Coffee World Crisis

On May 24, 2001, 14 young Mexican immigrants died in the Arizona desert while attempting to enter the US to find work. Of the 14 who died, six were bankrupted coffee farmers from the state of Veracruz. They were among an estimated 300,000 coffee farmers in Mexico who have been forced to leave their land in search of work. These deaths - directly linked to the collapse of world coffee prices - symbolise the desperation and sense of crisis faced by small coffee farmers and coffee plantation workers throughout the region, and the world.

The bankruptcy of coffee farmers in Guatemala and Nicaragua, massive financial losses in the Honduras, El Salvador, East Timor and Indonesia, and even the deaths of Mexican immigrants in the Arizona desert have all been linked to Vietnam. The oversupply of coffee in the world market and the subsequent fall in prices is blamed on Vietnam's recent rise as a world coffee producer. The head of Vietnam's Coffee and Cocoa Association (VICOFA), Doan Trieu Nhan, recently quoted the president of the International Coffee Organisation (ICO) as stating that Vietnam is "the culprit of plummeting world coffee prices." (Thanh Nien, August 12, 2001).

The Rise of Vietnam

Within a decade Vietnam has risen from an insignificant coffee producing country to be the second largest coffee exporter in the world, and the largest producer of robusta coffee beans. In 1999 Vietnam surpassed Indonesia as the largest producer of robusta coffee and the third largest coffee producer in the world after Brazil and Columbia. By the end of the year 2000, Vietnam's coffee production surpassed that of Columbia, making it the second largest coffee producer after Brazil.

Most of this growth occurred in the last 5 years, with an expansion of harvested area from 155,000 hectares in 1995 to 550,000 hectares in 2001. Exports rose in this period from 4 million to 14 million bags (accounting for 12.3% of the world's 114 million bags). Only 4% of coffee grown is consumed domestically, with the rest exported. Due to the limited number of coffee processing plants all of the coffee exported is unprocessed. Existing plants, such as the state-run Bien Hoa Coffee Factory and Nestle Vietnam, are geared towards the domestic market and are operating well below capacity.

Coffee growing in Vietnam is concentrated in the Central Highland Provinces of Dak Lak, Lam Dong, Gia Lai and Kon Tum. There at least 470,000 hectares of land under coffee cultivation, accounting for 85% of Vietnam's total coffee harvest area. (Some estimates put the total coffee area in the Central Highlands at 514,000 hectares). Dak Lak has the largest area under cultivation, with 264,000 hectares.

These coffee plantations have their origins in the official re-settlement of nearly one million ethnic Kinh people (the majority ethnic Vietnamese) to New Economic Zones in the Central Highlands. Since these provinces border Cambodia and Laos, the Vietnamese government actively promoted the migration of ethnic Kinh to ensure national security and protect against subversion by ethnic minorities. Members of indigenous groups (such as the Edeh and Gia Rai who rioted in February 2002) now make up only 25% of the population of these provinces.

(This text in great parts quotes an article by Gerard Greenfield published on in March 20002)

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