Coffee, 1400-1800

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In This Essay:

Introduction
Ceylon and Brazil
Labor
The Twentieth Century
Approaching the Present

1. Coffee from 1800 to the Present

While coffee was widely cultivated, traded, and consumed by the end of the eighteenth century, the nineteenth century saw the true coffee boom, as prices dropped and coffee became a staple part of the diet of much of the world. Modern transportation insured that ever-larger quantities of coffee could be transported from producing regions, particularly Latin America, to consuming regions in the north. Simultaneously, earlier forms of forced labor (particularly slavery) eventually gave way to wage labor, although the latter was not always significantly less onerous than the former. Likewise, the twentieth century saw attempts to regulate the international coffee market to protect the livelihoods of producers eventually collapse, leading to a flood of cheap coffee and an overwhelming imbalance of profits between the financial and commercial nations of the north and the producing nations of the tropics.

In 1804, Napoleon Bonaparte crowned himself Emperor of France. He promptly set out to conquer Europe, for a few years controlling much of the (sub-)continent. Napoleonic France's greatest enemy was Britain, which dominated the seas after its conclusive naval victory at Trafalgar in 1805. Napoleon's response was to create the "continental system," in which the areas under French control were to strive for self-sufficiency, hoping to bankrupt Britain's overseas trading empire and providing for the needs of continental Europe in the meantime. The Napoleonic system had two long-term effects on coffee: since the amount of coffee reaching Europe dropped dramatically under the continental system, various substitutes were tried (the most successful of which was the chicory root, which makes a vaguely coffee-like beverage when boiled, if one ignores the fact that it tastes nothing like coffee and has no caffeine.) This somewhat altered long-term consumption patterns in Europe.

More importantly, the continental system encouraged coffee-producing nations, many of whom were gaining their independence in South America from Spain at the time, to look to the United States as their most likely major consumer. They were not disappointed. During the nineteenth century the US became the single largest consumer of coffee; by the end of the century it was importing 40% of the world's total amount of coffee, and it continues to be the single largest coffee importer. [1] As the American population grew, its thirst for coffee grew with it, and the proximity of Latin American coffee-producing nations helped insure that the long-term production and consumption pattern of southern coffee satisfying northern tastes was predicated on solid foundations.

A complex set of circumstances came together to make the nineteenth century the era of Latin American dominance in coffee production. First, the Haitian Revolution in 1791 spelled the end for Haitian coffee production, which had produced roughly half of all coffee exports immediately prior to the revolution. [2] The specter of a successful slave uprising, and the independent black nation that arose as a result, terrified the powers of Europe and the Americas and all refused to open official relations with Haiti until well after the revolution. While this doomed Haiti to economic backwardness, the gap left in the global coffee (and sugar) market allowed ample room for the emerging nations of Latin America to make tremendous gains in their respective shares. [3]

Second, in many areas (especially Brazil), planters aggressively seized land and introduced coffee cultivation. Virgin rainforest was converted into coffee plantations in South America, Africa, and Asia. In almost every case, the favored method was the slash-and-burn technique in which plots of virgin forest were cut down, burned on the spot (thus providing nutrients to the soil), and coffee was planted on the ashes. This provided high yields for the first few years, but had a deleterious long-term impact on the ecology of the forest and, ultimately, on coffee cultivation itself. As long as fresh virgin forest remained, however, coffee plantations could grow rapidly and yields remained high.

2. Two Examples: Ceylon and Brazil

Two areas illustrate this pattern of coffee development in the nineteenth century: Ceylon (present-day Sri Lanka) and Brazil. [4] The British had taken control of Ceylon in 1796 and, as European colonists did the world over, tried to cultivate foods already familiar to them rather than adapting to local cuisine. Coffee already grew wild in Ceylon thanks to earlier seedlings planted by either Arab or Dutch traders, but large-scale cultivation did not start until 1824. The Kandyan Highlands of Ceylon had long remained inaccessible to human settlement thanks to the thick forest and their remoteness. The British, however, impressed local villagers into service and began a long-term assault on the forest for the purpose of growing coffee. Large-scale cultivation began in 1824. After 1840, large numbers of impoverished laborers from southern India began to make the arduous journey from their homes, across the Palk Strait, and to the Kandyan highlands looking for work on the coffee plantations. Many died, and those that made it were paid a pittance. For several decades, coffee cultivation thrived.

