A Need for Businesses in the Coffee Production Sector to Change Their Practices to Be Responsible - Case Study Example

Coffee Farming in Latin America

Coffee is one of the commodities that are used globally and is responsible for providing income for millions of farmers with a significant percentage of them being in Latin America. There have been various changes in the past concerning this industry with most of them being related to the social perspective and others to the prices. In the past, coffee prices were being regulated by a body known as the International Coffee Organization making the prices somewhat fair with respect to the growers and the pickers. However, the organization was disbanded in 1989 leaving individual organizations and governments to dictate the prices of coffee worldwide (Kolk, 2005, p. 228). This has led to the dropping of prices dramatically, and the competitiveness of coffee has been affected in many other ways that include but not limited to an emergence of new and more aggressive producers as well as the issue of environmental decay. A combination of factors have been blamed for being responsible for irresponsible practices in coffee sector and include the demand not meeting the supply. As coffee became less competitive, the organizations improvised to try to make an extra penny out of poor practices. These developments have been closely linked towards the fate of the farmers because they affected the income levels, social situations, and working conditions that the employees were able to enjoy. Most organizations, in an attempt to reduce the expenses while maximizing returns in the highly volatile coffee industry, have ignored ethical practices and child labour is common in these areas. Although there are codes of conduct governing the functioning of these organizations, the actual practices have not been favourable to the farmer and the community as a whole. This is because there is no universal body regulating the prices and the practices that take place in these organizations. Coffee was originally known as the commodity that helped people address issues related to poverty but it is the opposite in today’s world because the falling prices are pushing people into poverty. The profits realized are not even covering the cost of growing the coffee especially because of the increasing costs of pesticides and diseases affecting the crop’s produce. From the environmental perspective, coffee farming has had a toll on the environment because of the deforestation, heavy use of pesticides, and soil erosion factors that have led to a loss of biodiversity (Persson, 2008). Corporate social responsibility, activities that an organization undertakes so as to operate in a socially, economically, and environmentally sustainable way, has been ignored in many areas in the Latin America areas with respect to coffee production and processing.

One of the most common CSR issues facing coffee in the Latin American region is exploitation of the farmers. Research has found that most of the coffee produced in the world is consumed in the wealthy countries and mostly by the rich people (Haight, 2011). This could mean that its value in the market should reflect the same when it comes to the farmers. However, this is not the case. Most farmers live in deprivation and extreme poverty. In fact, a significant number of the farmers cannot afford to educate their children while others pull their children out of school to assist with the cultivation of this crop only for the returns to be enjoyed by other parties such as the immediate buyer from the farmers (Cleland, 2010). The prices at the lowest level, immediately from the plantations, are usually very low. It has also been found that while most of the consumption is evident in the industrialized world, most of the production is done in the developing countries. From a statistical perspective, at least 90% of the production is done by poor people and still their economic situations do not change. In spite of the low returns to the farmers, growing and harvesting of coffee requires labour-intensive manual work that may include weeding, spraying, pruning, sorting, and picking which takes much of the returns that the farmers get (World Vision Australia, 2014). The price of coffee, which ought to be set or determined by the farmer, is set on stock exchange floors and in rooms away from the plantations (No Child should be for Sale, n.d). There is a likelihood that the prices determined at the corporate level are not what the farmers get at the plantation level. Most of the coffee is also not traded by the farmers but by speculators who earn money from the stock exchanges. As the prices fall below the production level costs, the farmers, who should be enjoying the outcome than any other party, start struggling to meet the most basic needs such as feeding their own children, paying medical bills and even school fees. The instability of prices forces the farmers into a desperate situation where they work in exploitative environments just to earn very low income because they have few to no choices (No Child should be for Sale, n.d).

