher also reports the violentland grabbing process supported by the elite in powerthat prevailed then, the harmful effects of which arestill felt in the inequities that characterize the presentday Brazilian land ownership framework.

After of the end of slavery, between 1888 and1914, over one million European and Japanese im-migrants came to Brazil to replace the labour provi-ded by African slaves in coffee plantations. Manyof these immigrants faced degrading working con-ditions. The migratory flow decreased during the1930s, but the labour force in coffee plantationscontinued to be mostly made up of poor migrantscoming from other regions. While Brazil's populati-on as a whole tripled between 1900 and 1950, thepopulation of São Paulo quadrupled and that of Pa-raná grew almost six and a half times . These do-mestic migrations constitute a feature of the wage-

Soluble coffeeNine companies manufacture soluble co-

ffee in Brazil. The five largest exporters are thecompanies Cacique, Nestlé, Real, Iguaçu andCocam. Together, they control over 80% of theBrazilian exports, which in 2002 are estimatedat 2.5 million bags of green coffee beans (2.6units of green coffee beans generate one unit ofsoluble coffee). As for the others, Macsol is ajoint-venture between the Iguaçu group andCoca-Cola. The remaining manufacturers playa minor role. Nestlé dominates about 80% ofthe domestic market, according to businesspeo-ple linked to the industry. The corporation tradesa volume of soluble coffee in Brazil evaluated bythe industry at 500,000-800,000 bags of greencoffee beans every year, but the company doesnot make these figures publicly known. The do-mestic market is expected to grow, as many ro-asters are outsourcing the production of solublecoffee as a means to strengthen their image35.

As the largest food company in the world,with a turnover of US$ 50.4 billion in 2001, Nestléinvests, on average, US$ 150 million a year inthe Brazilian market, the seventh most importantmarket in its global activities. Last year, the Swisscorporation earned US$ 2.5 billion in Brazil, 5%more than in the previous year, and had profitsamounting to US$ 79.6 million. Chosen as "thecompany of the year" by the Exame magazine,Nestlé intends to make R$ 10 billion (US$ 3.1billion) in 2006. In June of this year the companylaid the cornerstone of a new soluble coffee fac-tory to be built in Araras, in the interior of thestate of São Paulo. They will invest R$ 95 millionin the factory, which will become the largest pro-ducer of the Nescafé brand in the world. It willproduce 22,000 tons of coffee for Russia andUkraine. In the domestic market the Nescafébrand competes with over 70 other brands of so-luble coffee that are mostly consumed by the po-pulation with low purchasing power36.

THE FIVE LEADING EXPORTERSOF SOLUBLE COFFEE

July 2002 - accumulated volume in the last twelve months(in thousands of 60-Kg bags)

Source: CECAFÉ (Brazilian Council of Green Coffee Beans Exporters) - 30/08/2002

Cocam (9%)

Iguaçu (9%)

Real (9%)

Nestlé (26%)

Cacique (30%)

21

earning labour force in coffee plantations to this day.In the process of expanding coffee plantations

in forest areas, the theft of lands was a common prac-tice. Gunmen hired by powerful people killed manynative Brazilians and traditional populations. The his-torian draws our attention to the complicity betweenthe Legislative and Judiciary branches, which grantedtitle deeds to land grabbers: "The Brazilian State thuscontinued to pursue the abominable tradition ofabdicating its responsibility and rewarding villainsin the Atlantic Forest region" (free translation). Manyland grabbers subdivided lands into small lots that weresold in instalments. This was a common practice inthe north of Espírito Santo, in the extreme west of SãoPaulo, and in the north and west of Paraná.

The coffee-with-cream policy and thecrisis of the 1930s

Between the late 19th century and the firstdecades of the 20th century coffee was an im-portant instrument of power in Brazil. In thosedays, Brazil's share in world coffee exports wasin excess of 80%. The so-called coffee-with-cre-am policy was an alliance between the oligarchi-es of São Paulo and Minas Gerais in the 1889-1930 period supported by exporters of agricultu-ral products38. This pact allowed coffee growersof São Paulo, who represented the most dyna-mic sector of the Brazilian economy, to controlthe monetary and exchange policy of the coun-try. In exchange for supporting São Paulo in Con-gress, members of the elite of Minas Gerais were

designated to high-ranking positions in the fede-ral administration and had funds earmarked forpublic works.

Members of the elite of São Paulo and Mi-nas Gerais took turns in key positions in the fe-deral administration. In the municipalities, politi-cal power lay in the hands of the so-called "co-lonels," who imposed their will on the illiteratepopulation through their give-and-take politics.

The coffee-with-cream pact was defeatedby the Revolution of 1930, which established thesecret vote, introduced the labour law and gavepriority to industrialization. The Depression of the1930s represented a big blow to the exporters ofagricultural products, as it reduced the demandfor coffee sharply. Thousands of coffee bagswere burned in an attempt to keep prices up. Inresponse to the crisis, president Getúlio Vargasbought coffee stocks, charged a fee for eachcoffee plant, prohibited the establishment of newcoffee plantations, and retained 20% of the ex-ported coffee.

According to the historian José AugustoRibeiro39 , the retention of stocks was the firststep to rationalize coffee exports, which up tothen were dominated by foreign banks. Coffeeexports began to be managed by the federal ad-ministration. Vargas also carried out a tax re-form that transferred the tax on coffee exportsfrom the state to the federal administration. Thegovernment continued to control the coffee tra-de until 1989, when the international market wasderegulated.

A little bitof HistoryA little bitof History

22

References

1 Brazilian Ministry of Agriculture / National Supply Enterprise (Conab), June 2002. The harvest year runs from July to June. http://www.conab.gov.br/politica_agricola/SafraCafe/safraCafe.pdf

2 For more information on the global coffee crisis see the Oxfam International publication - Poverty in your coffee cup: what’s behind the coffee crisis3 Under partnership systems, rural workers cultivate the lands of a rural proprietor and share the produce of the crop with him or her. The partner is commonly

referred to as a sharecropper, as the proceeds of the crops are often shared on a 50/50 basis.4 International Coffee Organization (ICO), August 2002. http:// www.ico.otg/ed/crisis.pdf5 According to João Abrão Filho, president of the Rural Union of Altinópolis (SP), in July 2002.6 Coffee-grower Ronaldo Chisté. São Domingos do Norte (state of Espírito Santo), July 20027 ESTADO NEWS AGENCY. Setor cafeeiro bombardeia plano de retenção. Fabíola Salvador. April 22, 2001. http://www.estadao.com.br/agestado/noticias/2001/

abr/22/74.htm8 FLÔRES JR., Renato G., CALFAT, Germán. Government Actions to Support Coffee Producers - An investigation of possible measures from the European Union

Side. Getúlio Vargas Foundation / University of Antwerp, Belgium. April 2002. http://www.fgv.br/epge/home/PisDownload/974.pdf9 Jornal do Café, ABIC, nº 129, May 200210 Brazilian Coffee Industry Association (ABIC), 200111 ICO, 200112 World Bank, 2000. Burundi, data from 199913 Agricultural Federation of the State of Minas Gerais (FAEMG), estimate for 200214 Ministry of Agriculture, estimate for 199815 FAEMG, estimate for 200216 National Land Reform Institute (INCRA)/United Nations Organization for Food and Agriculture (FAO), 2000. Novo Retrato da Agricultura Familiar - o Brasil

redescoberto. Data based on the Agriculture/livestock census of the IBGE (Brazilian Institute for Geography and Statistics) 1995/199617 Rabo International Advisory Services (RIAS) Raising the income of coffee growers. Study published in July 2002 at the request of the Sustainable Economic

Development Division of the Ministry of Foreign Affairs of the Netherlands. http://www.minbuza.nl/english/ and information provided by farmers.18 FAEMG, 200219 Coffee Technological Development Centre (CETCAF), February 200220 Idem21 GOMES, Wander Ramos. The state of Espírito Santo is a major producer of robusta. In Coffeebreak - http://www.coffeebreak.com.br22 INCAPER (Reseach, Technical Assistance and Rural Extension Institute of Espírito Santo).23 Coffeebreak - Official website of the National Coffee Council. http://www.coffeebreak.com.br24 3 Brazilian Agriculture/Livestock Research Corporation, (Embrapa), data for 2000. http://www.embrapa.br25 Idem26 RIAS 2002.27 Combination of different types of coffee.28 ABIC, estimate for 2001 The RIAS estimates this figure at 1,70029 Financial Times, article by Thierry Ogier republished by the Folha de São Paulo newspaper on 06/04/2002, page B-1430 Valor Econômico, 28/05/200231 Gazeta Mercantil newspaper, 05/07/200232 Financial Times, article by Thierry Ogier republished by the Folha de São Paulo newspaper on 06/04/2002, page B-1433 Brazilian Council of Green Coffee Beans Exporters (CECAFÉ), 2001/200234 CECAFÉ, July 200235 Interview with the executive director of the Brazilian Association Soluble Coffee Corporations(ABICS), Mauro Moitinho Malta, in August 200236 EXAME, a Brazilian weekly magazine. A empresa do ano [Nestlé] aposta no Brasil. Cover article by Cláudia Vassallo. São Paulo : Ed. April n. 14, July 10,

2002, issue n. 770.37 DEAN, Warren. A Ferro e Fogo – a história e a devastação da Mata Atlântica brasileira. São Paulo, Companhia das Letras, 199638 PEDRO, Fábio Costa. A política do café com leite. http://www.hystoria.hpg.ig.com.br/coron.html39 RIBEIRO, José Augusto. A Era Vargas - volume 1. Editora Casa Jorge publishing house, Rio de Janeiro, 2001.

23

WORK in theproduction chain

24

SSince the early 1990s, the life of wage-earning workersin coffee plantations has become more difficult. This is whata study1 carried out by professor Francisco Alves, who holdsa PhD in Production Engineering from the Federal Universi-ty of São Carlos (state of São Paulo), suggests. The workingconditions are even tougher than in sugarcane plantations.Alves remarks that the deregulation of the market and lowerprices created a situation of deep concentration [of wealth] inthe coffee chain.

