Perspectives on Global Development PERSPECTIVES

ON GLOBAL
DEVELOPMENT
and Technology 20 (2021) 558–567 AND
TEC HNOLOGY

brill.com/pgdt

Coffee in the Global Economy

John Redden
South Kona Farms, Kona, HI, USA
[email protected]

Abstract

This article describes the origin of coffee, and how it became a globalized commodity
leading into the current global landscape of coffee exchange. Significant contours of
coffee production taking place in the various geographies are examined. Then notable
organizations that influence global coffee markets are referenced. Finally, I state a few
suggestions for progressive action with respect to global coffee exchange.

Keywords

Arabica – Brazil – coffee – equatorial – fair trade – monopoly – Robusta – Vietnam

1 Introduction: Coffee, an Early Globalized Commodity

When did coffee become a globalized commodity? The answer is when coffee
became available outside the Islamic world of the Mideast. Coffee is generally
thought to originate in Ethiopia near the Red Sea. The Oromo people, a tribe in
Ethiopia, boiled desiccated cherry husks in water to produce what was initially
called ‘qishr’ in Arabic. Later the same drink was called ‘qahwa.’ Across the Red
Sea on the Arabian peninsula, the Sufi Islamic mystics adopted the drink as
‘kafta.’ The drink made its way from the Arabian peninsula to Mecca, Jeddah,
Medina, and eventually Cairo. The demand for coffee on the Sinai peninsula
was met with shipments from the port of Zeila. The trade came under the con-
trol of the Banyans, a Gurjarati merchant caste that dominated shipping in
the Indian ocean. Established by the Banyans around 1540, they controlled the
only supply of roasted coffee for 150 years.
Mocha became the principal port to supply coffee for the Muslim world sur-
rounding the Persian Gulf, Arabian Sea, and the Indian Ocean. Since Mocha was

© Koninklijke Brill NV, Leiden, 2021 | doi:10.1163/15691497-12341612

Coffee in the Global Economy 559

also the supply port for oriental spices, European merchants returning from the
East Indies were able to access coffee beans in small amounts. The appearance
of coffee in Venice, Italy is documented in 1575. By 1650 coffee houses begin to
appear in England. Coffee gradually conquered the European continent. At the
end of the eighteenth century, coffee consumption in Europe increased from
two million to 120 million pounds. Up to this point, coffee in Europe was in the
culinary domain of only the wealthy and rich. By 1720, the Dutch East India
Company importing coffee from Indonesia through Amsterdam made it pos-
sible for all classes, including the working class, to have access to coffee. At this
point coffee was truly a globalized commodity (Wikipedia 2021a).
The French followed the Dutch and established the French East Indian com-
pany. Coffee was introduced to the island of Réunion. Production on Réunion
was limited compared to Indonesia, but coffee beans made their way to Paris
and then to Caribbean territories. As decades passed, coffee became a crop in
the entire tropical climate band (Morris and Thurston 2013).

2 Breakdown of the Top Coffee Producing Nations in 20191

2.1 Brazil (2,680,515 Metric Tons)

Coffee was probably introduced to Brazil from Guiana around 1727 (Casa Brazil
nd). It was considered a minor crop until 1820. After 1820, the importation of
African slaves drastically increased the quantitative production of Brazilian
coffee. Slavery was set to legally end in 1830, but in reality, continued in some
form for another 50 years. In some ways the political economy of Brazil dur-
ing this 50-year period can be compared to the “Jim Crow” conditions in the
southern United States after the Civil War.
On May 13, 1888, slavery was formally banned by Brazilian law. What
occurred next becomes a common pattern across the equatorial regions of the
planet. Instead of slaves, workers are imported into Brazil to what amounts to
indentured servitude (Teixeira 2019). The class-race conflict intensifies when
laborers of color rebel against European plantation owners. There are even
cases of imported labor from Switzerland that ended up in immediate conflict
and failure.
In the early twentieth century, the rail infrastructure was built to expand
the delivery to export centers from growing regions. The government imported
workers, often from European countries, like Portugal and Spain, to build the
railroads. Up until the International Coffee Agreement, Brazil controlled 80