The other serious CSR issue in coffee farming and is evident in Latin America is child exploitation. This comes as a result of the low returns forcing the parents to pull their children from school and work on plantations so that they can make and extra dime (Specialty Coffee Association of America, 2005). This exposes the children to various dangers of labouring at a young age, as they ought to be learning at such ages. In addition, they may acquire health issues because their bodies may not be strong enough to endure the effects of the chemicals used in the plantations as pesticides. The children may also be exposed to accommodations with no water and electricity making their lives as well as those of their parents worse. The coffee industry relies on cheap labour and as such can even employ children just to fulfil their needs (Cleland, 2010). These children are not protected by the labour protection because they are yet to realize the legal age for a labourer. Child labour has a long-term effect from the perspective of maintaining poor conditions for the families. When children are not given an opportunity to attend school, they do not get chances that come with education such as decent income in the future that can help them in escaping the escapade of poverty. This then ensures that the poor remain poor for many generations to come (World Vision Australia, 2014). In Brazil, for instance, child labour was found to be significantly high and the enrolment in schools lower in the areas where coffee is produced. From a statistical perspective, the actual number is 37% increase for child labour and 3% drop in school enrolments (Bitter Brew: The Stirring Reality of Coffee, 2016). Although statistical data for dropping out has not been included, it is clear that a significant portion of them drop from school to work in the plantations to help make ends meet. Child labour is accompanied by long working hours because the average worker spends at least 10 hours daily in the plantation doing a variety of tasks that may include pruning and picking among others (World Vision Australia, 2014). The harvesting seasons are the worst. In Honduras, for instance, during the harvesting seasons at least 40% of the workers are children (Bitter Brew: The Stirring Reality of Coffee, 2016). This indicates how chronic this issue has become. Due to the poor compensation, the slavery aspect emerges. Many workers are forced to bring their children to work so that they can get out of debt peonage. These individuals are then forced to work so that they can repay their debts and in most cases, the debtors are the owners of the plantations, and these could easily be corporations (Bitter Brew: The Stirring Reality of Coffee, 2016). The shops ran by landowners, or the corporations behind the coffee industry are the only sources of essential goods, as they cannot shop far due to hourly working and other restrictions. This is then used against them by making them indebted to the plantation. Besides forced labour, the working conditions in coffee plantations are usually unjust and often illegal. A majority of the workers do not receive overtime payments or any other benefits as required by the state law. Moreover, nearly half of the workers received less than the minimum wage as required by the law of these states. Guatemala is an excellent example in this respect in addition to other areas such as the Dominican Republic, Mexico, and Colombia.

There are other CSR issues facing this industry, and a chronic one is environmental degradation. These effects have been experienced differently in different areas. Taking one area such as Costa Rica, coffee farming has had a severe impact on the environment with regard to pollution. River pollution has affected the environment in Costa Rica as the producers dump waste into the rivers making them unsafe for any form of use. According to research, at least 57% of the coffee bean is comprised of contaminants that, when dumped into the streams and rivers, destroy fauna and harm people because of causing a shortage in clean water for drinking (TED Case Studies: Coffee and The Environment, 1997). Costa Rica has also suffered in other ways that include deforestation. There is a new type of coffee plant that produces up to three times more than the traditional crop, but it has a downside in that it requires a lot of sunlight. This has prompted the farmers and the plantations to cut down trees at an alarming rate to ensure that they can maximize their returns by taking advantage of the opportunities presented by the new crop. This new requirement of the coffee plant is opposite to the traditional coffee plants that did well under shade thus requiring the plantations and farmer to plant more trees (Bitter Brew: The Stirring Reality of Coffee, 2016). Clearing of trees has not only affected the climate in this area but also caused a lot of erosion making the lands barely able to support the plants. This is because the rainwater washes away the top and the most important layer of the soil leaving a semi-fertile one. Environmental degradation can also be attributed to the farming practices adopted by the farmers. These practices require an excessive usage of pesticides and fertilizers that affect the quality of the soil making it lose and more susceptible to erosion. There are a myriad of other ways in which coffee farming has cause degradation that include in the processing where an overwhelming amount of resources are used. In Costa Rica, coffee drying uses approximately 142,268 u. m of wood annually (Arce et al., 2009, p. 142). This puts a burden on the forests because more wood is being cleared and used for processing purposes. There are new technologies but most producers have not implemented them citing cost. The processing also consumes a lot of water. On average, 1000 lbs. of green coffee uses between 1000 and 2000 litres of water to process (Arce et al., 2009, p. 143). This reduces the amount of water available for other purposes such as house chores and drinking increasing the risk of people consuming water that is not clean.

Best practice is doing something in an acceptable manner. Most of the CSR issues facing the coffee industry can be eliminated if ethical behaviour is followed. One of the acceptable practices that go to the side of the buyers of raw coffee is fair compensation. It is morally wrong to exploit people in the way that it is happening in most of the coffee producing areas in Latin America such as Brazil and Guatemala. It is clear that coffee returns are enjoyed by the wrong individuals in the long chain of buying the coffee that uses many intermediary agents. Best practice would occur if the farmers were allowed to benefit from the fruits of their labour because the returns realized from processed coffee are significantly high as compared to what the farmers get. One of the reasons behind this argument is that coffee is consumed in the wealthy countries, which without a doubt, would ensure good returns (Haight, 2011). This should be passed down to the farmers to ensure that they would not only be able to afford basic needs but also acquire the capacity to educate their own children. Justice in the way that compensation is done to the farmers is the only way that can pull the farmers out of severe poverty situations where they are even struggling to provide basic food to themselves and even having to allow child labour so as to make ends meet. This would be one of the best practices that would assist the farmers in preventing a recurrence of poverty for the coming generations.

