The value of About this free course This free course is an adapted extract from the Open University course DD103 Investigating the social world www.open.ac.uk/courses/modules/dd103. This version of the content may include video, images and interactive content that may not be optimised for your device. You can experience this free course as it was originally designed on OpenLearn, the home of free learning from The Open University: www.open.edu/openlearn/people-politics-law/the-value-coffee/content-section-0. There you’ll also be able to track your progress via your activity record, which you can use to demonstrate your learning. Copyright © 2019 The Open University Intellectual property Unless otherwise stated, this resource is released under the terms of the Creative Commons Licence v4.0 http://creativecommons.org/licenses/by-nc-sa/4.0/deed.en_GB. Within that The Open University interprets this licence in the following way: www.open.edu/openlearn/about-openlearn/frequently-asked-questions-on-openlearn. Copyright and rights falling outside the terms of the Creative Commons Licence are retained or controlled by The Open University. Please read the full text before using any of the content. We believe the primary barrier to accessing high-quality educational experiences is cost, which is why we aim to publish as much free content as possible under an open licence. If it proves difficult to release content under our preferred Creative Commons licence (e.g. because we can’t afford or gain the clearances or find suitable alternatives), we will still release the materials for free under a personal end- user licence. This is because the learning experience will always be the same high quality offering and that should always be seen as positive – even if at times the licensing is different to Creative Commons. When using the content you must attribute us (The Open University) (the OU) and any identified author in accordance with the terms of the Creative Commons Licence. The Acknowledgements section is used to list, amongst other things, third party (Proprietary), licensed content which is not subject to Creative Commons licensing. Proprietary content must be used (retained) intact and in context to the content at all times. The Acknowledgements section is also used to bring to your attention any other Special Restrictions which may apply to the content. For example there may be times when the Creative Commons Non- Commercial Sharealike licence does not apply to any of the content even if owned by us (The Open University). In these instances, unless stated otherwise, the content may be used for personal and non- commercial use. We have also identified as Proprietary other material included in the content which is not subject to Creative Commons Licence. These are OU logos, trading names and may extend to certain photographic and video images and sound recordings and any other material as may be brought to your attention. Unauthorised use of any of the content may constitute a breach of the terms and conditions and/or intellectual property laws. We reserve the right to alter, amend or bring to an end any terms and conditions provided here without notice. All rights falling outside the terms of the Creative Commons licence are retained or controlled by The Open University. Head of Intellectual Property, The Open University

2 of 19 http://www.open.edu/openlearn/people-politics-law/the-value-coffee/content-section-0 Monday 25 November 2019 Contents Introduction 4 Learning Outcomes 5 1 Investigating money and coffee 6 2 The Coffee Quiz 8 3 Coffee, money and debt 10 4 Cultures of coffee consumption 13 5 Comparing cultures of coffee consumption 15 Conclusion 18 References 18 Acknowledgements 18

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Introduction

In this free course, The value of coffee, you will explore the economic and cultural value of coffee. Coffee is a luxury commodity, with millions of people depending on the money that it generates for their livelihoods. It is estimated that the global economic value of coffee amounts to around $173 billion per annum (ICC, 2014), but those who grow coffee are some of the most disadvantaged in the world. Coffee is the most popular drink worldwide, yet how cultures of coffee consumption have developed differently over time reveals important insights into how and why this drink is valued as it is. In this short course, you will think about the chain of processes that connect the drink you enjoy on a daily basis with circuits of economic and cultural value. You will begin your study by exploring the breakdown of the price of a cup of coffee and will have the chance to reflect on the fairness of this distribution. You will then complete a short quiz that highlights the importance of coffee to different countries in the world. You then watch a short film that explores the relationship between coffee and money and consider whether the price you pay in a coffee shop is sufficient. In the second short film, you learn about the differences between coffee consumption in Italy and the UK and are given the chance to compare and contrast why these coffee cultures developed in such different ways. This OpenLearn course is an adapted extract from the Open University course DD103 Investigating the social world.