Under this new production model, the strongest linksin the chain transfer the burden of reducing costs to the we-akest ones - wage earners and family farmers. The conse-quences are lower revenues, social exclusion, unemployment,and rural exodus. The crisis is aggravated by mechanizationof production , which increases the labour supply and pressu-res wage earners to accept jobs under worse conditions.Coffee growers in the Triângulo Mineiro region (the so-cal-led "Triangle" region of the state of Minas Gerais) estimatethat mechanized harvesting techniques reduce the costs of acoffee bag by almost one-third. A large machine replaces150-500 people/day.

Mechanization has been more commonly adopted innew production areas - in savannah regions in the states ofMinas Gerais and Bahia, the so-called "cerrado" - by morecapitalized farmers. Because the machines are expensive, oneof the alternatives that farmers resort to as a means to reducelabour costs is to offer more precarious working conditions topotential workers. The researcher observes that this is not arecent phenomenon: "In Brazil this is something that can betraced back to the days of slavery and in rural areas itbears the mark of large landownership," he says. "Evenafter the exporters of agricultural products lost economicpower in the 1930s, the practice of subduing the labourforce in rural areas remained intact." (free translation)

"Coopercats"The labour contractor, who is known by the nickname

cat, is a character that is often associated with the increasinglypoor working conditions prevailing in coffee plantations. Be-cause the harvest period is short and there is a high rotation ofworkers, they often work in one farm after the other underverbal contracts with these contractors. The laws governinglabour relations are often disregarded. Many coffee growersclaim that they cannot afford to pay social taxes. "If I registermy employees, I will not be able to cover my productioncosts, and I will end up losing my land and becoming awage earner myself," says one of them.

Many farmers resent the absence of an agriculturaland tax policy ensuring a differentiated treatment to family plots.

The National Confederation of Agricultural Workers (Contag)is negotiating the adoption of a new rural regulatory norm withthe government and businesspeople. It is also trying to persua-de the Ministry of Labour to carry out at least 10% of all itsinspections in rural areas by the end of 2003. The entity alsosupports a bill under analysis at the National Congress provi-ding for the establishment of a short-term harvest contract.2

The "cats" act in a more sophisticated fashion, throughlabour cooperatives - also referred to as "cat-cooperatives" or"coopercats." Francisco Alves reports that manufacturers offruit juice concentrates created these cooperatives as a meansto ensure greater control over the logistic flow of the orangeproductive chain without having to take care of its harvest ortransportation. The "coopercats" became active in the coffeechain also, particularly in São Paulo, in the south of Minas Ge-rais, and in the north of Paraná. Coffee growers join thesecooperatives because they offer them a legal - and cheaper -alternative for hiring workers without running the risk of beingsued for irregular labour relations.

However, these labour cooperatives deprive workersof rights conquered in the 1980s, the researcher remarks. Someassociations of orange producers came up with an alternativefor hiring workers without the intermediation of false coopera-tives. They jointly hire all of the workers that they will need.Each producer pays the association for the labour they use. Inaddition to having basic rights assured, the workers can remainemployed for longer periods carrying out different tasks be-tween harvests.

Health and securityMany wage earners "die before their time" as a

result of the terrible living conditions they face. This is theopinion of a researcher of the Jorge Duprat FigueiredoFoundation for Labour Safety and Medicine (Fundacen-tro-Minas Gerais), Antônio Ídolo Dias. At a recent natio-nal seminar3, he reported that a regulatory rule proposedby the Ministry of Labour for protecting the health andsafety of rural workers is under discussion right now.Various practical measures could be taken to improvethe living conditions of workers in coffee plantations.

An example would be the development of a speci-fic glove for harvesting coffee, Dias recalled. The glovesbeing used today are either not sufficiently functional orcomfortable, as they are too rigid and prevent the workersfrom handling the beans appropriately, or they are notresistant enough and tear easily. "One can easily per-ceive that the development of machines follows a dis-tinct logic than that of the development of equipmentfor protecting workers," he said.

Concentration and increasinglypoor working conditions

25

It's late in the afternoon in the Novo Brasilvillage, municipality of governador Lindenberg,state of Espírito Santo. Maria da PenhaGonçalves, 21, crosses the little square of thevillage carrying a bag of coconuts on her back.Her husband, Lafaiete Teixeira de Jesus, 32, iswith her. They are extremely tired after a longday of work in coffee plantations. They work fordaily wages in crops grown in small ruralproperties in the region that belong to otherpeople. Politely, they stop to talk to us, but theyprefer to stay on their feet. If they sit down, theyknow they may collapse from exhaustion.Accumulated tiredness is what they areexperiencing: they have been working in cropssince they were 12 years old.

"I earn five reais a day working in crops,"Penha tells us. That is less than two dollars andhalf the amount paid to men. Together, they havea monthly income of R$ 300 (less than one-hundred dollars). It's barely enough for them totake care of their children Brasiléia, 7, and JoãoMarcos, 4. The children attend a public school,but the couple was not that lucky: Lafaiete neverwent to school, and Penha only completed thethird grade of elementary school. They are aliving picture of the difficulties faced bythousands of small farmers in Brazil. They usedto be poor. With the drop in coffee prices, theyare on the verge of abject poverty .

"We were sharecroppers for threeyears, but we had to leave the property,"Lafaiete tells us. When coffee could be sold fora good price, they managed to make a smallnest egg. They exchanged 20 bags for a four-bedroom wooden hut at the top of a hill. It wasa good deal. Today, they would not be able tobuy a single bedroom with the same amount ofcoffee. Recently they began to cook in a

Lafaiete and Penha in the Novo Brasil (New Brazil) village

woodstove, because they cannot afford to buycooking gas any longer. They bring wood homefrom the farms they work in.

The typical day of the family is apermanent struggle to survive until the nextmorning. They wake up at 4:45 a.m. to be pickedup by the truck that takes them to farms wherejobs are available. They stay there until the endof the afternoon. They take rice, beans, andmacaroni in their lunch pail. They can only eatmeat when they eliminate eggs and milk fromtheir diet and stop buying medicines. Lafaieterecalls that he hurt his leg once and could notwork for 60 days. He got no pay during thisperiod. "If we get sick and need a medicine, wedie," Penha says. "The boss only likes us whenwe are working."

Her only recreation on weekends is togo to the Assembly of God Church, where shecan still get some support from thecommunity. Other than that she just walks inthe streets, sits down on a bench in thesquare, and talks with friends. Alternatives forthe future? Lafaiete becomes agitated: "Wejust can't find any other job! Nobody wants tohire people who have never studied. We haveto continue to work in crops, things will notchange..." Penha adds: "I go to bed thinkingabout the empty pans in my kitchen. "Coffeeleft us with nothing and only brought ussorrow." But she still has dreams: "If I coulddo something different I would like to work asa maid. I would like to dress well, wake uphappy on Sundays."

They bid us farewell and start walkingtoward the trail that will take them to the top ofthe hill. They need to rest a little, as the daybegins early in the coffee plantations of NovoBrasil. And the truck will not wait for them.

26

Maurílio and Creuza Debarbimake their living growing coffee in afamily plot in the municipality of SãoDomingos do Norte, state of EspíritoSanto. He is 52 years old and she isabout the same age. Those who meetthis friendly and hospitable couple forthe first time cannot imagine that theyare victims of chronic poisoning bypesticides. Condemned to suffer painfulsequelae and to carry toxic products intheir bodies forever, they face theirordeal with dignity. Their story servesas a warning for all those who usechemical products in their crops.

Maurílio began to use poison inhis pastures and coffee trees in 1975.

A case ofchronic poisoning

He used to spray it without anyprotection, such as gloves and a mask.Sometimes he felt palpitations andrested in the shade of a tree for a whileuntil he felt better. He would thencontinue to spray the product in hiscoffee plantation - in the beginning, 20full sprayers of liquid poison a day,which he gradually reduced to 10.Sometimes he had a cold sweat andfever at night, whereupon he would takean anti-fever medicine and would feelapparently better on the following day.He had no idea that his body had beenirreversibly affected already.

"In 99 I was applying Randape(Round-up, a herbicide brand) to mycoffee trees when all of a sudden I felt aweakness in my legs, fell to the groundand could not get up," Maurílio recalled."I became purple, threw up, and mysweat smelled of poison. I was taken tothe hospital in São Domingos, took 18flasks of intravenous fluids, andremained in the hospital for three days.

The doctor told me I was lucky and thatI could have died if I wasn't as strong asI was. The poison had entered mybloodstream and would not leave."

Skin cancerIn the past three years he has had

six operations for skin cancer in the ear,mouth, and forehead. He cannot swallowcertain foods. He became hypersensitiveto pesticides - if he happens to pass by aplantation where poison or even chemicalfertilizers were used, he feels thirst andpain in the joints. One day he was crossingthe eucalyptus plantation of neighboursand he fainted. He was forced to stopusing pesticides in his farm altogether in

order to avoid the risk of a fatal relapse.The situation of Mrs. Debarbi

is also sad . She never applied thepesticides directly, but for twodecades she delivered meals to herhusband in coffee plantations andwashed his contaminated clothes. In1981, she got sick and could not walkfor six months. She recovered, but in2000 she had her right kidneyremoved because of a malign tumour.It is impossible to tell for sure whetherpesticides caused the problem, but theevidence is strong.

The rural worker recognizesthat he failed to read the warnings onthe label of the products, but he placespart of the blame on the manufacturers:"These companies should givecourses on their products and only sellthem on prescription," he says. And hehas a message for all those who applypesticides in crops: "My advice is thatthey should stop doing it. It's not worthit, because you run the risk of dying."

27

Pesticides cause most deathsby intoxication in Brazil

Sleep problems, sexual impotency, paleness, kidneyand liver dysfunctions, loss of concentration and memory,depression. When rural workers feel these symptoms, awarning bell should sound : they could be the symptoms ofpoisoning by pesticides. The statistics for this problem arestill embryonic in Brazil, but they are sufficient to showthat a silent tragedy is taking place. Data collected by theNational System for Toxic-Pharmacologic Information(Sinitox)5 in 31 control centres in 17 states indicate thatpesticides for agricultural use poisoned 5,127 people in 2000.They are the main cause of death by intoxication in Brazil.Of the 377 registered deaths, pesticides caused 141.