1 See Farrer’s Tea & Coffee Merchants (2019).

Perspectives on Global Development and Technology 20 (2021) 558–567

560 Redden

percent of all coffee exports until 1968 with the advent of the International
Coffee Agreement (Wikipedia 2021b).
Class differences in Brazil between growers and workers are extreme.
Inspectors from Reuters found a number coffee pickers in the largest Brazilian
coffee growing region working in an environment of virtual slavery (Vietnam
Culture nd). One farm, which the inspectors raided supplies Nucoffee, a part
of the agribusiness giant Syngenta, which sources beans from 4,000 farms and
helps producers sell abroad. Companies like Syngenta are the core of agricul-
tural globalization.

2.2 Vietnam (1,542,398 Metric Tons)

Coffee was introduced to Vietnam by the French in 1857. In the early twentieth
century production shifted from small farms to large plantations organized by
the French. Production suffered during the Vietnam War. After the war, all the
plantations came under national collective ownership, but production levels
continued to fall short of productive potential. The Vietnamese leadership
changed course and implemented a mixed economy of collective and small
farm private ownership (Wikipedia 2021c). The result was increased coffee
production, (though not immune from boom-and-bust cycles), that propelled
Vietnam to the second-largest coffee producer on the planet. One reason is the
inexpensive cost of labor when compared to other coffee producing compa-
nies in the world market. The shift from a “Soviet”-style planned economy to a
socialist market economy provided the basis for growth in coffee production.
Within Vietnamese coffee production class differences do exist. The Kihn,
who operated smaller farms, speak Vietnamese and are from South China and
Vietnam. Ede farmers have larger parcels of land concentrated on the cen-
tral highlands, but produce less. The have a distinctly different culture and
language, a Malayo-Polynesian language (Vietnam Culture nd). Using fam-
ily labor and higher household dependencies is one contributing factor for
the differences.

2.3 Columbia (754,376 Metric Tons)

It is likely that Jesuit priests introduced coffee in Columbia about 1730. Given
this early introduction, Columbian coffee was not exported until the second
half of the nineteenth century, in the 1830-to-1840-time frame. Around 1933,
the Pan-American Coffee Bureau was agreed on by all participating national
organizations. Its main purpose was to curtail overproduction. Of course, the
body had to come to an agreement in Washington with the Inter-American
Agreement to establish production quotas. After some disastrous liberaliza-
tion policies in the 1950s, the United Nations organized the International

Perspectives on Global Development and Technology 20 (2021) 558–567

Coffee in the Global Economy 561

Coffee Agreement. The charter included forty-two exporting countries and

twenty-five importing countries.
The objectives of the 1962 agreement are:
– Reach a balance of supply-and-demand, meaning adequate supply of coffee
to consumer nations and equitable prices for producers.
– Eliminate onerous surpluses and excessive fluctuations. Promote higher
wages, better working conditions, and a better standard of living in produc-
ing countries.
– Stimulate international cooperation with respect to coffee issues.
In 2001, Vietnam replaced Columbia as the second-largest coffee producing
nation on the planet. Currently coffee in Colombia is produced by small farms
operated by 500,000 families (Wikipedia 2021d). In 2013 there was strike by
the growers that blocked the roads to five major cities. Subsequently a strug-
gle ensued between the growers and Escuadrón Móvil Antidisturbios, or the
national disturbance police. The strikers claimed that the government ignored
farmers’ requests for support during an economic downturn. The debate con-
tinues to rage in Columbia over the neo-liberal actions of current government
coffee support organizations. Clearly the small growers remain an underclass
to those who control the channels to the global market (Cuéllar 2013).