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After studying this course, you should be able to: ● understand how coffee prices impact upon coffee farmers’ livelihoods ● explain the complex relationship between coffee and money ● compare and contrast the key differences between coffee consumption in Italy and the UK ● understand that it is the interplay of historical, economic, social and technological factors that shapes the of a country ● recognise that practices of and consumption have an impact on relations between and within countries across the globe. 1 Investigating money and coffee

1 Investigating money and coffee

The trade of coffee across the globe is made possible because of the exchange of money. There are a number of stages in the process of transforming a coffee seed into the roasted beans that are brewed to make your daily cup. At each stage, money changes hands so that the final price of a cup of coffee in a coffee shop represents much more than just the cost of the raw .

Figure 1 A breakdown of the costs that make up your cup of coffee Figure 1 reveals the breakdown of costs within a £2.20 cup of coffee. Study this figure and answer the questions below.

Activity 1 About 15 minutes

Question 1 The coffee farmer receives 8 pence for every £2.20 cup of coffee sold: true or false?

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Answer False The farmer who plants, cultivates and picks the coffee receives only a share of the 8 pence portion for the coffee. That portion must be split between coffee roasters, importers, exporters, haulage companies and farmers, all of whom hope to make the business of exchanging coffee a profitable venture. It is not always easy for everyone in the coffee chain to secure a fair share.

Question 2 Shop rents, retail taxes and staffing costs account for the majority of the cost of a £2.20 cup of coffee: true or false?

Answer True The figure reveals that shop rents, retail taxes and staffing costs account for about £1.58, or 72%, of a £2.20 cup of coffee.

Question 3 Do you think it is fair that the coffee shop makes 30 pence profit on each cup of coffee, whilst the farmer shares a percentage of the 8 pence portion?

Provide your answer...

Answer To answer this question, it is necessary to think about how to judge what is fair. The notion of justice is often contested because what seems fair for one person or society may not be considered fair if we take into account the needs or experiences of another person or society. In this case, it could be argued that because the raw coffee bean must be processed, transported, stored, roasted, brewed and poured by a skilled before it can be consumed, it does not seem unfair that the farmer only receives a small percentage of the value of the bean. The raw coffee bean is very different from the roasted blend that ends up in your , and incurs a number of costs along the distribution chain that the farmer has not borne. However, if the situation is looked at from a different perspective, the answer to the question is different. If the coffee farmer is unable to make enough money from the sale of his beans to support his basic needs and the needs of his family, while those higher up the coffee chain make a large profit from his labour, it could be argued that the situation is unfair. There are no right or wrong answers to the question and your values and experiences will likely shape how you think about this.

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2 The Coffee Quiz

Before you watch the first series of videos exploring the relationship between coffee and money, have a go at this short quiz to test your knowledge of the coffee industry. Don’t worry if you don’t select the correct answers first time; the purpose of the activity is to get you thinking about and questioning the economic and cultural value of coffee.

Activity 2 About 20 minutes Please select correct answer from the options provided:

Question 1 Which country is the largest producer of coffee in the world? o Ethiopia No, this answer is not correct. Ethiopia is thought to be the ‘birthplace of coffee’ but the majority of farms producing coffee are small and therefore their production is limited. o China No, this answer is not correct. China has long been associated with tea production but in recent years Yunnan province, in the South of China, has started to grow coffee with the help of the multinational company, Nestlé. o Brazil Yes, you are correct. Brazil has been the world’s largest producer of coffee since 1890. They produce both Arabica (high-quality) and Robusta (lower quality) on large plantations that cover many hectares. Unlike many other coffee producing regions, they have embraced technological methods of cultivating and processing coffees. o Italy No, this answer is not correct. Although Italy is well-known for their distinctive style of roasted coffee, they do not grow coffee themselves.

Question 2 In which country does coffee does coffee account for nearly 60% of total export earnings? o Burundi Yes, this answer is correct. Coffee exports accounted for 58% of total export earnings in 2012, making Burundi the country most dependent on coffee. o Timor-Leste No, this answer is not correct. Coffee used to be the major export for this small island, accounting for over 70% of its export earnings in 2008, but following the discovery of oil on the island, coffee accounted for just 16% in 2012.

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Question 3 If you were to break down the number of grams of coffee drunk by each member of the population in a year, which country in the world would have the highest per capita level of coffee consumption? o Brazil No, this answer is not correct. Although, Brazilians do drink a lot of the coffee that they produce, the average per capita consumption figure is 6.02 kg/per year. o Finland Yes, this answer is correct. The Finns consume a whopping 12.17 kg of coffee per capita per year. o UK No, this answer is not correct. As a nation of tea-drinkers, the average person in the UK gets through just 2.8 kg of coffee per year. o USA No, this answer is not correct. Although the USA gets through the greatest volume of coffee in the world, on a per capita basis, they consume 4.24 kg of coffee per year.