The total of non-reported cases is much higher.Almost all cases reported to doctors are of acute intoxica-tion, but few of them are of chronic poisoning - caused bythe continued use of pesticides over long periods. The doctorin toxicology Sony de Freitas Itho, who is the coordinatorof Toxcen (Toxicologic Assistance Centre) in Vitória (sta-te of Espírito Santo), estimates that less than 10% of thecases are actually reported. In 2001 there were 475 notifi-cations of poisoning by pesticides in the state of EspíritoSanto, the second largest coffee producing state as well asa large vegetable producer. It is the second principal causeof intoxication in the state, ranking second only to drugs.Of the 23 deaths registered last year, pesticides caused216. According to the IBGE (Brazilian Institute for Geo-graphy and Statistics), the use of pesticides in Brazil incre-ased by 22% from 1997 to 2000.7

The indiscriminate use of pesticides in coffee plan-tations affects particularly the wage earners who spraythem. Most of these workers do not use individual protec-tion equipment IPE), which is seldom provided by theiremployers. An additional problem is caused by the solida-rity that prevails among rural workers: very often they sharethe pesticides they buy with their neighbours. For this rea-son, children often drink the poison from plastic soft drinkbottles that should not be used to store the product. Theinadequate disposal of empty containers also contributesto pollute rivers and streams.

Why the problem remainshidden from view

Sony mentions various reasons to explain why somany cases of poisoning are not reported. First of all,reporting such cases is not compulsory . The access ofrural workers to doctors and laboratorial tests is difficult:"If you are a wage earner, you just cannot leave yourworkplace, or else the amount corresponding to oneday's work will be deducted from your wages." Forchronic cases, a precise diagnosis is difficult, particularlywhen the rural worker has used several products withdifferent effects. Many workers are careless and onlylook for a doctor when they feel incapacitated. The failu-re of toxicological surveillance services also aggravatesthe problem. Few health professionals master the sub-ject, since toxicology is not a compulsory discipline inmedical schools. She also mentions the lack of refreshercourses for doctors, the lack of awareness of the exis-tence of toxicological centres, and the fact that medicalrecords are not correctly filled out: "The workers oftendon't know the name of the product they used."

Some recommendations made by the toxicologistto deal with the problem include: A permanent campaign to make the population aware

of the risks of using pesticides indiscriminately. A search for alternatives such as organic herbicides

and biological control of pests. Making salespersons aware of the need to explain to

rural workers how to use pesticides safely. Enforcement of all legal provisions on the subject. Registration of all workers who spray pesticides in crops

through identification cards and periodical lab tests. Inclusion of Toxicology as a compulsory discipline in

the curriculum of medical schools. Provision of refresher courses to health professionals

who work in rural areas. Better toxicological surveillance services. Improving the access of rural workers to laboratorial tests.

Awareness-raisingSometimes the evidence of poisoning is so

clear that everybody can see it. "Two years agofarmer Geraldo Batista died of a heart attack,"reports the vice president of the Union of RuralWorkers of Colatina, Cézar Barbieri. "Nobody wan-ted to stay at the wake because of the smell ofpoison." There was another shocking accident nearhis farm recently: a girl drank the water of a coco-nut taken from a coconut tree that had been sprayedwith poison and had to spend two days in a hospital.

The Union has been promoting a series of initi-atives aimed at minimizing the problem, among whichthe dissemination of organic agricultural practices,awareness-raising campaigns for farmers, and theadoption of stricter controls for selling pesticides.

The head of the national executive board of the Inte-grated Workers' Union (CUT), who is also in charge of theNational Institute for Health at the Workplace (INST), RitaEvaristo, recognizes that in many collective bargaining pro-cesses the real emphasis is on economic topics. Discussionson health issues are often postponed: "The problem is that,in many cases, these issues are not tackled and Brazilcontinues to rank first when it comes to work accidents."

Rita reported that CUT is organizing a specificcourse on health and safety for rural workers: "We in-tend to propose interventions by the union movement forthe purpose of preventing work accidents, improving li-ving conditions in lodgings for workers, improving thequality of their transportation , and promoting discussi-ons on the use of pesticides, among other measures."4

28

A cat's lifeIt is five in the morning in São Gabriel

da Palha, state of Espírito Santo. It still darkwhen João (fictitious name), 30, finishes hisbreakfast. He puts his knife in his belt, grabshalf a dozen hoes, and says good-bye to hismother. Four other workers wait for himsitting on the curb. They carry lunch pailswith rice, beans, manioc flour, and one pieceof meat or sausage. They also carry bottleswith drinking water and some of them carrytheir own tools. Twenty minutes later, a smalltruck driven by a farmer arrives. All of themget in the open body of the truck. The vehiclepicks up fifteen men. The sun is up already,but the workers shiver with cold.

After the truck is full, it takes thehuman cargo down the road. It drives by ahighway police station without any problem,turns down a side road, and heads to a farmgate. All the workers get off and walk to acoffee and coconut plantation. Their hardwork begins at 7:00 a.m. At 10:00 a.m. theyhave a one-hour break for lunch and a 30-minute coffee break in the afternoon. Theywork until dusk, when the truck picks up thetired and sweaty workers to take them backto their homes. Each worker receives a dailywage of R$ 11 - about US$ 3.50 - that is paidin cash at the end of the week. They don'tsign any receipt, they don't have anycontract, and they don't have the right to anyweekly remunerated rest period. They haveno vacation, no 13th salary (provided for inthe Brazilian labour laws), and no records oftime in service for retirement purposes.Those who do not show up to work for anyreason do not get paid for that day. Thosewho get sick must cope with the problem ontheir own. They are not paid when it rains andthey cannot work.

João earns R$ 25 (US$ 8) a day to act

The coffee-processing industry - which inclu-des transportation, roasting, grinding, cleaning, andpackaging - formally employed 19,706 workers in2001, according to surveys carried out by CUT'sSocio-Economic and Political Studies Department.8

The activity has been displaced from the states ofSão Paulo and Rio de Janeiro to the state of MinasGerais and to the Northeast region of the country -Bahia, Pernambuco, Paraíba and Ceará. There wasalso a drop in remuneration at national level. In 1994,a slightly more than 60% of the workers earned lessthan four minimum salaries. This percentage incre-ased to 74% in 2001.

The participation of women increased. While in1994 their total participation amounted to 26%, in 2001they accounted for 35% of the labour force in the in-dustry. Many of the companies in the industry havelow competitiveness, use obsolete equipment, and havelittle concern for quality. The situation of the workersin this segment is precarious. Many of them come fromrural areas and they are often semi-illiterate. "The in-dustrialization process does not depend very muchon schooling," remarks the director of the NationalConfederation of Workers in the Food Industry (Con-tac), Osvaldo Teófilo. "As a result, there is a highdemand for labour and salaries are extremely low,in some cases as low as almost half the salaries paidin the soluble coffee industry."

Teófilo draws our attention to some differencesbetween the workers in the roasting industry and thosein the soluble coffee industry. "In the roasting industrythe situation is tolerable and you don't find many pro-blems related to the work environment, such as heat,noise, and poor lighting. But the conditions in thesoluble coffee industry are much worse: there is a highnumber of work accidents and professional diseasescaused by falls, burns, lesions caused by chemicalproducts, injuries caused by repetitive efforts, andhearing problems caused by loud noise ."

Industrialworkers

Rural wage-earners get to work by truck

29

as a cat - a middleman who hires informalworkers to work in farms. He does the samething that his late father used to do. Hislabour rights are as ignored as those of thefarm hands he hires. "We have no securitywhatsoever," he complains. "I work duringthe day to be able to eat at night." In harvestperiods he can be in charge of up to 50 men.His income increases a little, as the wages ofthe day workers include a bonus of R$ 3 foreach bag they reap and he gets acommission of R$ 0.20. But the sacrifice isalso greater. The workers have to eat in ahurry in order to maintain their productivity.Many of them give up their lunch and workfor up to 14 hours straight.

Their hands are calloused and oftenfull of cuts and wounds. Almost none of themuse leather gloves to harvest the crops.Neither the workers nor the bosses likethem, because the workers lose the sense oftouch when wearing them and can, as aresult, inadvertently remove leaves from thecoffee trees. Lycra gloves are softer, but theyonly last one week. Accidents such as snakeor scorpion bites are rare, particularly incrops sprayed with pesticides - products thathave a cumulative effect over the years ifapplied inappropriately. Sometimes Joãotakes two or three men with him to apply thepesticides. "They are very careless, theydon't bother to use any protective gear or amask," he says.

The cat knows that he is engaged in anillegal activity, but: "I cannot register any ofthe workers I hire, and neither can theemployer, or else he will go bankrupt. Wework in a different farm every week, so howcan I register them?" The authorities toleratethe situation. "Inspectors only stopped ourtruck once," he says. "We had to go to theunion and sign a commitment to enter into aone-month contract." He thinks that ruralwage earners should organize themselvesbetter and create a union of their own. But heis sceptical as regards any changes: "If theyunionise, they will develop price lists, theworkers will demand their rights, and thebosses will not like it," he ponders. "The lawof the strongest prevails here..."

Income equal to costsA survey carried out in June 2001 by the Association

of Programs in Alternative Technologies (APTA) with 15coffee growers of São Domingos do Norte, a municipality ofEspírito Santo with a population of 7,500, indicates that thecosts for producing robusta coffee are equal to the incomegenerated by the product. That is, small farmers are practi-cally working for free. They only manage to make ends meetbecause they cut down expenses and replaced part of theirhired staff by family members. According to the study, theaverage expenses for producing a bag of robusta coffeeamounted to R$ 48.70 at the time, while the price was aboutR$ 50 - one-third of the value in the previous year.

This situation has been harmful for São Domingos doNorte, where two-thirds of the population live off the land.Family agriculture prevails in 80% of all rural properties andcoffee growing is the main generator of jobs and income inthe region. "For generations these farmers specialized ingrowing coffee and were certain that would be able tosell their produce without any problem," remarks the agri-culture/livestock technician Dirceu Godinho Antunes, one ofthe co-ordinators of the APTA. "They developed such adependence on the money [which they thought was] gua-ranteed from coffee that they stopped growing food cropsfor their own consumption." He blames this situation partlyon the government, which has not implemented effective re-search and rural extension agricultural policies to encouragethe development of other income-generating alternatives.

The NGO is engaged in alternative sustainable agricultureprojects with 500 families in rural areas in Espírito Santo and 250families of Tupiniquim indigenous people on the coast of the state.These projects were designed to reduce costs by replacing syn-thetic inputs with natural products available in the farms. "Weprovide the conceptual groundwork for the sustainable ma-nagement of the soil," the technician says. "The idea is to ensu-re production for domestic consumption and for food securitypurposes - and also for a differentiated market, namely, a marketof healthy food products for people and the environment".