2.4 Indonesia (668,677 Metric Tons)

The first shipment of seedlings was sent to Indonesia in 1699. Then in 1711, the
first exports were sent from Java to Europe by the Dutch East India Company,
reaching 2000 pounds shipped in 1717. Indonesia was the first place outside
of Arabia and Ethiopia where coffee was widely cultivated (Wikipedia 2021e).
The Dutch East India Company, officially the United East India Company
(Vereenigde Oost Indische Compagnie or VOC), was a mega-corporation
founded by a government-directed consolidation of several rival Dutch trad-
ing companies in the early seventeenth century. It is believed to be the largest
company to ever have existed in recorded history (Wikipedia 2021f). The VOC
was dissolved in 1799 with the Dutch government taking all assets. What fol-
lowed in 1800 in Indonesia was a corrupt and particularly oppressive system
where the crops were taken to government warehouses. This system was
named Cultivation System. Under this system, 20 percent of all controlled
crops were required to be deposited in a government warehouse. From 1800 to
1840, Indonesian had the largest global coffee production. This monopoly was
eclipsed by Brazilian production after 1840.
It is important to note that the Dutch public became aware of the Cultivation
System in 1860. Eduard Douwes Dekker, pen name Multatuli, wrote Max
Havelaar; or, The Coffee Auctions of the Dutch Trading Company, exposing the

Perspectives on Global Development and Technology 20 (2021) 558–567

562 Redden

oppressive system and colonialism in general. One of the first Fair Trade orga-
nizations adopted the name Max Havelaar.
After independence in 1950, all the coffee plantations in Java were
nationalized. A number of additional growing regions now dominate the pro-
duction of Indonesia with the historical Java region only producing a small
percentage of the crop. Coffee is often grown as a forest margin crop, and in
January 2007 the World Wide Fund for Nature (WWF), reported that land was
illegally cleared for coffee farming in Bukit Barisan Selatan National Park on
the island of Sumatra. The protected park is home to endangered tigers, ele-
phants, and rhinos, and WWF predicts that these species will be extinct in a
decade should the clearing and farming continue. These claims were further
supported by the use of remote sensing imagery in the region. WWF states that
the illegal coffee is sold to Western companies such as Nestlé and Kraft Foods.
Creating a direct relationship between the small coffee farmer and buyer,
usually a small coffee company in one of the consuming countries, has gained
some notoriety in recent years. To what degree the one-to-one relationship
helps the farmer is subsequent to questions. To what degree locally organized
cooperatives that operate in this mode are an assistance to farmers is also
in question. We could generalize these observations to other coffee growing
regions outside of Indonesia that attempt a similar relationship (Daily Coffee
News Staff 2020). As it stands currently, small farmers have little bargaining
power in the global coffee industry.

2.5 Honduras (475,042 Metric Tons)

Coffee was introduced to Honduras by traders in the eighteenth century. Up
until a few decades ago, it was produced only by a few growers with small
farms. A deliberate top-down change from bananas and raw commodities
to selling coffee to consumer nations after World War II were the conditions
that caused the tremendous increase in Central American coffee exports. In
Honduras, a well-organized movement led by a growing number of coffee
farmers that dominated the rural areas produced riots in the streets from 2000
to 2004. The social and economic prominence of coffee was strong enough to
pressure the government into moving the support structure and services dedi-
cated to coffee from public to private control (Sevilla-Palma et al. nd). Thus
40 percent of Honduran coffee is in the public sector and 60 percent in the
private sector.

2.6 Ethiopia (471,247 Metric Tons)

The coffee plant Arabica originates in Ethiopia. According to legend, a ninth-
century goat herder in the region of Keffa discovered the coffee plant after

Perspectives on Global Development and Technology 20 (2021) 558–567

Coffee in the Global Economy 563

noticing the energizing effect the plant had on his flock, but the story did not
appear in writing until 1671. The Tea and Coffee Authority, part of the federal
government, handles anything related to coffee and tea, such as fixing the price
at which the washing stations buy coffee from the farmers. This is a legacy
from a nationalization scheme set in action by the previous regime that turned
over all the washing stations to farmers cooperatives. The domestic market is
heavily regulated through licenses with the goal of avoiding market concentra-
tion. In global markets, Ethiopia’s Arabica coffee is valued for its unique taste.
Ninety-five percent of the country’s coffee is cultivated by an estimated four
million primarily small and often poor, farming households (Minten 2017).

