Coffee Industry by Theo A.

Updated: Mar 23, 2020

Coffee is the second most valuable commodity in the world. Within the United States alone, 2.8 billion pounds of coffee is imported, keeping the average person consuming an average of 88.8 gallons each year."

This industry manages more than 60 billion US dollars per year.

More than 2.25 billion cups of coffee are consumed in one day, which is produced by more than 125 million farmers around the globe. Even in this scenario, and the current economic situation we are in, the apex of the capitalist society, based on "liberalist" principles, surprisingly, or not, single two corporations dominate 39% of this massive global market.

Globalization came, however, it did not mean the approximation of the nations and cultures through the development of technology as many think; it means the apex of the capitalist production system, it is the transformation of the world into a single market, where countries are linked in a relation which ensures the perpetuation of the capitalist system of production. All that ingrained by monopoly: some few corporations dominating the many different sectors, in some cases having more power than States. The "Citizens United '' well describes the reality of power and influence of corporations.

Throughout the development of capitalism during the last centuries, the wealth produced increased a lot, resulting in a decrease in global poverty. Many factors are to blame such as technological development and the industrial revolution, which possibly produce chain products for a low price. And, this argument was used by Bill Gates to prove that the capitalist system is serving to eradicate extreme poverty. Indeed, in practical terms it is, however being above poverty line is not a good standard, and, the income inequality has increased through the last centuries. Just in the US, the 5% richest had its household incomes rising from 15.3 to 20.3% between 1980 and 1996, while the 60% poorest had its household income falling from 34.2 to 30%. Besides that, when this argument is used, the situation of many proletarians, such as those who work at the coffee crop in Brazil, a country which produces more than ⅓ of the coffee in the world, and earn 2 GBP, by getting 60litre pack of the grain, is ignored. Less than 2% of the profit goes to the worker : They compose the group that left extreme poverty because of capitalism, and supposedly have a better quality of life.

Some can argue that it is possible to say that people do not necessarily need to submit to this type of work, given that in a democratic State, each individual has the right to do whatever they want. However, as shown in the article "The hidden suffering behind your morning cup of coffee," the vulnerable population, neglected by the state, in many cases does not have any other option: even though if the work is exhaustive; poorly remunerated, and is not official, that is their only option to survive. Not mentioning the cases being threatened or being in a slavery analog situation by a "middleman." The government of those states mostly does not watch and punish this type of job situation. And when it does, generally because of international pressure, doing things such as shutting down irregular crops, the condition affects more the workers, who will not have a source for survival. The "possibility" for those who suffer from this reality is forcibly migrating to city centers, seeking a better reality of life, which generally does not concretize, resulting in the creation of slums, and more danger in the cities, given the lack of public social services. On the other hand, those on the other side of the scope, who are bothered by this reality, buy coffee from "Fair Trade" sources, which even though they are a bit better for the producers. Still, not being effectively "fair," given that on average, the farmers get 10% of the profit while the big corporations get the rest.

The Marxist theory help to understand the case by analyzing it by the "World Systems Theory" lens. A theory conceptualized by Immanuel Wallerstein, which describes the link between the economic and "political" system in the current modern society, which is ruled by the division between, Core; Semi-periphery, and Periphery countries, presenting how the economic level of development is strictly related to the political situation. The core countries represent the group of wealthy and developed countries and democratic, which buy and consume commodities, and low qualified industrialized products being those mostly semi-periphery countries. The semi-periphery and periphery countries are those countries that provide what the raw materials and products needed by the core countries and buy technology from them. The degree of democracy usually is not high in the first group, but in the case of the periphery countries almost nonexistent, given that their "function" in the international system is to serve and supply the core nations, and not develop as a sovereign and power state.

Brazil, a country which produces 1⁄3 of all the coffee in the world, is a classic example of semi-periphery country: has somehow certain political stability, so can have a constant industry, however, has an authoritarian government aligned with the European/ Western powers which helps the perpetuation of the system of production, by creating policies which benefit the minority elite, and the core countries, for example, allowing the US setting a military base in the country; selling the national aircraft producer to Boeing, even though it is making profits and being "Sara Lee," an international corporation, the biggest producer of the coffee grain in the country, resulting in having all the profit going abroad. The periphery countries are the purest form of "Banana Republic," in which corporations and the core nations dominate politically and economically those countries, so they provide what is necessary.

The Dependency theory synthesizes this by proposing that this division result in a situation of interdependence, in which the semi-periphery and periphery countries provide the core countries with raw materials; food, cheap, and nonqualified labor, while the core countries provide better quality industrialized products in a dialectical relation.

Thus, the coffee production, which more broadly represents the system of production of the world, helps understanding why and how the liberalist ideology will never be effective during the capitalist era, given that for the perpetuation of the system, some nations have to be the periphery, to the core nations maintain their status, an essential structural condition of capitalism. And, even though people seek to do conjunctural changes, to change this reality, such as "fair trade coffee," only a structural change will enable the transformation of this reality of corporations dominating the world's politics and economy.

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