The downfall of coffee in Ceylon, however, was ecological in nature. Once the British had forced their way through the rainforest to the Kandyan hills, they initiated a full-scale effort to convert the forest to plantations. Once the protective vegetation had been destroyed, the thin, nutrient-poor soil was extremely vulnerable to erosion, and the high winds that swept across the hills wreaked havoc on the coffee plants. The destruction of the forest ecosystem drove away or killed large predators, and rats thrived amongst the plantations as a result. The British overseers struggled to find methods that would hold the soil in place, provide windbreaks, and control pests even as they carved further into the remaining forest. By the 1880s, less than sixty years after the first coffee plantation in Ceylon, the forest was all but destroyed.

In the late 1860s, a fungal infection spread among the coffee plantations of Ceylon. Called "coffee rust" or "left rust," Hemileai Vastatrix infected the leaves of coffee plants and could quickly devastate entire plantations. [5] From Ceylon it spread rapidly to other coffee-producing regions in Asia and Africa but, interestingly, it did not spread to Latin America (a fact that had much to do with the consolidation of Latin American coffee dominance in the late nineteenth century.) Coffee rust destroyed a number of coffee economies, particularly that of Dutch-controlled Java; it was one of the major factors that saw Java's share in the global coffee market plummet after 1873. Meanwhile, the British in Ceylon struggled against the eroded soil, pests, and the coffee rust to keep coffee production going until the 1880s, but finally abandoned it when coffee prices plummeted on the world market. They then switched to the cultivation of tea.

Ceylon is an interesting context in which to consider coffee cultivation in the nineteenth century not only because it starkly demonstrates the ecological impact of coffee, but because the problems the British faced in Ceylon led them to establish the first modern scientific institutes explicitly devoted to studying agriculture in the tropics. After the switch had been made to tea, the British established the Gannaruwa Research Station in 1902, the first station to consider the medium-term and long-term impact of farming in tropical areas. It was perhaps the first initiative to conclude that slash-and-burn agriculture was ultimately detrimental to both the environment and, in the long-run, to agriculture itself. Likewise, it concluded that the rainforest itself helped maintain the natural balance of the area, and that for agriculture to succeed in the tropics the forest had to be treated as more than just a nuisance to be replaced with cultivated fields. Ceylon was thus the setting of some of the first "scientific" scholarship on the impact of human activity on the environment of the tropics.

Ceylonese coffee cultivation lasted for just over half of a century. Brazil, on the other hand, seized its position as the major coffee producer in the world and kept it. Indeed, it is difficult to overstate the importance of Brazilian coffee cultivation: Brazil was largely responsible for the explosion of affordable coffee in the nineteenth century that saw the shift from respectable sipping-drink to common chugging-drink. In a sense, Brazil's entire social structure came to center on coffee: coffee planters formed a powerful political bloc, coffee merchants became wealthy on exports, and the entire banking system was deeply enmeshed with the coffee industry.

Just as coffee was at the heart of the Brazilian economy (a fact that remained true until the late twentieth century when manufacturing finally surpassed its importance), slavery was at the heart of Brazilian coffee. Brazil was the single largest importer of slaves during the centuries of the trans-Atlantic slave trade. In turn, Brazil was the last nation in the world to abolish slavery within its borders (in 1881), a fact that can be explained in large part by the social and economic power wielded by coffee planters. As has been noted, the forms of labor by which coffee was cultivated varied considerably around the globe. Even within Latin America, there were many areas (Costa Rica and Mexico, for instance) that employed wage-labor and small farms to grow coffee, rather than relying on slavery. [6] In Brazil, however, the planting class was adamantly opposed to abolition, believing that slavery was the very condition of Brazil's continued existence. [7]