2.7 Peru (346,466 Metric Tons)

Coffee was introduced to Peru after 1700. Most of the coffee growers are indig-
enous and do not speak Spanish. The average indigenous farmer works a farm
that is five to eight acres (two to three hectares). These farms typically do not
have electricity nor running water through plumbing (Equal Exchange nd).
The Agricultural Ministry has centralized coffee distribution allowing access
to the global market. Peruvian coffee is often sought after by small shops in the
consuming countries that sell specialty coffees.

2.8 India (234,000 Metric Tons)

Coffee was introduced to India in the seventeenth century. The coffees
seeds originated from Mecca. It grows almost entirely in the southern states.
Historically Indian coffee was controlled by the Coffee Board of India. A liber-
alization policy shifted the organization into the private sector domain. The
vast number of coffee growers have farms equal to 25 acres (ten hectares) or
less (Wikipedia 2021g). In 1996 India coffee went through neoliberal changes
allowing small Indian growers to access entire global marketing, but with a loss
of quality due to focus on production.

3 Hawai’ian Coffee

The once independent Kingdom of Hawai`i is the only coffee-producing area

in the geo-political United States. It is likely that coffee first was introduced in
1825, via Brazil. It was first introduced to Oahu and then found its way to all
eight Hawai`ian islands. In 1892 high-quality “typica” arrived from Guatemala.
This became the favored strain, especially in the Kona district of Hawai`i island,
the big island. By 2010, the Hawai`ian islands produced about four percent of
the green beans when compared to total global production (Steiman 2013).

Perspectives on Global Development and Technology 20 (2021) 558–567

564 Redden

Currently coffee is produced on all eight Hawai`ian islands, with a predomi-

nance of the Kona district followed by the Ka`u district. There is a relative high
standard of living of Hawai`ian farmers when compared to coffee farmers in
the other regions of global coffee production. Consuming organizations often
complain that Hawai`ian, and particularly Kona, coffee is overvalued in price.
I would argue that the coffee in the rest of the global coffee growing regions is
undervalued in price.
Currently within the Kona region, there are two distinct classes of coffee pro-
ducers. The small independent farmers align with Kona Farmers Association
and the larger farmers with corporate ties align with the Kona Coffee Council.
The initial conflict between the two organizations centered around coffee
labeling. The large farms in the Kona Coffee Council supported a label that
stated “A Kona Coffee Blend, 10% Kona Coffee.” Where the blend came from
is never declared. In 2018, an additional source of conflict presented itself.
Atlanta-based Domain Capital Advisors, with US$4.1 billion in capital acting
as Kona Hills LLC, set up the largest farm in Kona on 1900 acres of land. The
company was able to have an exemption from the Hawai`ian Department of
Agriculture with the ability to import 1.5 million In-Vitro coffee plants from
Costa Rica (Dible 2018). This type of subterfuge is typical of what large capital
can do to all the growing regions.

4 International Coffee Agreement

The International Coffee Agreement was initiated in 1962, but wasn’t effective
until 1968. Initially it stifled the Brazilian monopoly, but later pursued deregu-
lation and sponsored various types of support and cooperation. The council
operates under the auspices of the United Nations. The agreement attempted
to establish quotas based on price and production. The International Coffee
Organization (Wikipedia 2021b) describes their objectives: “the ICO is dedi-
cated to strengthening the global coffee sector and promoting its expansion
in a market-based environment” (ICO 2021). Clearly the ICO is the primary
organization for commodity globalization with respect to coffee products. The
economic clout within the organization lies with the EU and the US, who pay
the biggest shares of the ICO budget. Growers are represented at ICO meetings
by government officials from Ministries of Agriculture or Trade, thus guaran-
teeing oligarchical control. The US withdrew from the council in 2018 due to
presidential policies at that time.
It should be noted that the trend in recent political and economic history
has tended to strip away controls that safeguard a range of systems including

Perspectives on Global Development and Technology 20 (2021) 558–567

Coffee in the Global Economy 565

coffee. Neo-liberal ideology has wreaked havoc in the global market. After the
2008 collapse, Alan Greenspan professed himself to be in a state-of “shocked
disbelief,” because the “whole intellectual edifice” had collapsed (Baker 2013).
I find that the division of the producing bloc and the consuming block not
only divided by economic class but also by ethnicity or race. The producing
bloc consists mostly of peoples of color.