Informal work marks the activity in rural areas

30

References1 ALVES, Francisco. Trabalho e trabalhadores no Complexo Agroindustrial do Café. March 2002.2 According to Guilherme Pedro Neto, director for wage earners of the National Confederation of Agricultural Workers (Contag).3 National Seminar on Labour Health, Safety, and Conditions in the Coffee Chain, held on April 8-10, 2002 in Belo Horizonte (Minas Gerais), sponsored by the

Integrated Workers’ Union (CUT), the National Confederation of Agricultural Workers (Contag), and the National Confederation of Workers in the FoodIndustry (Contac).

4 Idem5 National System for Toxic-Pharmacologic Information (Sinitox) - http://www.fiocruz.br/sinitox6 Interview with the coordinator of Toxcen - Vitória (state of Espírito Santo)7 Folha de São Paulo newspaper, 06/20/2002, page A-198 Desep-CUT. Panorama do emprego formal na indústria de processamento de café. October 2001

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The paths of

COFFEE

32

The migrant´sdesillusion

Every year for almost two decades, FatherAntônio Garcia Peres has accompanied the day-to-day routine of the workers who migrate temporarilyfrom the state of Paraná to work in the coffee harves-ts of the southeast region of the country. Between themonths of April and October they leave towns likeBela Vista do Paraíso, Centenário do Sul and Uraí andhead for the states of São Paulo and Minas Gerais inthe hope of earning some money. The year of 2002 ispossibly the worst ever. News of a super-harvest ledto more migrant workers, who were consequently fa-

33

ced with very precarious situations."They leave for the harvest with their family

and everything, but then they get there and are offe-red lower wages, so they work harder and earnless," Father Antônio reports. He remembers thatfive years ago migrant workers came back to the sou-th of the country with enough money to repair theirhouses and buy new clothes and sometimes even elec-tric appliances. "But the wages they are getting thisharvest will scarcely buy them food." One of thereasons for the lower wages is mechanization of far-ming in the northeast region of São Paulo, which brin-gs the harvest to an end in August instead of October.A harvester with the capacity for 800-1,000 coffeetrees a day puts a hundred farm hands out of work.

The situation is all the more serious because theearnings from the harvest represent savings that areused throughout the rest of the year. In other words,when these families fail to earn enough during harvestseason, they have no other sources of income until thenext year. This affects the economy of their cities oforigin and also harms those who do not work with co-ffee. Merchants, liberal professionals, urban wageearners - the entire community - become fragile. Fa-ther Garcia says of the hardships of the migrantworkers' lives: "In the old days there were many ca-ses of slave labour, especially in Minas Gerais, buttoday the problem is more the quality of the workand the lodgings. In some places there isn't evenwater to take a bath and cook."

Hunger and palliative measuresAltinópolis, a town of 15,500 inhabitants in the

region of Alta Mogiana in São Paulo, is a point of re-ference for migrant workers. At harvest time, about2,500 rural wage earners move from the north of Mi-nas Gerais and other areas to look for work in localharvests. But the prices crisis has been causing asituation of social tension that could become explosi-ve. Not even a harvest of an estimated 350,000 bagscan keep hunger away. As an emergency measure,the City Government, together with the Union of Ru-ral Workers and the (owners') Rural Union, distribu-tes 1,500 free meals a day to the farm-workers. The"Bóia Quente" (Hot Food) Program functions in fivepoints in the town, and in the morning also serves abuttered bread-roll and coffee.

This does not tackle the roots of the problem.But in the face of the desperate situation of those whohave nothing to eat, this was the alternative found toavoid the worst. "If coffee is doing badly, the who-le business and the population do badly," sums upJoão Abrão Filho, President of the Rural Union andSecretary of Agriculture. He says that business intown has almost come to a standstill. "Since the situ-ation is very bad, many people who did not work

before - women and children - are now having to goand do farm work." According to the Secretary, localfarmers are completely decapitalized because the priceof arabica coffee does not cover the cost of production.Abrão assures us that many other coffee municipalitiesin the region are also in a critical situation.

Rural exodusColatina, a municipality in Espírito Santo with

113,000 inhabitants, is another example of how thedecadence of the coffee culture can affect the livingconditions of small farmers. In the rural zone, mostlymade up of owners of 10-40 hectares, abandoned co-ffee plantations are quite common. Given the difficul-ty of surviving, many farmers try their luck in newagricultural frontiers or else look for sub-employmentin the urban area, thereby contributing to territorial di-sorder. Pockets of poverty proliferate all over the hillsof the city to aggravate the already precarious situati-on of infrastructure and sanitation. Almost all the hou-sehold, hospital and industrial refuse is tossed untrea-ted into the rivers. The improper use of pesticides andherbicides has caused problems of occupational heal-th and contaminated waterways.

"Urbanization has been violent and too po-werful," says Mayor Guerino Balestrassi. "We wantto invert this process and we have to create condi-tions so that the small farmers have some manage-rial capacity." His bet is on encouraging diversifica-tion and technology. One of the hurdles mentioned bythe Mayor is that owners are afraid to take on wage-earning workers, because of the strict labor laws: "Tobreak this mentality, we are developing a condo-minium structure that will offer management tech-niques." He explains that the idea is to give farmersthe incentive to share the costs of hiring the service ofaccountants, lawyers and agricultural technicians.Fruit-growing is one of the alternatives mentioned bythe Mayor to generate income.

The Landless MovementClose by, in Nova Venécia, a coffee munici-

pality with 43,000 inhabitants, 50 families of theMovement of Landless Rural Workers (MST) havegrown coffee since 1988 in the Pip-Nuck settlement.At first, almost all the revenue of the settlementcame from the coffee plantations. The impact ofthe fall in prices forced diversification. Today the480,000 coffee plants account for 80% of the totalrevenue, and the tendency is that this share will dropeven further. "People began to plant black pe-pper, bananas, manioc, coconuts, tomatoes andto raise cattle," says one of the local leaders ofthe movement, José Rocha. But the farmers whomanaged to get land to plant are still few in compa-rison with those who still need to be settled.

34

In late July, the authors of this report found120 MST farmers camped in black canvas tents inthe state capital, Vitória. Their objective was to pressthe government to speed up expropriations for landreform in the north of the state. Marcos Franciscoda Cunha, the 32-year-old leader of the group, isyet another of those affected by the coffee crisis.He and his family used to work as sharecropperson a family estate in Nova Venécia, but this yearthe crisis caught them out. They had to sell theirhouse to pay off a bank loan. The farmer, his wifeand small child had nowhere to go and moved intothe landless camp. "I think the price of a cup ofcoffee is absurd," he comments. "Who's gaininganything with this? All I know is that they tooksomething from me."

Claudionor Gomes da Silva, 43 and marriedwith four children, is another coffee farmer in pe-nury. He worked as a sharecropper on a farm inColatina for more than five years, and then, whenprices plummeted, he was left without any alterna-tives. "They took the bread from my children'smouths," he protests. Forced to leave the country-side, now they survive in badly paid jobs in the cityof Linhares. Claudionor preferred to place his ho-pes for the future in the collective struggle for landreform. "We are like a brotherhood," he says,referring to the others in the camp. "We help oneanother and we are going to move forward."

Workers humiliatedHunger and humiliation are part of the daily rou-

tine of migrant farm-workers. This is the case of agroup of 50 men from the north of Minas Gerais whowent to the coffee harvest in the south of the state inMay of this year. On reaching the plantation that hadhired them, they had their first unpleasant surprise:the pay was far less than what had been agreed upon.At night they all had to share two houses with threerooms each, sleeping on the floor and next to the open-air sewage. At the end of a working day that startedat 6 in the morning and ended at 6 in the evening,some of them had to wait until 11 o'clock at night tohave a bath, since there were only two showers for all50 of them.

Ten of the men who arrived at the plantationthe first day soon abandoned the job when they reali-zed the awful working conditions, and especially thehorrible food: tasteless beans full of stones, hard riceand chicken feet. The others continued, but wereoutraged on payday when they saw that the amountdeducted from their wages for meals was higher thanthe one agreed upon previously. When they complai-ned to the farm manager, they were told that if theywanted to leave they would have to pay R$ 50 thatBrazilian labor legislation requires in the case of prior

notice. Most of the group were scared and paid up."We were in a bad situation, we couldn't even sleepright," recalls one of them, José Hamilton da Rocha.

Faced with the prospect of returning home wi-thout any money, they decided to report their plight tothe Union of Rural Workers. Only then did they findout that many of their rights were being disrespected.By law, rural workers who move from one region toanother must have an admission test and receive acopy of their work contract at the municipality of ori-gin. Both the union at their place of origin and at theirplace of destination must be informed of this contract.The conditions of lodgings have to be suitable - beds,bath, drinking water and proper sewage. In addition,the farmer must offer transportation to where the workactually took place. "We were told that there wouldbe a bus to the farm, but we had to walk the threekilometers," recalls another wage earner, RosalinoBatista Oliveira.

Precarious inspection, slow justiceThe lawyer of the Union of Rural Workers of

the south of Minas Gerais, Tanilda das Graças Ara-újo, admits that only 10% of the workers found in asituation similar to slave labor manage to get any com-pensation: "In most cases we don't even know."She explains that farmers prefer the crop-pickers thatcome from afar because there is less risk of beingcaught by the inspectors. Besides earning less, the-se workers are more vulnerable because they knownobody in the region: "Whenever something ha-ppens, in general they run away because theydon't know whom they can ask for help. Evenknowing that the situation is wrong, they give upthe idea of going to the court because labor dis-putes take so long. Most of them feel hopelessand leave without a penny in their pocket."

One of the coordinators of the Union, Paulo Se-bastião, does not attribute the precarious working con-ditions just to the low price of coffee. "What most de-preciates the work is mechanization," he says. "Thefarmer no longer needs to weed or clear the land,he just tosses on the poison, that takes care ofeverything." He recalls that 15 years ago workers ear-ned as much as three minimum wages1 a month at har-vest time and that there was no lack of work the rest ofthe year. "Farmers kept you and the family on forthe coming year." Today wages are three times less.Since the employer makes practically no commitmentto the workers, everyone just hops from one farm to thenext.