Question 4 The world’s most expensive coffee is processed from civet poo: true or false? o True No, this answer is not correct. Although civet poo coffee, or Luwak, has held the top spot for a number of years, fetching around $600 per kg, there is now a rival product. o False Yes this answer is correct. Elephant poo coffee is now the most expensive coffee. Coffee beans ferment in the elephant’s stomach and are then extracted from their faeces. Supply is very limited at present so Black Ivory Coffee fetches around $1200 per kg.

Question 5 It is difficult to purchase a in Italy after 11 a.m.: true or false? o True Yes, this answer is correct. For Italians, cappuccino is a breakfast drink and it can be difficult to find restaurants or coffee bars serving it after the morning rush. More common in Italy is the , a small strong coffee – you will learn about this distinctive feature of Italian coffee culture in Section 4. o False No, this answer is not correct.

How did you do? Hopefully this activity has made you pause and think more carefully about something that is often taken for granted. When you order your skinny or add milk to your instant brew, you probably don’t think about the important role that coffee plays in global and local socio-economic relations.

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3 Coffee, money and debt

Now that you have a sense of the importance of the income generated through the sale of coffee for some regions in the world, you have the chance to think about the consequences of the prices that coffee farmers receive for their crop. Coffee prices are determined through an international system of exchange. The ‘C’ market price (for commodity coffees) is notoriously unstable (as it is for many commodities) and there have been times when this price has fallen below the cost of production. This makes it hard for coffee farmers to make ends meet. But what can you, as a consumer, do about this? This is a difficult question because there are many factors that determine the price of coffee and these factors are not always visible to or changeable by consumers.

Activity 3 About 45 minutes The first series of films in this course introduces you to the complex relationship between coffee, money and debt. As you watch each extract, take some brief notes to help you address the questions that follow below.

Question 1

Video content is not available in this format.

What are the consequences for coffee farmers when the coffee prices are low?

Provide your answer...

Discussion When coffee prices are low, coffee farmers may get into debt because they have borrowed money to pay for things upfront (such as coffee seeds, fertilisers and labour) which they are now unable to pay back due to lower than forecasted coffee prices. In some communities, such as Oaxaca in Mexico, farmers are abandoning their crops and migrating to the city to make more money.

Question 2

Video content is not available in this format.

You saw a number of people describing why they (or the coffee farmers they work with) continue to grow coffee. Match the three statements below with the speaker pictured. EDMUND KANANURA, UGANDA COFFEE DEVELOPMENT AUTHORITY FERNANDO AGUILAR, AMA COFFEE DONALDO GONZALEZ, CAFÉ ARUCO

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Match each of the items above to an item below. In areas where coffee is grown, there’s a better income per household, and less poverty. My family has always grown coffee and now I have the opportunity to re-invent our business and directly trade our specialty coffee with buyers in London. Coffee culture is a way of life in Honduras. People depend on us for their business and we help a lot of people in our community by harvesting coffee.

Question 3

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What can consumers do to increase the amount of money that coffee farmers receive?

Provide your answer...

Discussion Schemes such as Fairtrade (where the farmers are guaranteed a set price for their coffee) and direct trade are ways that consumers can help ensure that more money returns to coffee farmers. However, convincing consumers about the effectiveness of these schemes can sometimes be difficult. In addition, some farmers, such as Fernando Aguilar from El Salvador, are able to sell their single-origin speciality coffees for a much higher price because consumers are willing to pay more for these distinctive flavours.

Question 4 Do you agree with Rebecca Singer that ‘we have lost the ability to understand … the real value of a product’?

Provide your answer...

Discussion This question has no right or wrong answer and this will be something for you to continue to think about. There is one school of thought that believes that the value of a product ought to be determined by the amount of human labour that has gone into its production. One problem with this approach is that it does not take into account interactions between supply and demand. Just because someone has supplied coffee using labour-intensive production methods does not mean that the demand for this coffee will be any higher than a similar coffee that has been supplied using mechanised-production methods. The value of coffee on exchange markets is shaped by the global supply and demand of coffee, and those most able to supply high yields of coffee do so because they do not rely on human labour alone. Whether people ought to support small-scale farmers producing coffee is hotly debated because, for those small-scale farmers, coffee is their main source of income and they have few opportunities to improve their productivity. Large-scale coffee

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farmers, such as those in Brazil and Vietnam, pull down the global price of coffee because they supply so much, which in turn creates global inequalities between coffee producers and between countries.