5 Fair Trade

Fair Trade is a system of coffee contracts that provides a guaranteed minimum

price regardless of the movement of global markets. In addition to this primary
goal, Fair Trade supports a comprehensive approach to sustainability, access
to credit and community development, like access to education, health care,
clean water, and micro loans (Rice 2013). In reality, coffee harvesting is almost
always seasonal. Usually there is a period of several months where the coffee
farmer has little or no income. Fair Trade certification is not always helpful in
this situation. Impoverished coffee farmers often turn to their local coopera-
tives or support organizations for help (Peyser 2013).
There are critical responses to Fair Trade and what it does. Does the cost of
Fair-Trade certification supersede growers’ economic benefit? There are lower-
quality beans in each harvest, and there is a tendency to dump deficient beans
into Fair Trade channels. Fair Trade exports from the poorest coffee-growing
countries in Africa are a fraction of other more successful producing nations
(Wydick 2014/2016).
My own perception is that Fair Trade and organizations like it should be
examined with a critical eye, but not discounted. It is an attempt to control the
dominant interests of capital in the global coffee market.

6 Some Progressive Responses

– Pay attention to the Rain Forest Alliance in Brazil as it attempts to certify

farms that pay expected wages, and foster humane working conditions and
other organizations doing similar work.
– Consider the Women’s International Coffee Alliance as a positive global
force.
– Consider Fair Trade with a critical view, but as an attempt to counter the
worst excesses of large national and global capital during coffee exchange.

Perspectives on Global Development and Technology 20 (2021) 558–567

566 Redden

References

Baker, Peter S. 2013. “Coffee as a Global System.” Pp. 26–29 in Coffee: A Comprehensive
Guide to the Bean, the Beverage, and the Industry. Edited by Robert W. Thurston,
Jonathan Morris, and Shawn Steiman. NY: Rowman & Littlefield Publishers.
Casa Brasil. nd. “The History of Coffee in Brazil.” Casabrasilcoffees.com. (https://www
.casabrasilcoffees.com/coffee-history).
Cuéllar, Luis Alberto. 2013. “Columbia.” Pp. 146–152 in Coffee: A Comprehensive Guide
to the Bean, the Beverage, and the Industry. Edited by Robert W. Thurston, Jonathan
Morris, and Shawn Steiman. NY: Rowman & Littlefield Publishers.
Daily Coffee News Staff. 2020. “Nine Myths About Coffee Farmer Development:
Relationship Coffee in Indonesia.” Dailycoffeenews.com, July 1. (https://dailycof
feenews.com/2020/07/01/nine-myths-about-coffee-farmer-development-relation
ship-coffee-in-indonesia/).
Dible, Max. 2018. “Controversy brewing in the Coffee Belt.” Hawaii Tribune Herald,
February 19. (https://www.hawaiitribune-herald.com/2018/02/19/hawaii-news/con
troversy-brewing-in-the-coffee-belt/).
Douwes Dekker, Eduard (Multatuli). 1860. Max Havelaar; or, The Coffee Auctions of the
Dutch Trading Company. Netherlands.
Equal Exchange. nd. “History of Coffee in Peru.” Equalexchange.coop. (https://equalex
change.coop/history-of-coffee-in-peru).
Farrer’s Tea & Coffee Merchants. 2019. “Top 10 Coffee Producing Countries around the
World.” Farrerscoffee.co.uk, December 6. (https://farrerscoffee.co.uk/blogs/blog
/top-10-coffee-producing-countries-around-the-world).
International Coffee Organization (ICO). 2021. ICO.org. (https://ico.org/).
Minten, Bart. 2017. “Ethiopia’s coffee farmers struggle to realize benefits from inter-
national markets.” International Food Policy Research Institute (IFPRI). (https://
www.ifpri.org/blog/ethiopias-coffee-farmers-struggle-realize-benefits-interna
tional-markets).
Morris, Jonathan and Robert W. Thurston. 2013. “Coffee, a Condensed History.” Pp. 215–
225 in Coffee: A Comprehensive Guide to the Bean, the Beverage, and the Industry.
Edited by Robert W. Thurston, Jonathan Morris, and Shawn Steiman. NY: Rowman
& Littlefield Publishers.
Peyser, Rick. 2013. “Hunger in the Coffee Lands.” Pp. 86–91 in Coffee: A Comprehensive
Guide to the Bean, the Beverage, and the Industry. Edited by Robert W. Thurston,
Jonathan Morris, and Shawn Steiman. NY: Rowman & Littlefield Publishers.
Rice, Paul. 2013. “Fair Trade, Still a Big Plus for Farmers and Workers around the World.”
Pp. 128–132 in Coffee: A Comprehensive Guide to the Bean, the Beverage, and the