Inspection is precarious. The assistant delegateof the Ministry of Labor, Paulo Andrade Azevedo, ad-mits that the office is lacking in staff and material. Thereis just one pick-up truck, one doctor, two engineers andseven inspectors to attend to 46 municipalities under his

35

jurisdiction. Besides the rural environment, the team isalso responsible for inspecting all the productive sec-tors in the region. Whenever the inspectors come uponan irregular situation, they notify the employer, make areport and apply a fine. The assistant delegate claimsthat since the farmers take on a lot of people, it is diffi-cult to regularize the situation of everyone at the sametime. The Ministry allows five days for the employer toregister the worker's documents and another five daysat the end of the harvest to settle accounts.

For Union member Sebastião, it is precisely thismechanism that has allowed for irregular practices. "Thework papers are retained during the harvest," he ex-plains. "If the inspector does not turn up, the farmerreturns the papers unregistered. And if he does turnup, the farmer still has ten days to sign and leaveeverything in order." Sebastião reports that formerly,when inspection was carried out and people were caughtredhanded, there was no way the farmer could avoidpunishment. He also criticizes the fact that the Ministryof Labor fails to admit such situations as slave labor. "Theworkers are hungry, they sleep on the floor, they arestuck in a region without being able to leave, andthis is considered normal. It is only 'degrading work',"he says ironically. "The Ministry of Labor is like be-ans cooking, it only works under pressure!"

Impoverishment in Minas GeraisIn Minas Gerais, where almost 700 of the 853

municipalities grow coffee, stories of losses and di-

fficulties are frequently told, even among the big far-mers. "I've been dealing with coffee for manyyears and I've never seen such a tough and long-lasting crisis," states the President of the CoffeeCommission of the National Confederation of Agri-culture and Livestock (CNA), João Roberto Puliti.A good example of a large-scale coffee planter, Pu-liti once produced as much as 16,000 bags, but hasnow given up: "Nowadays, I'm satisfied if I gather700 bags." The Mayoress of Três Pontas and Pre-sident of the Minas Association of Municipalities,Adriene Barbosa de Faria, warns about the socialcrisis: "Impoverishment is general and the socialservices of the municipalities are overloaded."

Edésio Pereira do Amaral, owner of 102 hec-tares, has fond memories of 1994. In that year therewas a hard frost, the Real was on a par with thedollar, and he managed to sell his coffee for as muchas R$ 270. He optimistically ventured to buy moreland, for which he still owes the bank. Amaral em-ploys seven full-time workers and 50 temporaryworkers for the harvest, which this year should bringin 2,300 bags. After facing pressure from the unionmembers in the region, he now maintains cordial re-lations with his old adversaries. He pays his harvestpickers R$ 12 a day in average and is proud of com-plying with all the labor regulations. The farmer com-plains of unfair competition from another producerwho has taken from him workers brought over fromBahia by offering them a little more wages but wi-thout signing their work documents.

36

Volcafé doublesits capacity

Amid the biggest coffee-price crisis inrecent years, some companies took theopportunity to invest. This is the case ofCopag, which belongs to the Swiss groupVolcafé, one of the world's largest coffeebuyers and present in 25 countries. Thehead office of Copag in Varginha (state ofMinas Gerais) was undergoing renovationwork in July. The partner in the companyand general manager João Pedro Alvarengaannounced that he is going to double thestorage capacity to 150,000 bags. Theinstallations process, classify and store beansthat will be destined by priority to countrieslike Germany and Japan, and also to someBrazilian roasting companies.

The entrepreneur explains that he isfeeling the reflexes of the crisis, becausestorage costs have grown in relation to theprice of raw material, but he is working witha long-term perspective. His expectation isthat in 2003 the supply level will be back tonormal, since the crop will naturally yieldless. He thinks that the government shouldfinance the harvest to enable the coffeegrowers to bear the costs and be in no hurryto sell. As Alvarenga sees it, those whomost benefited from the lower prices wereretailers and the roasting companiesoverseas. "Nobody here benefits from lowprices, because roasting and storing havea fixed cost and the turnover goes down.My profit comes from the number of bagssold, so if the price stays low, I makeless."

With 2,300 members, 85% being small-sized,Cooabriel (the Agrarian Cooperative of Coffee Gro-wers of São Gabriel da Palha-state of Espírito San-to) sells 300,000 bags a year - mostly of the robus-ta variety - and numbers among its clients suchcorporations as Sara Lee and Melitta. In its 39years of existence, the company has never facedsuch difficulty as at the moment. Out of a total of250 employees, more than one hundred were dis-missed last year. "We had to dismiss competentpeople because we couldn't pay the social char-ges," laments President Antônio Joaquim de Sou-za Neto. Costs had to be cut by 62,5% in order toguarantee survival.

Antônio defends urgently adopting an agri-cultural policy that offers the farmer accessiblecredit. He remarks that although up to now thecoffee business in Brazil has lived with resourcestaken from the sector itself - the Fund for Develo-pment of the Coffee Economy (Funcafé), theseresources never arrive when the coffee growersmost need them. This is the case of funding forharvest-time. The money arrives only about 60days after the beginning of the harvest, when itought to be in the farmers' hands 60 days before.His opinion is that investing in productivity andquality are the most feasible alternatives for thesmall farmers to face the crisis: "Together we willbe strong."

Cooperatives

37

Unfair competitionThe coffee-grower cooperatives suffer not only

from falling prices but also from unfair competition.Many coffee companies in Brazil function through"orange" firms - middlemen who take over business tohide the identity of the true agent of the transaction.In this way they make sales using false invoices andother accounting tricks to dodge taxation. In January1999 the then Mayor of São Gabriel da Palha, PauloLessa, denounced the existence of a "coffee mafia" inEspírito Santo.2 According to him, the "ghost" com-panies acted surreptitiously, causing enormous fiscalevasion. Lessa and his family suffered death threatsas a result of these denunciations. At that time theState Secretariat of Finance launched the Coffee Ope-ration to curb illegal practices and suspended the acti-vities of 38 buyer companies.

One coffee merchant who prefers not to havehis identity revealed asserts that the frauds still go on inmany States. The creativity of the tax-dodgers opensdifferent breaches for cheating the law. According tothe businessman, one of the schemes used is to exportsoluble coffee "cold": the company releases the coffeefor export, sends empty containers abroad and sells theproduct on the domestic market without any invoice.Another common fraud is to transport coffee from onestate to the other with the invoice of another agricultu-ral product, so as to pay less tax. The proliferation of

illegal trade jeopardizes the competitiveness of legali-zed companies, who have to bear higher costs.

Cooxupé makes investmentsWith its 8,600 members, 1,100 employees and

functioning in 56 municipalities, Cooxupé (the Regi-onal Cooperative of Coffee Growers of Guaxupé,Minas Gerais) is the biggest coffee cooperative inthe world and one of the ten biggest Brazilian co-ffee exporters. Although its directors claim thatthey also feel the effects of the crisis, this year thecompany will invest about R$ 5 million (US$ 1.6million) in equipment and rented warehouses to re-ceive the production of the super harvest. The sto-rage capacity will rise from 2.8 to 3.3 million bags.

The superintendent of production, José Ge-raldo Rodrigues de Oliveira, claims that the coo-perative has no other choice but to expand thestructure to receive the coffee. However, he con-siders this investment practically risk-free, becau-se of the expectation of a smaller harvest nextyear. The Superintendent of Cooxupé, JoaquimLibânio Ferreira Leite, is likewise optimistic as tothe outlook of recuperation: "In 2002 the pricehad already reached its lowest rate because lastyear they took into account the expectation ofa large harvest in Brazil."

and the crisis

38

Shrimp and fruit

Brothers Daniel and IsaacCozzer own a property of 23,9hectares together with another twobrothers in São Domingos do Norte,Espírito Santo. Hostages to a loan tofinance the coffee harvest, they foundthemselves obliged to sell a car to paythe bank. The crisis forced them tolook for alternatives. Today coffee,which once accounted for almost theirentire production, corresponds to only40% of the cultivated area andaccounts for 65% of the income fromthe property. The family is notcontemplating giving up coffee-growing but is going to reduce it. Theiraim is to cut the coffee share to only40% of the revenue within three years.

"We started investing more infruit-growing, especially guava,coconut, lemon and orange," saysDaniel. "We also began to raise pigs,fish and shrimp." The brothers belongto an association of shrimp farmers inSão Domingos do Norte, whichguarantees the marketing of theproduct. The family has recentlyexperienced a case of rural exodus.Their brother Ângelo Francisco was afarmer, but gave up the land and wentto Colatina to work as a truck-driver.With the drop in coffee prices, theCozzers stopped using fertilizers andnow only use organic manure. Theyhave not used pesticides on theircrops for ten years and are nowthinking of registering the property asan organic producer.

They have other projects to addvalue to what they produce. They areconsidering buying a small roaster forabout R$ 20,000 (something in the areaof US$ 6,500) as well as selling frozenfruit pulp. "Today we lose as much as50% of the guava due to flaws in theskin," explains Isaac. "The pulp can besold in the off-harvest season, when itfetches a better price." The idea is topush these projects ahead inpartnership with other farmers in orderto bring down the costs. "The best wayto get out of this crisis is throughorganization," is how Isaac sums it up."If the small farmer stays on his own,he's out of the market."

Growers want moreintervention in the market

The Superintendent of the National Coffee Board (CNC,the growers' association) and President of the Cooperative ofCoffee Growers of the Region of Garça-SP (Garcafé), Mano-el Vicente Bertone, defends vigorous State action in regulatingthe activity. In his mind, the government should tax exportsand intervene in the market by buying coffee so as to impactprices and the exchange revenue. The resources gatheredfrom taxes could cover the costs generated by the crisis, whi-ch would enhance the government's social responsibility. Heemphasizes that this is his own personal opinion rather thannecessarily that of the associations he represents. A critic ofeconomic liberalism, he holds this policy responsible for muchof the misery that permeates the coffee-growing sector.

"Government and private sectors have the duty toassume management risks instead of accommodating the-mselves to revenue being transferred between sectors andcountries, always from the poorest to the richest," he pointsout. "Coffee is heavily taxed in consumer countries, whichknow how to make use of their economic dominion to ge-nerate wealth." He underscores that developing countriesused this same thesis when, in times of international agree-ments on commodities, they taxed coffee exports in partner-ship with the developed countries. The practice was disconti-nued with the intensification of globalization. "I think that theworld is now realizing how perverse this model is."

