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Nicaragua: Land Of Coffee and Famine

They traveled more than a hundred miles. Many came on foot. But the 700 starving coffee-pickers from the northern region of Nicaragua who descended upon Managua to set up a tent city across from the President’s Palace the week of August 27 were quickly shuffled into trucks and shipped back to the north, with promises of two months work and parcels of untenable, arid land in Chinandega. Nicaraguan Health Minister Mariangeles Arguello instructed Managua residents not to feed the coffee-pickers as it might “encourage them to stay.” Only 70 coffee workers refused to be shepherded back to the lands of hunger from which they came. Thus, the Nicaraguan government survived another PR disaster.

But why has the tragedy of hunger struck so many coffee workers in the north of Nicaragua? This disaster is not just bad luck; it results from a massive global oversupply of cheap, low-grade coffee and a series of erroneous decisions and sometimes malicious moves made by international finance institutions.

How Did This Happen?

In the early 1990’s, the World Bank invested heavily in developing a coffee industry for Vietnam so that it too could have an export “cash crop.” Now Vietnam has developed into the second-highest producer of coffee in the world. Unfortunately the low-grade, Robusta bean coffee grown in Vietnam and other countries has created a glut in the market, causing the whole-sale price for Nicaraguan coffee, made mostly from higher-grade, Arabica beans, to drop from $3 a pound in 1996 to 51 cents a pound presently. This price nose-dive has resulted in loss of employment for approximately 300,000 Nicaraguans as well as the threat of property foreclosure for many small-scale producers, who account for 64% of coffee production in Nicaragua.

Some coffee-growing countries have weathered the storm better than Nicaragua. In many coffee countries, growers are required to pay a portion of their proceeds to a government fund used to bail them out when price fluctuations cause them to lose money. Nicaragua has this arrangement in place, but due to financial corruption in the present government and an agreement with the International Monetary Fund to maintain a minimum balance of international reserves, this money has been sitting in the bank, inaccesible to the growers who desperately need it right now.

Even modest palliative initiatives by the Nicaraguan government have been obstructed from abroad. In April of this year, the Nicaraguan National Assembly unanimously passed a bill which would have suspended all foreclosures due to debts and unpaid loans for all coffee growers in the country for 300 days. The bill was vetoed by President Aleman and subsequently dropped after intense pressure from the International Monetary Fund (IMF) and the Inter-American Bank (IDB), including the suspension of $50 million in loans by the IDB due to what it called an 'unstable market'.

Why Nicaragua Needs Fair Trade

To realize the tragedy of Nicaragua’s coffee crisis, one must appreciate the enormous potential Nicaraguan coffee growers would have to compete in a fair trade, organic coffee market. A legacy of the Sandinista land reform of the 1980’s has been the abundance of small-scale Nicaraguan coffee cooperatives. Equal Exchange, a pioneer of the US fair trade movement, was founded in 1986 as a collaboration with Nicaraguan coffee cooperatives. With sixty-four percent of Nicaraguan coffee production coming from small-scale producers, a fair trade coffee industry would fit Nicaragua like a hand in a glove. Thousands of Nicaraguan farmers have applied to become certified fair trade coffee growers, but they are told that no new certifications will be issued until the demand for fair trade coffee increases. Currently, no more than a fifth of fair trade coffee imported to the US is sold at fair trade prices, while companies like Starbucks, which buys only 0.1% of its coffee from fair trade importers (and does not brew any of it), complain that the supply is not there.

Until companies like Starbucks listen to the increasingly vocal demand for fair trade products, the enormous potential of fair trade coffee production in Nicaragua will go unrealized. The starvation in Nicaragua and other countries should reshape the rationale and motivation for our organic coffee campaign. This is not just about consumer’s health or environmental issues. People in Nicaragua are dying while Starbucks enjoys record profits. When we protest in front of Starbucks, we should do so in solidarity with Nicaraguan and other coffee farmers who would not be facing starvation and eviction from their land if there were a sufficient fair trade coffee market in the US.

Emergency Aid for Coffee Workers

Charity is not the ultimate solution to the coffee crisis in Nicaragua and other countries. A just and sustainable world economy is. In the meantime, however, we must take care of those who will soon die if they do not get the food they desperately need.

Governmental aid money coming into Nicaragua will not make it through the corrupt bureaucracy in which officials have personally enriched themselves through crisis aid in the past. The Nicaragua Network has carefully selected Nicaraguan non-governmental organizations to filter material aid directly to people in the regions that need it most.

Please consider supporting our emergency aid drive by writing a tax-deductible check to the Nicaragua Network. Be sure to write “crisis aid” on the outside of the envelope and on the memo line of the check. Send your donation to the Nicaragua Network at 1247 “E” Street SE, Washington, DC 20003.


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