Perspectives on Global Development and Technology 20 (2021) 558–567

Coffee in the Global Economy 567

Industry. Edited by Robert W. Thurston, Jonathan Morris, and Shawn Steiman. NY:
Rowman & Littlefield Publishers.
Sevilla-Palma, Joel Ulises, Carmen Peligros-Espada, and Octavio Uña-Juarez. nd.
“Coffee, Quality and Origin within a Developing Economy: Recent Findings from the
Coffee Production of Honduras.” (https://www.academia.edu/14851029/Coffee_Qua
lity_and_Origin_within_a_Developing_Economy_Recent_Findings_from_the_
Coffee_Production_of_Honduras).
Stieman, Shawn. 2013. “Hawai`i.” Pp. 133–136 in Coffee: A Comprehensive Guide to the
Bean, the Beverage, and the Industry. Edited by Robert W. Thurston, Jonathan Morris,
and Shawn Steiman. NY: Rowman & Littlefield Publishers.
Teixeira, Fabio. 2019. “Picked by slaves: coffee crisis brews in Brazil.” Reuters.com,
December 12. (https://www.reuters.com/article/us-brazil-coffee-slavery/picked-by
-slaves-coffee-crisis-brews-in-brazil-idUSKBN1YG13E).
Vietnam Culture. nd. “The Ede Ethnic Group.” Vietnam-culture.com. (https://www
.vietnam-culture.com/anak-ede-ethnic-group.aspx).
Wikipedia. 2021a. “History of Coffee.” (https://en.wikipedia.org/wiki/History_of_coffee).
Wikipedia. 2021b. “International Coffee Organization.” (https://en.wikipedia.org/wiki/
International_Coffee_Organization).
Wikipedia. 2021c. “Coffee production in Vietnam.” (https://en.wikipedia.org/wiki
/Coffee_production_in_Vietnam).
Wikipedia. 2021d. “Coffee production in Colombia.” (https://en.wikipedia.org/wiki
/Coffee_production_in_Colombia).
Wikipedia. 2021e. “Coffee production in Indonesia.” (https://en.wikipedia.org/wiki
/Coffee_production_in_Indonesia).
Wikipedia. 2021f. “Dutch East India Company.” https://en.wikipedia.org/wiki
/Dutch_East_India_Company).
Wikipedia. 2021g. “Coffee production in India.” (https://en.wikipedia.org/wiki
/Coffee_production_in_India).
Wydick, Bruce. 2014/2016. “10 Reasons Fair-Trade Coffee Doesn’t Work.” HuffPost,
August 7/January 28. (https://www.huffpost.com/entry/10-reasons-fair-trade
-coffee-doesnt-work_b_5651663).

Perspectives on Global Development and Technology 20 (2021) 558–567