UnemploymentBertone is convinced that the alleged Brazilian competi-

tiveness at the cost of cheap labor and low prices does notcompensate the internal social costs: "The enormous diffe-rence between the price of our coffee and that of our com-petitors shows that we are relinquishing exchange revenuethat is absolutely crucial to our country." He warns of therisk of mass unemployment in Brazil's coffee-growing sectorwithin a few months, with damaging effects not only in therural areas but also for those who live in the cities.

"Economic retraction means less tax collected, ruralexodus and increased violence," he claims. "It's the Statepaying along with farmers the price of a commercialaggressiveness that should be better dosed for the benefitof Brazilian society." As he sees it, it makes no sense that anactivity of such economic importance is not used as an instru-ment of social justice. "Brazil has a key role to play in thisdiscussion, given its leadership in the coffee-growingarea," he feels. In the field of civil-society organizations, co-ffee growers point to cooperativism as a potent instrument forredistributing income.

39

Jorge (a fictitious name) grows coffee on a 240-hectare farm and also works as a middleman in thestate of Espírito Santo. He joined the market a yearago to offset a drop in his income as a farmer. With thehelp of two truck-loaders and a driver, he runs an infor-mal firm installed in an old wooden hangar in the northof the state. Responsible for an "ant" business, he ne-gotiates about 3,000 bags a month with a margin of pro-fit of R$ 3 (about US$ 1) per bag. He does not dealdirectly to the exporters, because he lacks the structureto process the coffee and meet the Health and Safetystandards. His buyers are bigger middlemen.

"You either stay without any work or you dobusiness on the sly, like I do," he says. The traderadmits that you need to have backing if you want toget into the big-time stuff. To open a legalized firmtrading in coffee, he reckons that you would need ca-pital of at least R$ 200,000 (about US$ 65,000) to in-vest in installations, electronic machines for benefi-ting, and hiring trained personnel to operate them. Sin-ce competition is great among the middlemen, he alle-ges that his prices would not be competitive if he paidthe taxes. Jorge ventures a guess that 90% of coffeedealers are not officially registered.

Valdir Laureti, a coffee dealer with a legalized

The middlemenfirm in São Gabriel da Palha (state of Espírito San-to), represents yet another link in the chain of coffeemiddlemen. He declares that he trades 30,000 bagsa month - ten times more than his informal competi-tor - and obtains a gross margin of R$ 5 (US$ 1,60)per bag. He claims that after all the expenses arepaid there is little left - but he does not complain aboutthe transactions: "The turnover has never been ashigh as this year. I sold well, but if the price hadbeen higher I could have made more." About twothirds of the coffee he buys go to a roaster and therest to exporters in Vitória.

His company employs 25 workers, but he plansto dismiss eight in the next two months to cut down oncosts. Laureti makes a comparison to show the prac-tical effect of the drop in coffee prices on his profes-sional life: "In 1986 I managed to buy a small truckwith 80 bags, now I would need 700." He saysthat he cannot afford to get into roasting because thatis a business that demands a lot of capital. He thinksthat organic coffee could be a good deal but that it isnecessary to trade at least 10,000 certified bags amonth to offset the costs and that his firm lacks thestructure for this. Laureti reckons that nine out often coffee-growers that he knows are in debt.

40

Market nichesSpecial coffees - organic and certified with the "fair

trade" stamp - have been announced as promising alterna-tives for small producers. Out of 100,000 bags of organiccoffee forecast for this year, Brazil will export 70,000 - anincrease of 191% in relation to 2001, according to the Bra-zilian Association of Organic Coffee Producers. The pri-ce is 50% higher than the conventional and the demand isgrowing 20% a year.3 But it is important not to see thesemarket niches as some miraculous way out of the crisis.They are not accessible to all the poor growers, since theyrequire techniques that take time to adopt. And the pro-blem of coffee-growing is an emergency.

In order to place organic coffee on the market,farmers have to obtain certification. This is a marketmechanism that offers differentiated consumers the chan-ce to choose a differentiated product or productive pro-cess, explains Laura Prada of the Institute for Forest andAgricultural Management and Certification (Imaflora):"The message is as follows: 'Give preference to myproduct because as a coffee grower I am responsiblefor the workers, the surrounding community and theenvironment'. The farmer who wants to access thisdifferentiated market is going to have to satisfy crite-ria that society has defined as fair or acceptable."

A successful exampleOne example of how organic coffee growing is

working comes from the municipality of Nova Venécia(state of Espírito Santo). Since 1995, Maria HelenaMantovanelli and her husband Alcione Puttin have beendeveloping sustainable agriculture on their 25-hectareproperty. There they plant banana, cashew, coconut,mango, passion fruit and coffee without using any chemi-cal fertilizer or pesticide. With a crop of 40,000 plants,this year the couple produced 300 organic bags. In thecertification process, they abandoned conventional tech-niques and had the soil and water audited. They neededto prove the preservation of riparian forests and the lega-lity of their workers' situation. About R$ 2,100 (US$680) was spent on these matters. At present they supplytwo Brazilian companies.

Initially the production costs of growing organiccoffee are higher, but in three or four years they reachthe same level as conventional coffee. At the end ofeight years the tendency is for the costs to fall more, dueto the savings in input materials. For example, the coffeeberry borer is attacked by biological control, the Ugandawasp (Prorops nasuta). Maria Helena emphasizes the

Trade shakenIt is eleven o'clock on a workday in the

main street in São Domingos do Norte, amunicipality of 7,500 inhabitants in the northof the state of Espírito Santo. Sitting on achair on the sidewalk, Domingos Ballastrini,74 years old, kills the time whittling away at apiece of wood with a pocketknife. For half acentury he has been the owner of theBallastrini and Co. hardware store. His placeis empty - no customers. The merchandisetoo is beginning to disappear, because hecannot afford to replace the stock. "Todaynot a single cent has come in," he says."Yesterday I sold only ten Reais" (US$ 3,10).

It was not always like this. Once therewas a lot of activity, with shop attendantshelping him and his two sons at the counter.They sold everything: electric appliances,cloth, building material, tools. Money wasabundant. Today the store is a melancholycaricature of the years of plenty. Ballastrinihas been forced to rent part of thecommercial area to an Evangelical church.He has almost R$ 40,000 (US$ 13,000) incredit to receive from customers he keeps inhis "little notebook" - all of them honest folkthat just cannot afford to pay him. "I spendthe day smelling the dust," he complains."We keep hoping, but the day for me to closeup is getting nearer and nearer."

In search ofalternatives

“ “

Domingos Ballastrini, trader.

We feedon hope.

In search ofalternatives

41

social function of her farm: "We are committed tomaking others aware of the need to farm without poi-son," she says. "When they are mature enough torealize the advantages, they will benefit from all this."Biodiversity has already won the day. Her property isfull of birds, wild rabbits, capybaras, parrots and evenmonkeys, which are rare in the region. The work enjoysthe support of the local government of Nova Venécia, theCapixaba Research and Rural Extension Institute (Inca-per), the Health Pastoral and the Regional Agency forMarketing (Arco).

Some government actions

The Ministry of AgricultureIn early August the Ministry of Agriculture,

Livestock and Supply launched sales-option con-tracts for coffee growers and cooperatives. Untilthe month of October, 6 million bags will be offered- 78,2% arabica because this is the percentage ofthe variety in the Brazilian harvest. Resources tothe order of R$ 765 million have been earmarkedfor these operations. The Minister of Agriculture,Marcus Vinicius Pratini de Moraes, also announ-ced the inclusion of the product in the guaranteedminimum-prices policy and the release of R$ 320million (US$ 103 million) for the program to supportexports. The government has allocated an additio-nal R$ 400-500 million (US$ 130-163 million) forfunding the 2002/2003 harvest.4

"This program to support coffee growinghas been developed to preserve the national com-plex and sustain prices at a moment when theinternational quotation for coffee is affected byover-supply," stated Pratini de Moraes. Accor-

ding to the government, the Bank of Brazil is to fi-nance 80% of the value of the bag for stock, whichis sufficient for a volume of four million bags. "Weare strengthening the farmers' financial capaci-ty for exporting, because they are facing diffi-culties in renewing lines of credit for advanceson exchange contracts," said the Minister.

The Green and Yellow FundThe federal government plans to develop a part-

nership project with coffee growers to value and pro-mote Brazilian coffee abroad. According to the Minis-ter for Development, Industry and Foreign Trade, Sér-gio Amaral, exporters will have a new line of creditavailable to them - the Green and Yellow Fund. "Forcoffee exports, the objective will be to produce, pro-cess, roast, pack and place in the supermarket," hedeclared. Amaral estimates that the gains for farmerswill be as high as 40% of the final retail value in super-markets in Europe and the United States.5

The Green and Yellow Fund, which is the res-ponsibility of the Ministry of Science and Technology,has a budget of R$ 80 million (US$ 26 million) for thisyear, part of these resources being earmarked for thecoffee and leather sectors. This partnership betweengovernment and the business sector is also designedto seek out new markets by negotiating better tariffs.Amaral says that the National Bank for Economic andSocial Development (BNDES) is to finance Braziliancompanies that want to set up and sell their productsin other countries. One of the prospective markets isChina.6 An estimate made by the Brazilian Associati-on of Soluble Coffee Industries (ABICS) points outthat the daily consumption of two cups of coffee by10% of the Chinese population would raise Brazil'sexports by 12 million bags.7

The testimony presented here, far from aiming togive a comprehensive account of a sector as complex ascoffee, is to draw attention to one of the crucial aspect ofthis crisis: its social side. We want to go beyond the econo-mic discussion and the laws of the market to show that weare talking about people with names and addresses. Hu-man beings who are suffering now and can no longer wait.

We had no pretension to deal with the theme ingreater depth or exhaust all the views and opinions. Thelimitations of this work, which was carried out in lessthan three months, have to be put into context. This islittle time in proportion to the dimension of the challenge.Nevertheless, we consider that this could be a contributi-on to make Brazilian society and even other countriesaware of the problem of coffee in Brazil, which is a worldgiant in this particular product.

