Explanatory Class Notes by Anne Conlon
As I'm sure you realise, the musical isn't just about coffee. It's also about some of the things which make some people and some countries poorer than others. We've used coffee as an example to show what happens when products are produced in 'poor countries' and consumed in 'rich countries'. The musical could just have easily have been about sugar, bananas, tea, tobacco..... The list could be very long.
One of the reasons some countries are poorer than other is the trading system itself. The world price of coffee changes from day to day, sometimes from minute to minutes. When there's a frost in Brazil, people think there might be a shortage and the price goes up. Producers of coffee can't affect the price. They might not even know what the world coffee price is. This makes it very difficult for them to make plans.
Things are made even worse because of a cycle which is sometimes called "boom and bust". It takes about five years for a tree to produce coffee. When the price is high, lots of new trees are planted, but by the time the cherries come, the price will being to fall because, by that time, the market will be flooded. Gradually producers start to neglect their trees, the quality goes down, and eventually, they don't even bother to harvest at all, because the price they can get isn't worth the effort. At this point the coffee shortage will make the world price start to rise and the whole cycle beings again.
You know about the Futures Market. This institution means that people and companies with money can protect themselves against loss. They are in the system and they always have 'paper coffee' to sell. If the price goes up, so will the price of their 'paper coffee'. They can then sell that and so have enough money to buy 'real coffee' at the new higher price. If the price goes down, so does the price of their 'paper coffee', but it doesn't matter because they don't have to pay so much for the 'real coffee' they need.
It's easy to see how this basic trading system puts producers (and producing countries) at a disadvantage, making it very difficult from them to improve their position. During the last 25 years, though, other factors have come into this equation, which have caused producing countries to become steadily poorer.
Debt is one of these. In the 70's, when interest rates were low and commodity prices, including coffee, were high, enormous sums of money were lent, by private banks and governments, to developing nations. The interest rates went up, the coffee prices went down and very soon the debt could not be paid. The songs at the beginning of part two explain all this very clearly.
They also explain an associated factor, which is sometimes referred to as capital flight. Money that was leant, and given in aid, was given in the expectation that it would be spent on goods from the lending country. This lead to the rather ridiculous situation of 'the revolving door'. Apparently, some of the money which was lent never left New York or London, coming straight back in interest payments or in payment for goods and services. When you consider that dollars from coffee sales were also rushing back to pay the bills, you can see how easily countries, instead of becoming more prosperous, became steadily poorer.
The exporter also plays a part in this process. He's an example of people who live in a 'developing country', but really belong to the 'developed world' in every way, They contribute to the problem of capital flight when they keep their personal money in Switzerland/New York etc. When dollars are paid to the exporter for coffee produced in his country, they go straight out again. This can be a real problem, especially if there's a lot of corruption, so that dollars gained though bribery 'disappear' into foreign bank accounts - but we didn't have space to deal with this in the musical.
It's not surprising that some countries have got into a real mess. Some countries, which have been in the news as 'disaster zones', are very dependent on coffee. Here are a few figures which show coffee as a proportion of export earnings of a few 'famous' countries: Uganda 90%, Rwanda 90%, Burundi 80%, Ethiopia 60%. When Rwanda was on the news, in 1994, because of civil war, the coffee prices had been very low for years, and the country was basically trying to keep going on its earnings from coffee.
When countries get into real economic difficulties, they have no choice but to call the IMF, who then advise them on how to solve their problems. The IMF works out what is called a Structural Adjustment Programme. The IMF song shows you what this will be like. The country has to cut back on public expenditure (food subsidies, health, education) and increase their exports (coffee) so they can pay off debts. When they agree to do this, the IMF will arrange for further loans to tide them over.
Of course, such measures hurt the poor people the most. The prices of basics, including food, rise dramatically and poor people become even poorer. This often leads to demonstrations, riots.... The song tells you the rest.
It might seems as if this has nothing to do with us, but clearly it does. If the producers of coffee could rely on a steady price, which covered their costs, and enabled them to provide food, healthcare and education for their children, their countries would have a hope of peace and prosperity and we would be less likely to see sudden disasters and refugees on the television.
I think it comes even nearer home than that. These days, it isn't just producers of coffee in far-off Rwanda who are powerless and exploited. The woman in the coffee factory has a job at the moment, but if it becomes more profitable to process the coffee in Indonesia, she could easily lose it. And the demands of the IMF in the musical, and some of their effects, seem rather familiar when you think about health cuts, 'strong men dossing when they can't find a job' and so on.
I don't think we need to feel powerless, though. We are all consumers and this gives us power and influence. By the way we buy, by the way we vote, by the things we say to people we know and, perhaps, by the letters we write to people with influence, we can make it clear we would like to see the world run in a different way. Politicians behave in a way they think will get them elected, and manufacturers (of coffee for example) are totally dependent on people buying the things they make. It's up to us if we want to 'change this crazy world', but, if we don't, we have to be prepared to live with the consequences.