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Black Gold Coffee – Ethics in the Coffee Industry the Impact of the Cash Crop on Countries of the South Vs

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Black Gold Coffee – Ethics in the Coffee Industry the Impact of the Cash Crop on Countries of the South Vs Kathrin Brunner Black Gold Coffee – Ethics in the Coffee Industry The Impact of the Cash Crop on Countries of the South vs. Increasing Ethical Awareness of Northern Roasters and Consumers in terms of CSR, Coffee Certification and Direct Trade Master’s Thesis To be awarded the degree of Master of Arts in Global Studies at the University of Graz, Austria Supervised by Univ.-Prof. Dr. Leopold Neuhold Department of Ethics and Social Studies Graz, May 2016 Master’s Thesis Brunner Author´s Declaration Unless otherwise indicated in the text or references, or acknowledged above, this thesis is entirely the product of my own scholarly work. Any inaccuracies of fact or faults in reasoning are my own and accordingly I take full responsibility. This thesis has not been submitted either in whole or part, for a degree at this or any other university or institution. This is to certify that the printed version is equivalent to the submitted electronic one. Date: Signature: I Master’s Thesis Brunner Acknowledgements I would like to express my sincere appreciation to all the people who supported me over the course of my studies and who contributed to the completion of this thesis. First, I would like to thank my thesis advisor Prof. Leopold Neuhold of the Department of Ethics and Social Studies at the University of Graz. The door to his office was always open whenever I had a question about my research or writing and I am very grateful for his input. In addition, assistance provided by Prof. Bernhard Ungericht and Prof. Peter Teibenbacher during the final steps of the Global Studies program, was highly appreciated. Further, I would like to express my great appreciation to Eva Haberler and Harald Fischer of Tribeka, who have inspired the topic of this thesis and contributed valuable information to my case study. They have turned my student job as a barista into a thoroughly enjoyable experience. Special thanks also go to Ulrich Salamun of Biosfair in Nicaragua, for his participation and expert opinion in this research project. Finally, my profound gratitude goes to my parents, for their unfailing support and patience throughout my years of study, to my boyfriend, Steven, for his continuous encouragement and last but not least to my brother, Christoph, whose glass is always half full, Namaste! Kathrin Brunner II Master’s Thesis Brunner Table of Contents 1. Introduction ........................................................................................................................ 1 2. Coffee as a commodity ....................................................................................................... 6 2.1 The origins and the diffusion of coffee ....................................................................... 6 2.2 Coffee production in the era of colonialism ................................................................ 8 2.3 Coffee and Brazil ....................................................................................................... 10 2.4 Coffee in the 20th century .......................................................................................... 13 2.4.1 Early crises and price manipulation ................................................................... 13 2.4.2 The ICO, ICAs and coffee politics ..................................................................... 16 2.4.3 Market developments in the second half of the 20th century .............................. 21 2.4.3.1 Specialty coffee and the Starbucks revolution ............................................ 22 2.4.4 The most recent coffee crisis .............................................................................. 24 2.4.4.1 The problems with volatility ....................................................................... 25 2.4.4.2 The coffee commodity chain....................................................................... 26 2.4.4.3 Small-scale farmer livelihood vulnerability ................................................ 27 2.4.5 From the 20th to the 21st century......................................................................... 29 2.5 The coffee economy in terms of Development Theories .......................................... 29 2.5.1 A short note on definitions ................................................................................. 30 2.5.2 From Modernization to Dependency Theories ................................................... 31 2.5.2.1 Terms of Trade and the Prebisch-Singer Hypothesis.................................. 33 2.5.2.2 World Systems Theory ............................................................................... 34 2.5.2.3 The theories’ implications for coffee economies ........................................ 35 3. Ethics in the coffee industry ............................................................................................. 36 3.1 Morals and ethics ....................................................................................................... 37 3.2 Ethics in economics and business .............................................................................. 37 3.2.1 Corporate social responsibility ........................................................................... 38 3.2.1.1 CSR in the coffee industry .......................................................................... 40 III Master’s Thesis Brunner 3.2.1.2 CSR and environmental ethics in the coffee sector .................................... 42 3.3 Ethical consumerism .................................................................................................. 43 3.3.1 Coffee certification and labelling ....................................................................... 44 3.3.1.1 Organic coffee ............................................................................................. 44 3.3.1.2 Fair Trade coffee ......................................................................................... 44 3.3.1.3 Eco-friendly or shade-grown coffee ........................................................... 45 3.3.1.4 Utz-Kapeh ................................................................................................... 45 3.3.2 The Fair Trade network ...................................................................................... 45 3.3.2.1 Fair Trade mainstreaming ........................................................................... 46 3.3.2.2 Criticism of Fair Trade coffee ..................................................................... 47 3.3.2.3 Ideological fantasies of Fair Trade coffee................................................... 49 3.3.2 Direct trade coffee .............................................................................................. 53 3.3.3.1 Third wave coffee ....................................................................................... 54 3.3.3.2 The Cup of Excellence ................................................................................ 56 4. Case study: An example of direct trade between Nicaragua and Austria ........................ 57 4.1 Historical overview .................................................................................................... 57 4.2 The coffee economy of Nicaragua ............................................................................. 58 4.3 Tribeka coffee shop and roaster ................................................................................. 62 4.3.1 The roaster’s point of view ................................................................................. 62 4.3.2 Employees’ experience ...................................................................................... 66 4.3.3 The customers’ opinion ...................................................................................... 67 4.4 Biosfair ...................................................................................................................... 68 5. Conclusion ........................................................................................................................ 73 References ................................................................................................................................ 77 List of Abbreviations ................................................................................................................ 85 List of Illustrations ................................................................................................................... 86 Appendix .................................................................................................................................. 88 IV Master’s Thesis Brunner 1. Introduction COFFEE – For many of us the first thing in the morning, for others an afternoon power boost, to some the most reliable companion throughout the day, to a few even an essence of life. It is likely, the readers as much as the writer of this thesis, enjoy coffee on a regular basis and every minute you flip through these pages some two million cups of coffee are consumed around the world (Kienreich & Schwarz 2008: 5). For centuries, many countries have been affected by coffee production and consumption, albeit in very different ways. Coffee as a crop, as well as in the cup, has had major effects on societies, their economies, cultures and histories. Not only is there “a world of history in your cup”, it is also “a palpable and long-standing manifestation of globalization (Topik & Clarence-Smith 2003:1)”. This paper will focus on the ethical aspects of today’s coffee industry, but to begin, I will
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