Where these paths lead...Much of the testimony and information presented

here point to paths, possibilities and challenges. The pro-grams of the federal government, for example, are anattempt to tackle the crisis. But these actions are still ata remove from those who suffer the hardest impact. Thefollowing chapter presents the proposals of small gro-wers, household farmers and rural wage earners, whoalso have the right to be heard.

This report has endeavored to contribute to theglobal and national campaign launched on 18 September2002, an initiative that gathers together organizations fromdifferent countries. Two parts of the publication aremaking this connection: one on what is being said by thelarge transnational roasting companies, the other on theproposals of the international campaign included in theso-called "Coffee Rescue Plan."

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1 In september 2002 the minimum wage in Brazil was R$200 (US$65)2 A Gazeta, 22, 23 and 24/01/99 and 08/07/99, Vitória (ES)3 Gazeta Mercantil, 09/08/20024 The Ministry of Agriculture, Livestock and Supplies. http://extranet.agricultura.gov.br/5 The Ministry of Development, Industry and Foreign Trade. Speech given by Minister Sérgio Amaral. http://www.mdic.gov.br/imprensa/radio/20020522Cafe.mp36 Gazeta Mercantil, 22/05/20027 Folha de S. Paulo, 23/05/2002

References

43

PROPOSALSfor the coffee crisisPROPOSALSfor the coffee crisis

44

Household farmers and rural wageearners form the most vulnerable link inthe coffee productive chain. This is wherethe social and economic impact of thecurrent crisis can be seen mostdramatically. While the transnationalcoffee companies increase their profits,household farmers are abandoning theircrops and rural wage earners who workwith coffee are losing their jobs andseeing their working conditions becomingmore and more precarious. This situationcalls for urgent measures to be taken tomake coffee growing an activity thatsustains and strengthens householdfarming in Brazil and provides rural wageearners with dignified working conditions.

*These proposes were aproved during the National Meeting, organized by Contag, CUT and Oxfam, in Vitória (ES) onthe 20th and 21 st of August, 2002. The meeting had the support of Actionaid Brasil, Federation of Workers on

Agriculture of Espírito Santo (Fetaes) and Secretary of Agriculture of the State (ES).

BRAZIL

Proposals of household farmersand rural wage earners *Proposals of household farmersand rural wage earners *

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COFFEE-ROASTING COMPANIESA commitment to engage in a propositional dialogue with representatives of household farmers.

A clear commitment to guarantee the rights of workers involved in coffee production, including financing effective monitoringmechanisms.

Investing resources in programs to improve the quality of the coffee produced under household agriculture schemes.

GOVERNMENTFamily AgricultureParticipation of representatives of household farmers and workers in the Deliberative Council on Coffee Policy (CDPC).

Participation of representatives of household farmers and workers in international meetings of the International Coffee Organi-zation (ICO) and other relevant international entities.

Implementation of specific policies for coffee within the National Program to Strengthen Family Agriculture (Pronaf),including resources of the Defense Fund for the Coffee Economy (Funcafé) to fortify extension and technical assistancedirected at the quality of coffee and diversification of production, in addition to training in storing, marketing and transfor-ming coffee for direct export.

Negotiating existing debts with Pronaf.

Policy of guaranteeing minimum prices for coffee produced by household farming.

Actions towards strengthening the participation of household farming in the fair-trade coffee market.

Access to land through land reform and extension of agricultural credit so that sharecroppers, leaseholders and the children ofsmall coffee producers can improve their living conditions.

Conduct research with representatives of household farmers and rural wage earners on the profile of coffee production in Brazilin order to identify their participation and conditions.

Creating, with government participation, a seal of quality and origin for the coffee production of household farmers.

An international marketing policy to better the image of Brazilian coffee.

Setting up a mechanism for monitoring effective competition between toasting companies and other agents in the productionchain.

Transparency with regard to prices for producers and consumers in the region, and transmitting this information to householdfarmers.

A campaign to clarify the Brazilian consumer on the quality of coffee.

Rural wage earnersCreating specific legislation so that the harvesting contract is drawn up collectively through the Unions of Rural Workers (STRs),thereby guaranteeing labor and welfare rights.

Increasing inspection in the rural area carried out by the Regional Labor Bureaus (DRTs), thereby guaranteeing the applicationof the laws and norms that protect worker rights.

Suspending public credit to employers who ignore labor and welfare legislation.

Setting up a program to train workers in the use of Individual Protection Equipment (IPE), handling chemicals, and techniquesthat reduce the risks of accidents in rural areas.

The proposals for domestic policies presented here should be complemented bygovernment negotiations with producer countries in an endeavor to find mechanismsto manage production and prices.

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RecommendationsA Coffee Rescue Plan is needed, to

bring supply back in line with demand andto support rural development, so that far-

mers can earn a decent living from coffee.The plan needs to bring together the major

players in coffee to overcome the currentcrisis and create a more stable market.

Within one year, and under the auspices of the ICO, the Rescue Plan should result in:

1. Roaster companies committing to pay a decent price to farmers.

2. Roaster companies trading only in coffee that meets the ICO's Quality Coffee Scheme standards.

3. The destruction of at least five million bags, as an immediate measure, to be funded by roastercompanies and consumer governments and roaster companies.

4. The creation of a Diversification Fund to help low productivity farmers create alternative livelihoods.

5. Roaster companies committing to buy increasing volumes of coffee under Fair Trade conditionsdirectly from producers. Within one year this should apply to two per cent of their total volume, withsubsequent incremental increases.

The Rescue Plan should be a pilot for a longer-term Commodity Management Initiative to improvecommodity prices and provide alternative livelihoodsfor farmers. The outcomes should include:

1. Producer and consumer country governments es-tablishing mechanisms to correct the imbalance insupply and demand to ensure reasonable prices toproducers. Farmers should be adequately repre-sented in such schemes.

2. Co-operation between producer governments to

stop more commodities from entering the marketthan can be sold.

3. Support for producer countries to capture more ofthe value in their commodity products.

4. Extensive financing from donors to reduce farmers'dependence on agricultural commodities.

5. An end to EU and US double standards on agricul-tural trade that squeeze developing countries into anarrow range of options.

6. Companies paying a decent price for commodities(above the costs of production).

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CoffeeCompanies*

The Coffee Rescue Plan will only succeed if allparticipants in the coffee market are actively invol-ved. The following recommendations include elementsof what each group can do to make it work.

Roaster companies– Kraft, Nestlé, Procter & Gamble e Sara Lee

1. Commit to paying a decent price to farmers.2. Commit significant resources to tackle the coffeecrisis (including a financial contribution to aid packa-ges that deal with the crisis).3. Label coffee products on the basis of their quality.4. Commit to buying increasing volumes of coffeeunder Fair Trade conditions directly from producers.Within one year this should apply to two per cent oftheir total volume, with significant subsequent incre-mental increases to be determined annually by theFair Trade movement.5. Lobby the US government to rejoin the ICO.6. Adopt clear and independently verifiable commit-ments to respect the rights of migrant and seasonalworkers, including respect for ILO conventions.

Coffee retailers(supermarkets and coffee bars)

1. Demand of suppliers that the coffee they sell paysproducers a decent price.2. Promote Fair Trade coffee brands and products.3. Insist that coffee products are labelled on the basisof their quality.4. Starbucks to make public the findings of the com-mercial viability of its sourcing guidelines.

Governments and InstitutionsInternational Coffee Organisation

1. Organise, with the UN and the participation of theWorld Bank, a high-level conference on the coffeecrisis by February/March 2003, headed by Kofi An-nan and James Wolfensohn, specifying that participa-tion is conditional on being willing and able to makeconcrete commitments.2. Work with producer countries, Fair Trade organisa-tions, and roaster companies to define a decent inco-me for producers.3. Implement the quality scheme, preceded by an im-pact assessment on small farmers.

* This plain is part of Oxfam International´s globocampaign: “What´s in your coffee?”

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World Bank

1. Identify World Bank support for producer countriesto manage the short-term impact of coffee-price co-llapse, including rural development considerations in thePoverty Reduction Strategy Paper (PRSP) exercise.The World Bank and IMF should develop a long-termintegrated strategy to tackle the problem of commodi-ties.2. Continue to review the HIPC process in light of theexpected shortfall in export revenues resulting fromthe fall in commodity prices, and ensure that any coun-try which suffers from a significant decline in commo-dity prices between Decision and Completion Pointunder HIPC automatically receives additional debt re-lief at Completion Point to ensure that it meets the 150per cent debt-to-export target.3. Contribute to a major international conference oncoffee with the presence of the United Nations (UNC-TAD) and the ICO by February/March 2003.

UN Conference on Trade andDevelopment(UNCTAD)

1. Develop a long-term integrated strategy to tacklethe problem of commodities.2. Contribute to a major international conference oncoffee with the ICO by February/March 2003.

Producer governments1. Co-operate with each other to stop more commodi-ties from entering the market than can be sold.2. Put the issue of diversification at the centre of po-verty-reduction strategies.3. Provide support to farmers who have to leave thecoffee market, including attention to women left onfamily farms.4. Address the immediate needs of rural farmers forextension services including:- Technical and marketing information- Credit schemes and debt management servicesThese extension services should pay particular atten-tion to the needs of women farmers.5. Institute sanctions against anti-competitive tradingpractices that hurt small farmers.6. Assess the impact of the ICO Quality Scheme onsmall producers, especially women farmers.7. Protect the rights of seasonal and plantation workersto ensure that labour legislation, consistent with coreILO conventions, is enacted and implemented. Parti-cular attention should be paid to the rights of womenlabourers.8. Promote the formation of associations of small producers and companies in order to strengthen themin Brazilian coffee markets.

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Consumers

1. Buy more Fair Trade coffee.2. Ask retailers to stock more Fair Trade products.3. Demand that companies adopt pricing policies thatguarantee a decent income to farmers.4. Request better labelling on the origin of coffee fromroasters/retailers.5. Request that pension fund managers raise the ques-tions below.

Consumer governments

1. Provide political and financial support to tackle over-supply, including:- Support and financial help for the ICO Quality Sche-me, including monitoring the quality of coffee enteringtheir markets from each producer nation, and rapidlymakes this information public- Removal of remaining tariffs- Destruction of the lowest-quality coffee stocks2. Support the ICO as the forum where producers andconsumers can tackle the coffee crisis.3. Increase funding for rural development and live-lihoods in Overseas Development Assistance.4. Provide incentives for roaster companies to under-take technology transfers and to carry out more of thevalue-added processing in developing countries.