The combination of slave labor and the hitherto-untouched vast expanses of the Amazon rainforest allowed Brazil to seize preeminence among global coffee producing regions. From 1800 to 1850, the Imperial government of Brazil (which was technically the crown of Portugal; the king of Portugal had fled Napoleon and set up shop in Brazil) awarded land grants to anyone who would promise to cultivate crops. One of the conditions of land grants, however, was that the would-be cultivator had to have proof of owning enough slaves to work the land. [8] Land grants in the Amazon led to an explosion of both coffee-farming and land speculation. Previously virgin rainforest was rapidly converted into coffee plantations (even as the same process was taking place in Ceylon.) One of the important differences, of course, was that Brazil's potential coffee-growing areas were vastly largely than their equivalents in Ceylon, and Brazilian coffee production soon dominated global exports.

While it was almost exclusively Portuguese-descended Brazilians who owned and ran the coffee plantations, their coffee ultimately ended up enriching banks and trading companies based in London and New York. Even prosperous farmers were often deeply in debt, having staked their plantations and (until the end of the century) their slaves as collateral on loans. The banks that supplied these loans were, as often as not, owned and run from overseas. The planters lived harvest-to-harvest, a fact that led to widespread bankruptcy when harvests went badly. The banks, of course, were able to foreclose on the plantations in question and the coffee industry as a whole continued to grow despite fluctuations.

By the time Brazil finally abolished slavery in 1881, coffee had transformed the nation completely. Certain areas were already ecologically devastated: in the Parahyba Valley, for instance, what had been virgin forest a century before was reduced to barren hillsides covered in weeds, now given over to cattle pasture since they could no longer sustain coffee plants. This in turn drove coffee planters further into the jungle to carve out new plantations. As newly-freed slaves struggled to establish lives for themselves and their families, many became wage-laborers on the ever-growing plantations. At the same time, the Brazilian government (a Republic as of 1889) subsidized the immigration of large numbers of Europeans, primarily southern Italians, in order to insure a continuous supply of cheap labor for the coffee industry. [9]

3. Labor

The question of labor was always central to coffee production. The nineteenth century saw a slow and intermittent shift away from forms of outright forced labor to more subtle forms of coercion. Brazil was unique not only in having relied on slavery for as long as it did, but for its subsidization of immigration after the end of slavery, a factor that kept its massive coffee industry stable despite the radical shift that abolition brought about. Elsewhere, Javanese coffee production had been a particularly pernicious form of taxation in kind, a practice which continued even after Java had vanished as a major player in the coffee market (labor taxation was finally eliminated completely in Java in 1917.) [10] In Guatemala, meanwhile, a shortage of cheap labor led the state (which was controlled by coffee barons) to impose a labor law in 1877 which obligated Mayan villagers from the highlands to work on the coffee plantations for fixed times and fixed wages, a system that lasted until the early 1920s. [11] Finally, forced labor and other forms of quasi-slavery continued in West Africa (particularly Angola) until the 1940s.

Elsewhere, however, a longer-term labor pattern was coming about. Where slavery and labor laws had obliged people to work on coffee plantations, the global coffee system increasingly relied on a combination of state intervention and market forces to insure a steady supply of labor. Foreign-owned coffee buying concerns dictated the policies of many Latin American states, resisting efforts to allow organized labor and setting coffee prices as low as possible. Prices themselves were sensitive to natural forces (i.e. diseases, droughts, etc.) but, after the first coffee futures market was founded in New York City in 1883, they came to be dictated as much by price speculation as by the size and quality of the actual harvests. [12]

Likewise, by 1900 the emerging global coffee companies were almost all owned and operated by Europeans and Americans, which coffee-producing nations were forced to cater to. Essentially, debt forced coffee producers to sell their beans at the going rate as soon as they were harvested, no matter how successful or unsuccessful those harvests had been. Good years saw flooded markets and low prices, while bad years saw higher prices but poor yields. Either way, the bulk of the profit went to the coffee concerns run in New York, London, and Hamburg. Foreign firms not only owned and financed coffee production, but they monopolized coffee exportation and processing, the most technologically advanced and costly areas of the coffee economy (and thus the areas from which most of the profits were to be derived.)