Moreover, another point to be considered as the best practice is the corporations to take a serious stand concerning child labour. The employers in the plantations and other farmers should have a serious position concerning who they employ. Since most parents allow this as a result of extreme poverty, if just compensation is done, the aspect of child labour would be eliminated. Moreover, although there are laws governing and prohibiting the use of child labour in any industry, the relevant authorities do not take the time to know the exact situation on the ground regardless of statistical research data claiming that child labour is increasing, and this is affecting the education of the children. If the unjust compensation practices continue, this would not be realized. The practice of employing children is also ethically wrong. Bearing in mind that these children should be in school studying, allowing them to work for a very low wage is uncouth and unethical in nature. It is also ethical to ensure that the worker’s children get an education. For the employers, they should make sure that while the parents are working, their children are at school and although this would increase the debt to be paid by the worker, mainly by working, it would give the children a chance to improve their future by taking advantage of suitable employment that compensates well. This would be a CSR initiative that would be met with motivation on the side of the workers, which would mean more productivity.

Another best practice would include just working situations. Currently, the workers are required to work for long hours even without appropriate equipment to help in their work and without additional pay for the extra hours that they work. This is unethical and the laws have stipulated the length of time that a worker should spend working. Ensuring that these are the exact hours that the employees work is the best practice and in the event that they want to make additional money by working overtime, they should be compensated accordingly and in the regular rates. While this would improve the living conditions of the workers because they have money to cater for their needs, it would also facilitate better mental health because they would not have to worry much concerning the future of their children or even what they would eat the following day. There should also be governmental and non-governmental individuals overseeing the length of working hours and taking legal action against organizations that intend to overstep it.

Taking care of the environment for the sake of the surrounding communities and the future generations is also a case of best practice. Although there is a new plant that produces more and demands more sunlight, cultivating this particular crop should be regulated by governmental bodies for the sake of the environment and to reduce erosion that renders the soil unproductive. Such regulations would be used to force the farmers to plant trees on the sections of their farms that have the traditional coffee. This is because better returns may not help the future if the soil will have been degraded to a large extent. This will bring not only an undesirable impact on the present generations but also those of the future that will not have fertile lands to cultivate. Moreover, it would be important to adopt better practices with regard to waste disposal. The processing organizations should ensure that they are responsible for what they do and that all their processes do not affect the surrounding communities either through deprivation of education, overusing resources such as water or even in polluting the water that the people including their own workers depend on. Therefore, as a best practice, these organizations should invest in establishing better disposal places to ensure maximum health with regard to the communities that rely on the rivers as sources of drinking water. Since the processing of coffee uses an overwhelming amount of wood, the producers should make sure that they are responsible for CSR initiatives that are directed towards the planting of more trees to ensure a continued stability in the climate of the regions.

As a recommendation, the businesses in the coffee production sector need to change most of their practices and adopt others that will show responsibility. These practices should be geared towards the responsibility of children of the workers by making sure that they are not allowed to work. There should also be organizational strategies that facilitate the acquisition of education for the children of the workers. Corporate social responsibility should be given a special place in these organizations to make sure that the perception that the public has of it is changed for the better. Another way of realizing this is through fair compensation and provision of working materials to facilitate a better working environment. Moreover, compensation is the main issue after environmental degradation that these businesses should take seriously. One of the best ways to do this is to ensure that the length of hours and the type of work done concur with the compensation. Just compensation will help the farmers in eradicating poverty and realize the original goal of coffee farming that, besides providing the commodity in the market, was intended to help eradicate poverty for the farmers. Most farmers are currently living in destitute conditions in spite of producing a commodity that is consumed mostly by the wealthy countries. Furthermore, the government should take serious steps against the organizations polluting the rivers by dumping waste. This would ensure that other organizations would take action to locate alternative dumping sites that would be far from the people to ensure continued sustainability and availability of clean drinking water. Lastly, there should be initiatives to clean the rivers and rehabilitate the areas that have been affected by the operations of the producers including planting trees.