Investors

1. Encourage roaster companies to adopt supply-chainmanagement schemes and pricing policies that pay abo-ve the costs of production and protect the labour rights ofcoffee workers, in the interests of the long-term sustai-nability of the coffee market.2. Express the view to coffee companies in which theyinvest that improvements in the lives of poor farmers willbe the criteria applied when assessing reputation riskmanagement on issues of price and supply-chain mana-gement.

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51

What thecorporation say

52

KRAFTKraft Foods shares together with its consumers, customers and thecoffee industry as a whole, the concern for the long-term sustainability ofgood quality coffee. This means we support ...A decent and improvingstandard of living for growers and producers of coffee and their families.1

The market will find its own solution because countries and producerswill be driven out of the market. Our role is on the demand side - our roleas Kraft is to increase consumption.3

As the original producers of vital raw commodities for our qualityproducts, farmers must be able to achieve an acceptable overall level offinancial return in order to remain viable participants in the coffee sectoron a long-term basis.4

Our role in the coffee industry is to provide coffee products at reasonableprices that meet both the quality and values expectations of ourconsumers.

. The ICO quality initiative has been offered as one means of addressingthe current price environment. Therefore, we are giving this programcareful evaluation to fully understand its implications for our complexglobal business and its potential contribution to constructivelyaddressing the current market situation.6It won’t work. It never has because it is a voluntary scheme and becauseit is unclear what it is trying to do. We are fundamentally opposed to anyscheme that intervenes on price.7

Kraft has spent $500,000 on a quality improvement scheme in Peru. Itclaims that its efforts in conjunction with a local cooperative, Cocla, tointroduce better quality standards has improved the overall price thatPeru receives for its coffee.

Kraft also supports quality improvement in Viet Nam, focused on thearabica producing area of Tan Lam in conjunction with Douwe Egberts,GTZ and the Tan Lam company.6

Kraft pays a quality differential for a large proportion of the green coffeeswe purchase. The significant majority of our coffee is purchased fromexporting companies in countries of origin. Therefore we cannot assessdirectly the magnitude of benefits that accrue to specific farmers.However, as a general matter we believe that producers of coffees forwhich we pay quality differentials receive higher prices than they would inthe absence of these differential payments.12

Statements on CorporateSocial Responsibility

Views on the Crisis

Views on Control ofOversupply in the CoffeeMarket, including the ICOQuality Scheme

Actions Taken to Addressthe Crisis

Price & Premiums Paidfor Coffee I11

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1 Kraft Foods “Sustainability.an important issue in thebrand orientated foodindustry” presented toOxfam 23 April 2002

2 Peter Brabeck-Letmathe,CEO Nestlé, 30 November1999 “The Search forTrust”.

3 Interview with Oxfam 23April 2002

4 Letter to Senator Sam Farr 7March 2002

5 Low coffee prices Causesand Potential Solutions Presentation to CSREurope 12 July 2002

6 Kraft letter to Oxfam 26June 2002

7 Interview with Oxfam 23April 2002

8,9,10,12 Nestlé letter toOxfam 26 June 2002

11 No company was preparedto disclose the averageprices paid for coffee

NESTLÉA few years down the road, we are going to be asked not only if we havemaximised short-term shareholder value, but also some other, moredifficult questions. Among them will certainly be: What have you done tohelp fight hunger in developing countries?2

Nestlé is concerned about the plight of those coffee farmers who are presentlyreceiving historically low prices for their coffee crop. This situation results in adisturbing increase in poverty and suffering for themselves and their families.Nestlé is against low prices as they are not only bad for farmers, but also badfor Nestlé’s business. While in the short term they reduce the cost of rawmaterials, low prices inevitably lead to high prices and it is these wide swingswhich negatively impact our business.5

Nestlé fully supports the ICO Quality Improvement Scheme and itsapplication as it pertains to the export of green coffee from producingcountries.8

Nestlé considers the International Coffee Organisation (ICO) as the bestplatform to set up a price stabilization mechanism, since the success ofthis kind of initiative requires the commitment of the governments of bothproducing and importing countries. Unless an entirely new system is tobe created, the ICO remains the only viable forum.Nestlé supports any coordinated effort between governments, industry,intragovernmental agencies, and NGOs to eliminate the boom to bustcycle and helping the individual coffee farmer.9

About 13% of our coffee is bought through direct purchasing, where apremium is paid for quality. The mechanism of ensuring that the farmerbenefits from the premium varies from country to country, but we havecontrols in place to make sure that this is the case.2

Nestlé has a number of projects in place to help improve the situation ofthe small farmer. Mexico is one example of this.10

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PROCTER & GAMBLEPROCTER & GAMBLEPROCTER & GAMBLEPROCTER & GAMBLEPROCTER & GAMBLEP&G has always conducted its business with integrity and astrong P&G core value of “doing the right thing.” We havelong been leaders in human resource management,employee compensation and benefits, -workplace safety,environmental management of our operations, ethicalbusiness practices and involvement in the communitieswhere we have operations.1

Statements on CorporateSocial Responsibility

No-one in coffee can deny the crisis.2

We recognize the social problems many coffee-growingfamilies face given the current situation of global over-production and low prices. P&G is committed to help addressthe underlying social and economic issues which contributeto this situation and we want to work with reputableorganizations that can help provide long-term systemicsolutions.3

Views on Control ofOversupply in the CoffeeMarket, including the ICOQuality Scheme

Actions Taken toAddress the Crisis

Price & Premiums Paidfor Coffee I 10

Views on the Crisis

We support the National Coffee Association’s efforts toidentify ways to ensure an adequate, sustainable supply ofcoffee in the range of qualities demanded by consumers,while addressing social and ecological needs. We alsosupport efforts such as the Cup of Excellence competitionsthat promote the host country’s best coffees.5

P&G supports the National Coffee Association’s position onthe coffee crisis. P&G is not prepared to support theInternational Coffee Organisation’s scheme because it is notthe NCA position.

As a company we have supported coffee growing countries onthree levels:Local- Contributions from various P&G offices around the world,Brazil, Mexico and Venezuela, to build schools.Business Unit - $1.5 million in funding to non-profit organisation,Technoserve, to help small-scale coffee growers.Corporate - P &G fund makes contributions to organizationslike The Nature Conservancy and disaster relief efforts.7

P&G buys a significant portion of its total requirementsdirectly from exporters with offices in producing countries.The employees in our Green Coffee Department spendsignificant time in country working with exporters; theseexporters help translate our local quality needs back throughthe local supply chain.

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SARA LEESARA LEESARA LEESARA LEESARA LEESara Lee’s objective is to utilize the corporation’s purchasing powerto influence those from whom the corporation procures products andservices to: embrace high standards of ethical behavior, comply withall applicable laws and regulations, treat their employees fairly, andwith dignity and respect, so as to promote their welfare and improvetheir quality of life, and be socially responsible citizens in thecountries and communities in which they operate.

Sara Lee and the coffee industry at large do not consider suchfluctuations (in price) in the interest of local farmers, the industry, orthe consumer.4

Sara Lee is uneasy about price support. The market needs toequilibrate on supply and demand. We believe the best solution (is)...to be found in the improvement of coffee quality at a local level.Compensating coffee farmers for the burden of lower income byartificially paying guaranteed prices provides an incentive to over-production, while creating unwanted discriminating positions on thegreen coffee market. For this reason Sara Lee will not promote orinitiate the marketing of coffee under the Fair Trade level.6

Sara Lee’s support includes “the execution of projects in coffeeoriginating countries (Viet Nam, Uganda, Brazil) aimed at helpingcoffee farmers and their families to improve their living conditions bydeveloping and implementing production-methods with minimalimpact on the environment, while resulting in higher coffee qualityand therefore in higher market prices.”8

While purchasing green coffee, Sara Lee will continue itsSmall Farmers Policy (since 1989), committing itself to aminimum of 10% of total coffee purchase being purchaseddirectly through small planters and co-operations of smallplanters, preconditioned by the availability of required coffeequalities and related prices.9

1 P&G on CorporateSocial ResponsibilityJuly 2002www.pg.com/abouLpg/corporate/sustainability/faq2 Interview withOxfam II June 20023 SustainableCoffee- documentpresented to OxfamII

June 20024,5,6 Interview withOxfam IO June 20027 Folgers Web site,Procter & Gar8,9 Sara Lee letter toOxfam I9 Jun

SDS Edifício Venâncio VI - 1º AndarCEP: 70393-900 - Brasília - DFweb site: www.contag.org.br

phone: (55-61) 321 2288

SDS Edifício Venâncio 2000 - 4º Andar - sala 403CEP: 70333-970 - Brasília - DF

phone (55-61) 321 4044 - fax (55-61) 323 8552

Rua Caetano Pinto nº 575CEP03041-000 Brás, São Paulo SP

phone (55-11) 3272 9411web site: www.cut.org.br

CAFÉDO BRA ILZ

BRAZILIAN COFFEE - THE BITTER TASTE OF CRISIS

PUBLISHING HOUSEMaria José H. Coelho (Mtb 930 Pr)

REPORT

FINAL TEXT

PHOTOGRAPHIC REPORT

GRAPHIC PROJECT AND DIAGRAMMING

Dauro Veras (SC 00471-JP)Débora F. Lerrer (RS 7399/33 -JP)

Dauro Veras

REVISIONCristiane MateusSandra Werle (SC 00515-JP)

Sérgio Vignes (SC 00249 RF)

PHOTOGRAPHY

Rosane Lima (pg 5)Giel van den Hoven (pg 5 and 51)

Coordination of Social ObservatoryCommunications

ENGLISH TRANSLATIONLuiz Marcos B. L. de Vasconcelos

PROJECT CARRIED OUT BY

www.observatoriosocial.org.br

SEPTEMBER 2002Florianópolis - State of Santa CatarinaBrazil1,000 copiesAgnus Printers

Banco de Imagens do OS

BR

ASIL

The Observatory is an organization

that studies the behaviour of

multinational companies

with regard to the fundamental

rights of workers. These rights

are mainly guaranteed in the

conventions of the International

Labour Organization (ILO)

that deal with trade-union freedom,

collective negotiations, child labour,

forced labour, gender and race

discrimination, environment and

occupational health and safety.

BRA

SIL