4. The Twentieth Century

The history of coffee in the twentieth century was a struggle surrounding the price of coffee beans. Having been battered by price fluctuations since the 1880s, Brazil introduced a revolutionary "valorization" scheme in 1906, in which it deliberately kept a portion of its harvest off of the world market to keep prices at a certain level. This brought about howls of protest in consuming nations, especially the United States, which had long since latched on to free market ideology as the holy writ of economic relations. [13] Where low coffee prices were a matter of convenience for American and European consumers, they were a matter of life and death for Latin Americans. By 1912 coffee was over half of the total exports of Brazil, El Salvador, Guatemala, Haiti, Nicaragua, and Venezuela. Likewise, by 1913 fully 91% of all coffee produced in the world was Latin American. [14]

Thus, until World War II, the fundamental pattern of global coffee was Latin American production feeding American (and, to a lesser extent, European) consumption. Labor was kept in check (and thus prices were kept low) by an alliance between the foreign-owned transportation and processing concerns and local oligarchies of land-owning elites, who often held tremendous political power. It is important to emphasize that the exact circumstances of this process varied from nation to nation: Brazil's plantations were already huge, while Costa Rican farms remained small, for instance. Likewise, while the general pattern was that oligarchic coffee magnates controlled land and labor, their relationships with peasants and workers varied. Brazil instituted the valorization scheme at least in part to protect the livelihoods of workers, while in El Salvador coffee barons massacred communist-affiliated peasants who rose up in protest to the confiscation of their lands for coffee production in 1932. [15]

World War II and its aftermath brought about a few major changes in coffee. First, the massive consumption of coffee by soldiers in the war cemented the taste for cheap instant coffee in the US, creating a long-term market for low-quality beans at rock-bottom prices. This in turn allowed regions (such as the Ivory Coast in Africa) that could not grow large amounts of higher-quality arabica, but could grow robusta, to enter the world market. Second, the postwar colonial liberation movements, particularly in Africa and South Asia, ended the last vestiges of imperialist coffee ventures. European and American corporations continued to control the industry as a whole, but coffee production was no longer under the direct power of imperial governments. Finally, the Cold War realigned global politics in such a way that western powers, primarily the US, had an active interest in maintaining capitalistic (though certainly not always democratic) governments throughout the world. This, in turn, saw the growth of a limited consensus between coffee-producing and coffee-consuming nations that set prices to prevent the more severe economic cycles of the "pure" free market from destabilizing the economies of producers.

The most important event in the global coffee economy that arose in the Cold War context was the signing of the International Coffee Agreement in 1962. The ICA was an international accord between producing and consuming nations that regulated the amount of coffee sold on the international market (it was inspired by the Brazilian valorization scheme, which had continued in different forms since its inception in 1906.) Quotas were set which were meant to fix supply to demand and thereby regulate prices in order to prevent the kind of major price fluctuations that had wreaked havoc on the economies of coffee-producing countries in the past. The ICA was a strategic decision on the part of western nations in response to the Cold War: the United States in particular was concerned that economic crises in third-world nations could result in the growth of international communism. Thus, to prevent the possibility of a coffee-based crisis feeding into an upsurge in leftist politics, the US (which represented more than half of the total coffee consumption in the world at the time) supported the agreement. [16]