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4 Cultures of coffee consumption

Figure 2 Different types of coffee Cappuccino, filter, skinny latte, espresso, instant, macchiato, Fairtrade, organic, Ethiopian, at home or at a coffee shop? How do you take your coffee? The possibilities seem endless and, as you will learn in this section, different countries have very different traditions when it comes to drinking coffee. For social scientists, comparison is an important tool for investigating the social world. By comparing how two or more societies have developed a particular way of doing something – in this case drinking coffee – it is possible to learn a great deal about the organisation of that society and the nature of that practice. What seems like a matter of individual choice is revealed to be part of a much wider interconnected web of collective forces. For example, the style of coffee you are used to drinking is very likely linked to:

● the systems of coffee provision in your country – the supermarkets, coffee shops, coffee machines and technologies that offer and prepare the coffee you regularly consume ● your country’s historical trading partnership with colonies that produce particular types of coffee beans ● public policy and legislative systems that regulate things such as the temperature of hot drinks, the levels of for a drink to be labelled as ‘decaffeinated’ or the prices that can be charged for basic goods

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● the ways different types of coffee experiences are advertised to you through the media, reinforced by cultural references such as popular TV programmes, and influenced by your friends and family.

These commercial, technological, economic, regulatory and sociocultural contexts together create and sustain distinctive cultures of coffee consumption within a country, which in turn shapes the value assigned to this commodity.

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5 Comparing cultures of coffee consumption

As you learnt in the coffee quiz, ordering a cappuccino in Italy after 11 a.m. can be difficult. Much more popular in Italy is the small, short coffee drink called espresso. But why has Italy’s coffee culture developed in such a different way from that in the UK, where and lingering visits to coffee shops are common? The second series of films on this course, The Cultures of Coffee Consumption, will help you identify some of the key differences between the coffee shop cultures in Italy and the UK, as well as other parts of the world.

Activity 4 About 60 minutes

Now watch the first extract of the film which explores the differences between coffee consumption in Italy and the UK. A blank table has been provided to help you to compare coffee cultures in Italy and the UK. Don’t be concerned if some boxes are more difficult to fill in than others – this is the nature of comparison and the social world. The forces shaping the development of coffee cultures in the two countries will inevitably be different with certain elements being more important in one country than another.

Video content is not available in this format.

Interactive content is not available in this format. Comparing the cultures of coffee consumption in Italy and the UK

Discussion

Comparing the cultures of coffee consumption in Italy and the UK

Italy UK

What is the most popular Espresso Milky coffee drinks style of coffee beverage? How do consumers Italian consumers are not very Consumers in the UK choose their coffee brand conscious but instead commonly choose coffee shop? tend to choose a coffee shop shops on the basis of the brand that is local to them and where of retailer. For example, they think they will have a nice Professor Morris asks, ‘Am I a social experience. Costa person or a Starbucks person?’ Other important factors are the availability of Wi-Fi and a space where people can linger. What does the price of a Italians pay very little for their According to Professor Morris, cup of coffee include? coffee (around €1) and no the price of coffee in a coffee service is included in this drink. shop includes ‘rent for time’,

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Many Italians drink their coffee referring to how UK consumers quickly at the bar. use coffee shops as a place to relax and work in. What reasons are given The Italian government The rise of self-autonomous for the development of a regulated the price of coffee working practices and the distinctive coffee culture? following the First World War digital revolution are closely and, although this regulation is linked to the rise of coffee no longer enforced, it shaped shops in the UK. The milky the development of the coffee coffee that takes time to drink is shop business. Consumers well suited to consumers who only expect to pay a small price want to work away from the for a cup of coffee and do not office and check their emails pay for any extras such as using the free Wi-Fi provided service charges or ‘rent for by the shop. time’. The US/UK-style coffee shop business model is not suited to this coffee drinking culture.

