Sat, Jul 02, 2005 - Page 9 News List

For Africa, fair trade is better than debt relief

DPA , KIAMBU, KENYA

Rust spreads over Ludovick Karanja's blue truck, a 10-wheeler with its axles on cinder blocks, a rotting shrine to the heyday of Kenya's coffee industry.

"When times were good I bought a Land Rover and I bought that truck to haul my own coffee," said Karanja, 60, grey, unshaven. He earns just over US$500 a year in coffee beans, he said, down from a high of US$4,000 dollars about 20 years ago.

"Now, I can't afford the repairs on the truck, or even the gas once it's repaired," he said.

Like thousands of small-scale coffee farmers in Kenya and across eastern Africa, Karanja started growing coffee in the late 1960s, when coffee prices were relatively stable and high enough to allow many growers to build sprawling, cut-stone houses, buy new German-made cars, and enroll their children in private schools and send them to colleges in Europe and the US.

These days, most African coffee farmers teeter on the edge of poverty, even as Western coffee processors and specialty outlets like Starbucks rake in about 90 percent of the US$70-billion-dollar-a-year industry, according to some industry analysts. The most profitable end of the value chain seems beyond the reach of most African farmers.

That's an aspect of global trade that many Africans want addressed by the leaders of the world's richest nations at the upcoming G8 summit in Scotland. Already, G8 leaders won praise in Africa for supporting a US$40 billion plan to cancel the debt for 14 of Africa's poorest countries.

In the weeks leading up to the three-day summit that begins on Wednesday, African leaders urged G8 countries to cancel all of Africa's debt, saying that governments across the continent were overburdened by debts accumulated by inept leaders and corrupt regimes that have long been voted out or overthrown.

Still, Africans hope G8 leaders address what many here perceive as a trade injustice: Western companies reaping huge profits from Africa's raw material, while, for the most part, limiting Africa's access to those markets.

"There's still this kind of colonial relationship that many countries have with Africa. They see Africa as a source of raw materials to be processed in the West," said Thomas Cargill, Africa program coordinator at the Royal Institute for International Affairs in London.

In almost any industry, the profit curve gets steeper at the consumer end. Kenyan coffee farmers earn less than ten cents a pound for unroasted coffee beans, but coffee wholesalers and retailers in the US -- after transporting, roasting, grinding and packaging -- sell those beans for about US$7 a pound.

"Why aren't we doing the roasting and packaging?" asked Cyprian Ipomai, a regional manager for Coffee Board of Kenya, which oversees the country's coffee production and marketing.

"Forgive us our debts or don't forgive us, it's fine either way. What we really need is to get at more of the links in the value chain so we can create the jobs and the wealth that come with that," he said.

Most Western markets levy higher tariffs on processed goods. Import tariffs for unprocessed coffee beans from Africa are about 1 percent, but the tariffs rise to about 10 percent if the beans are roasted.

"It's true that debt relief can sometimes make a difference when the money that's saved finds its way to the people and projects that need it most," Cargill said. "But the problem is that the benefit is more than cancelled out by the millions lost because of the unfair trade rules of rich countries."

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