Last weekend, I sat down and watched a movie that I’d been wanting to watch for quite some time: Black Gold. This movie is about coffee: the second most profitable commodity, only after petroleum. The film follows the work of Tadesse Meskela, who runs a coffee cooperative in Ethiopia and fights to get his growers higher prices for their beans. One scene in the film shows Meskela talking to a group of his growers about the price of a cup of coffee in the United States. The farmers literally laugh when they hear the number – they can’t even imagine it. If you purchase a cup of coffee for $3 at Starbucks, the amount that gets back to the farmer is 1/100th of that – $0.03.
There is definitely a human aspect to this film and you do get to see the journey of a group of farmers and cooperatives as they engage in their trade. What I learned the most about, however, is how coffee prices are set in the US (and, ultimately, around the world). Essentially, the New York “C” market, a futures commodity trading market, sets the global price of coffee. Because there are so many levels to coffee production, the high price set by the New York Board of Trade for coffee doesn’t really filter down to the grower.
On a broader scale, the film does much to enlighten the viewer about global trade in general. Meskela and the filmmakers attend the 2003 World Trade Organization (WTO) summit in Mexico, where you can see that it is nearly impossible for underdeveloped nations to have their voices heard. The number of delegates that they are able to send to the meeting – sometimes as low as 3 per country – pales in comparison to the 650 delegates present from the European Union. Since most or all of the negotiations occur behind closed doors between 2 or more countries, it is impossible for underdeveloped nations to have a delegate in each negotiation session. In this, my favorite segment of the film, I learned several surprising things:
- Africa is the only continent in the world to have gotten poorer over the last 20 years.
- Through the Structural Adjustment Program, the IMF and the World Bank have effectively forced African countries to stop subsidizing their crops in order to spend more of their GDP on repaying debt to rich countries. Meanwhile, US farmers receive $300bn in subsidies each year.
- The food subsidies received by US farmers allow for an overproduction of staple crops, which the US government then sends to Africa as food aid.
- Africa is now more dependent on food aid than ever. Seven million people in Ethiopia rely on emergency food aid each year.
- The African continent’s share of world trade has fallen to 1% over the last 20 years. An increase to 2% would generate an additional $70bn/year – 5 times the amount the continent currently receives in aid.
While these global financial issues are too much for any one of us to tackle on our own, there’s one thing we can easily do: drink Fair Trade coffee, which cuts out the middle men and ensures that growers get a fair price for their labor. Cheers to that!