As you will have realised from comparing coffee cultures in Italy and the UK, there are a range of factors that influence how coffee drinking is experienced in different countries. Now watch the second extract from the film, The Cultures of Coffee Consumption, and write down some of the features of coffee cultures in the other countries that are mentioned. What do you notice about these countries’ coffee cultures? How are they different from your own?

Video content is not available in this format.

Provide your answer...

Discussion The coffee drinking cultures of four other countries were described in this video. Here are some of the points you may have picked out:

● Switzerland is home to the large multinational company Nestlé, and this influences the type of coffee that Swiss people are used to drinking (for example, and Nespresso pods). ● In France, legislation prohibiting smoking in public places has had a detrimental effect on coffee shops. To encourage consumers to use coffee shops again, cafe owners have agreed to charge a minimal amount for a cup of coffee. However, the growth of at-home espresso machines is making it difficult for cafe owners to compete. ● In Uganda, coffee drinking has only recently become popular. Historically, much of the good coffee grown in the country was exported and tea was more readily available. ● In Ethiopia, coffee holds an important place in ceremonial rituals and social relations. Ethiopians consider it a central part of their daily routines.

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The type of coffee you enjoy can be shaped by such things as historical price regulations, the dominance of brand retailers and the types of technology available. In other countries, factors that have influenced the development of distinctive coffee cultures include colonial histories, the dominance of particular manufacturers, the regulation of smoking in public places, and the structure of ceremonial rituals. The value of coffee in the sphere of consumption is not only determined by the amount of coffee that is actually consumed but the sociocultural context in which it is enjoyed.

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Conclusion

This free course, The value of coffee, has examined the economic and cultural value of coffee for both producers (farmers) and consumers. You have learnt that the price of a cup of coffee is shaped by number of factors and processes which influence the uneven distribution of value between coffee-producing and coffee-consuming regions in the world. The value of coffee is shaped through the interactions between four key economic processes:

1. consumption – how and why people drink coffee 2. production – how and why people grow coffee 3. exchange – how ownership of coffee is negotiated 4. distribution – the movement of coffee across space and over time.

In this course, you have considered all of these processes to some extent but you have concentrated primarily on consumption. To learn more about the other processes and their impact on the value of coffee, why not sign up to study DD103 Investigating the social world from which this extract has been developed.

References

Food Processing Technology (2014) ‘Double hit: the world’s most expensive coffee beans’, Food Processing Technology [Online]. Available at http://www.foodprocessing-technology.com/features/featuredouble-hit-the-worlds-most- expensive-coffee-beans-4203310/ (Accessed 16 October 2014). International Coffee Council (ICC) (2014) ‘World coffee trade (1963–2013): A review of markets, challenges and opportunities facing the sector’, ICC-111-5 Rev. 1 [Online]. Available at http://www.ico.org/news/icc-111-5-r1e-world-coffee-outlook.pdf (Accessed 16 October 2014). International Coffee Organization (ICO) (2011) ‘Country datasheets’, International Coffee Organization [Online]. Available at http://www.ico.org/profiles_e.asp (Accessed 16 October 2014). International Coffee Organization (ICO) (2014) ‘Historical Data on the Global Coffee Trade’, International Coffee Organization [Online]. Available at http://www.ico.org/new_historical.asp (Accessed 16 October 2014). International Trade Centre (ITC) (2011) The Coffee Exporter’s Guide: Third Edition, Switzerland, ITC.

Acknowledgements

This free course was written by Katy Wheeler

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Except for third party materials and otherwise stated (see terms and conditions), this content is made available under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 Licence. The material acknowledged below is Proprietary and used under licence (not subject to Creative Commons Licence). Grateful acknowledgement is made to the following sources for permission to reproduce material in this free course:

Images Course image: © OJO Images Ltd / Alamy Figure 1: adapted from https://uk.finance.yahoo.com/news/the-real-cost-of——a-coffee-115637778.html Figure 2: Coffee menu: © anna42fa/ iStockphoto.com

A-V Video: © The Open University and its licensor (BBC) Every effort has been made to contact copyright owners. If any have been inadvertently overlooked, the publishers will be pleased to make the necessary arrangements at the first opportunity. Don't miss out If reading this text has inspired you to learn more, you may be interested in joining the millions of people who discover our free learning resources and qualifications by visiting The Open University – www.open.edu/openlearn/free-courses.

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