Large
Land Owners / Local Traders (Level 1 Coyote)
The name given by peasants to the
intermidiary traders with whom they negotiate the sale of their coffee
is coyote. They are found at several levels of the coffee trade, from
the bottom coyote who buys directly from farmers, to the top coyote who
exports to international buyers. Their strategies, power and
influence vary from one region to another, but generally their interests
carry great weight even in government, where they have strong allies.
Coyotes make up an integral part of the local village elite in
Mexico. They act as bankers, provide the local transportation
system, and often own the main general store. The virtual monopoly
allows them to control nearly all the economic activities of a
village. They offer loans to peasants, but usually on the
condition that farmers sell their coffee at reduced prices and repay
their loans at extemely high rates of interest.
Transportation infrastructures are not well developed in the mountainous
regions. By owning the only vehicle in the village, coyotes can
control everything that enters or leaves the village. If they own
the only store in the village, they can control all the prices.
Thus, in many cases, peasants find themselves dependent on coyotes to
sell their coffee, to obtain credit, to buy foodstuffs, and to transport
themselves or their products to larger centres of trade.
Processors
(Level 2 Coyote)
Coffee beans are subject to a final
process before exportation. The fine skin which covers each bean
must be removed. This process requires the use of expensive
machinery which is often owned by intermediary coyotes or sometimes by
exporting coyotes. In some cases, multinational corporations may
even own factories in the South where they process the coffee.
The beans are then graded according
to their shape, colour and density. Sophisticated machinery is
used in this grading process. Finally, the beans, still green, are
packed into 60kg sacks and sent to the exporting coyotes.
Exporters
(Level 3 Coyote)
The role of private exporters is to
prepare a product that most precisely meets the demands of the
importer. They must make sure the right type of coffee is sent to
the right place at the right time. Their goal, naturally, is to
buy coffee at the lowest price and resell it for the highest profits.
Initially, the privitization of
export markets in many coffee-producing countries caused the number of
exporters to increase greatly. In Mexico, several years of
privatization has left only the most competent and efficient exporters
in the business.
Although the various coyotes have a
large influence on the markets in the coffee-producing countries, their
influence on the international stage is limited. Globally, prices
are determined by the New York and London commodity
exchange.
Brokers
Brokers are international business
people who buy and sell on commision without ever officially owning the
coffee that they trade. They act as intermediaries between
exporters and importers. Giant multinational corporations, such as
Nestlé or Philip Morris (owner of Kraft General Foods) have their own
brokers. The huge buying and selling power of these corporations
allows them to speculate and exercise great influence on the New York
exchange for arabica coffee (UCIRI's variety) and the London exchange
for the robusta type.
Brokers have access to an ultramodern
information network. If, for example, a satellite study predicts
extreme weather conditions in Brazil (the world's largest coffee
producer), the price of coffee on the world markets will rise.
However, if an excellent harvest is forecast, world prices will
fall. Rumours and psychological factors play a large role in
determining market prices.
The price of coffee varies
considerably from one year to the next, taking its toll on the income of
coffee producers. According to Oxfam
International, '...the price of coffee has fallen by almost 50 per
cent in the past three years to a 30-year low. Long-term prospects
are grim.'
Multinational
Coffee Roasters
The companies which roast and sell
coffee are usually one and the same. During the last decade, these
companies have become more and more concentrated in the hands of giant
agro-food corporations. Though judging from the supermarket shelf
you may think there are fifteen or twenty brands of coffee on the
market, in reality the majority are owned by a few large multinational
corporations. In 1992, 70% of the world coffee market was
controlled by four multinational corporations: Philip Morris
(Maxwell House, Nabob, etc.), Nestlé (Nescafé, Taster's Choice, etc.),
Proctor & Gamble (Folgers, etc.), and Sara Lee (Douwe Egberts,
etc.).
By purchasing millions of tonnes of
coffee at a time, these corporations are able to benefit from an
enormous economy of scale and to reduce their retail costs. The
influence they hold over global commodity markets and the economies of
coffee-producing countries is undeniable.
Consumers
We, as consumers, have a choice to
decide which route our coffee takes:
CLICK
HERE to see the Fair Trade Route