Patterns of production and consumption throughout the Cold War period were similar to those of the early twentieth century, with the exception that the US frequently intervened should a communist (or even left-leaning) leadership come to power in a "third world" nation. In the civil wars in Honduras, El Salvador, and Guatemala in the 1980s, US-trained death squads wreaked havoc. Coffee oligarchs usually supported the right-wing dictatorships that faced leftist opposition, but even the most powerful planters were often simply trapped between warring sides, trying to bring in their harvests and keep their farms from being destroyed or seized. Likewise, even when leftist regimes did come to power (despite American intervention), the plight of coffee producers was not always improved. When the leftist Sandinistas seized power in Nicaragua in 1979, they nationalized coffee production, but paid producers only a small percentage of profits and proved utterly incompetent at maintaining the coffee plantations themselves. [17]

5. Approaching the Present: Neo-Liberal Economic Policy

In 1989, the Berlin Wall fell, a symbolic event which is often thought to have spelled the beginning of the end of the Cold War. Not coincidentally, the US withdrew its support from the ICA a few months later. While revised versions of the ICA are still technically in effect, the withdrawal of the major coffee consuming nation in the world has undermined its effectiveness. Prices of coffee dropped rapidly in 1989, driving huge numbers of coffee farmers into desperate circumstances and often forcing them off of the land entirely.

The US's withdrawal from the ICA was symptomatic of global economic changes in the post-Cold War era, changes which had a profound impact on the coffee trade. Without the threat of communism to balance the need for profits with the need for social welfare, US-led global economic organizations like the International Monetary Fund (IMF) and the World Bank became increasingly stringent in enforcing free market-based ("neo-liberal") policies. Typically, the IMF and World Bank would provide loans to developing nations to build up infrastructure on the condition that social services and any kind of price-stabilizing policies were abandoned and that the commodities would be sold directly on the world market with a minimum of taxes and tariffs.

The effects of neo-liberal economic policies are easy to discern in the case of Vietnam. In the early 1990s, Vietnamese farmers received large numbers of loans to start coffee cultivation (although Vietnam had been producing coffee since the 1920s, it was not until the 1990s that it did so on a large scale.) [18] In order to repay those loans, they were forced to sell their coffee on the world market as soon as possible. The flood of cheap Vietnamese coffee drove international prices sharply down, provoking crises in other coffee-producing countries. Meanwhile, Vietnamese farmers found themselves locked into a cycle of debt: interest rates on their loans forced them to produce as much coffee as possible, while there was little possibility of ever paying the loans in full. Meanwhile, already China shows signs of entering the world coffee producing market; if it does, prices will be forced down even further and Vietnam will probably join the ranks of impoverished coffee-producing nations as the market is further glutted with overproduction. [19]

Meanwhile, some efforts were made starting in the 1990s to introduce more sustainable models for coffee production. "Fair Trade" coffee is produced by farmers (largely in Central America) who own the land they work, sometimes communally with their neighbors, and are paid a guaranteed minimum price per pound. Currently, most Fair Trade coffee is sold in Europe, although there is also a significant market in the United States. Fair Trade coffee is, however, only a tiny percentage of the total coffee produced in the world; the vast majority of coffee is produced according to (internationally enforced) free-market principles and most coffee farmers themselves are wage laborers working for large plantations. [20]

6. Conclusion

Today, coffee consumption has stabilized overall; despite the explosion of specialty coffee shops (such as Starbucks), actual per capita consumption of coffee has not grown significantly world-wide. With consumption stable, every new region to entry coffee cultivation drives prices down further. Thanks in large-part to the decline of the ICA, the percentage of profits going to coffee-producing nations has dropped from 40% in 1991 to 13% in 2004, since transportation, processing, and commercial markups remain in the hands of American and European corporations. [21] Free Trade coffee is one of the only efforts within the coffee economy that tries to maintain a minimum price per pound and thus to allow the possibility of a living wage for coffee producers. [22] Thus, despite the vast changes brought about by the modern revolution, the fundamental patterns of the global coffee trade have remained consistent since the end of the Yemeni coffee monopoly at the close of the seventeenth century: interests in the temperate zones of the north control the coffee trade while tropical producers cater to their interests.