The steep plunge in coffee prices has led to the layoffs of some 600,000 farm workers in Central America and Mexico over the past two years. Tenant farmers and peasants in the region, already devastated by drought and famine, are waging a fierce struggle to stay on the land.

News reports estimate that some 125 million people in the world’s coffee growing regions, from Central America to Africa, have been directly affected by this aspect of the world capitalist economic crisis. In Burundi and Uganda, which derive 70 percent of their export earnings from sales of coffee beans, the severe price drop has devastated the countryside.

The crisis has a differential effect. "Wealthy hacienda owners face selling their private helicopters," reported London’s Financial Times, while tenant farmers, "many of them indigenous Indians, survive poor harvests by hiring themselves out to pick coffee between November and March."

Some workers have struck deals with growers to be paid for two weeks for every three they work, in the hope that the boss will make up the difference later. The big business daily reported that despite the decimation of many farms, "big coffee growers could still be the winners as former farms have become expensive real estate for housing the region’s population."

In taking advantage of their monopoly position to drive down the price of coffee beans, the big corporations are wiping out entire villages in Central America. A massive migration of workers and peasants from the region is bringing with it a tragic toll. For example, 14 jobless coffee pickers from Veracruz, Mexico, died in Arizona’s Sonora desert last year while crossing into the United States.

The collapse in employment on coffee plantations comes on top of famine conditions in some parts of Central America, the result of on ongoing drought. Relief agencies estimate that more than 1.5 million peasants in the region lack food. Hundreds of children in Honduras have become so malnourished that they have to be hospitalized and can no longer attend school.

Those workers in Central America who still have jobs earn less than $2 a day. "We’ve had no work since February and are here begging for our lives," said Antonio Luna, a worker in La Dalia, Nicaragua. He is among 3,000 unemployed coffee pickers whose families are huddled under plastic tarpaulins pitched along the roadside.  
 
A boon for imperialist investors
Coffee was brought to Central America in the latter half of the 18th century, and German merchants began exporting the crop in the 1830s. By 1890 it had become the chief source of foreign exchange earnings of countries in the region. The economies of Guatemala, El Salvador, Nicaragua, and Costa Rica were built around this one crop. The coffee growers expanded into banking and manufacturing and built roads and ports to facilitate exports. First British, then German, and finally U.S. imperialist investors fostered a native coffee bourgeoisie.

Landless indigenous Indians and mixed-race laborers provided a source of cheap labor for the coffee bosses, housed in squalid camps in which the wealthy farm owners exercised the power of life and death, while a handful of oligarchial families wielded political and economic dominion over millions of toilers.

As Washington began its rise as an imperialist power at the turn of the century it began to dominate the region. Leading up to World War I the United States accounted for 55 percent of all imports into Central America and was the destination for nearly 40 percent of all the region’s exports. By 1920 the U.S. empire accounted for 70 percent of imports into Central America and 80 percent of all exports from the area, pushing its imperial rivals in Germany and Britain further out of the region.

Large, mostly U.S.-based corporations control the processing and the distribution of coffee, keeping semicolonial countries confined to their role as dependent providers of coffee beans. They encouraged a coffee-production boom over the past decade. New plantations coming on line, including in Vietnam, which in the last five years has emerged as a major producer and rival to Brazil, have flooded the market with coffee beans.

Four companies--U.S.-based Proctor & Gamble, Kraft Foods, and Sara Lee, and Swiss-based Nestlé--control 40 percent of the world’s coffee market. Their dominance has enabled them to increase the squeeze on coffee growers. The rise in production has resulted in a coffee glut of close to 2 billion pounds--a surplus that cannot be sold at a profit in the monopoly-controlled market.

At the end of the 1980s, semicolonial countries exporting coffee received $10 billion of the $30 billion worth of retail sales worldwide. Annual sales have nearly doubled since then, but those countries’ take has dropped to less than $6 billion as the large corporations depress prices by pitting them against each other.

"The collapse of coffee prices has been a boon for the big companies that process the beans and sell the final product," the Wall Street Journal noted. While prices paid to coffee farmers have tumbled more than 80 percent, average retail prices for ground roast coffee in U.S. cities have dropped only 27 percent, according to the U.S. Bureau of Labor Statistics. The profits of the coffee barons have soared as the gap between prices received for processed coffee on the one hand, and raw coffee beans on the international wholesale market on the other, widened to $2.54 in May. Five years ago the difference was $1.50.  
 
A record year in coffee profits
According to the Wall Street Journal, Proctor & Gamble’s coffee business, with $1 billion in annual sales, had a "record year in 2001." Nestlé also reported record sales figures.

A spokesman for Sara Lee said that in the same year the company had its best financial results in five years, with its coffee and tea division posting sales of $2.9 billion and income of $495 million.

Meanwhile, as corporate profits rise, coffee growers in Latin America are rapidly sinking. Production costs of 80 cents a pound far exceed the 55 cents a pound received in sales--an 80 percent drop from the brief peak of $3.15 received by growers in May 1997. Thousands of farmers have gone bankrupt as a result. "Many growers have left the beans to rot," reported Andrew Bounds for the Financial Times, and "farmers are heading for the cities."

Growers have tried switching crops only to find themselves "on the verge of bankruptcy after trying to compete against U.S. farmers receiving generous subsidies from Washington," the Wall Street Journal reported. The head of the United Nations Development Program has estimated that these subsidies cost semicolonial countries about $50 billion a year in lost agricultural exports.

Some farmers have begun organizing protests to defend their livelihoods. On June 25, more than 1,000 people in Nicaragua blocked the Interamerican highway, reported the Financial Times, "in the first of what promises to be a series of actions to press for state aid."  
 
 
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