The Hidden Abuse Of Mexican Coffee Farmers – CoffeeTalk

Cririo Ruiz, a coffee farmer and activist from Mexico, was arrested for weeding his farm while protesting for fair prices in the purchase of coffee. He spent 34 days in prison and was accused of starting a fire at Agroindustrias Unidas de México (AMSA) facilities. The courts eventually acquitted them, but the company continues to appeal.

Ruiz’s story highlights the hidden backroom of the Mexican coffee sector, where abuses against small producers occur, poor practices spread, and economic interests become intertwined with political power. Mexico has consolidated itself among the countries that contribute the most beans, ranking 10th in the United States Department of Agriculture.

The harvest for coffee cherries in Coatepec was delayed by two months this winter and began in January. Some coffee producers hope that this year will see more than a million tons of coffee cherries leave the country. Most of this production ends up in the hands of intermediaries, such as smugglers or marketing companies, who resell a continuous flow of this bean to large conglomerates like Nestlé or Starbucks.

AMSA, responsible for this process, have been accused by farmers of monopolistic practices, which the firms deny. However, for years, they have become almost the only option for farm owners to put their coffee on the market. This highlights the challenges faced by small coffee producers in Mexico and the hidden backroom of the coffee industry.

Nestlé announced an investment of $1 billion in Mexico during President Claudia Sheinbaum’s administration, establishing strong ties with the executive branch of government and expanding its operations. In July 2022, Nestlé inaugurated a new Nescafé plant in the eastern state of Veracruz, making Mexico the firm’s largest supplier of coffee beans. This led to tensions between small-scale producers, Indigenous groups, and coffee companies, who have connections to the ex-president’s party and can levy accusations to the point of putting five of them in jail out of revenge.

The case of producers arrested in Veracruz spread throughout the country in 2023, putting coffee organizations and cooperatives in other states on high alert as they were also fighting against low prices being offered by buyers. The problem began in January 2022 when coffee growers in Ixhuatlán, about 60 miles from Xalapa, blocked the doors of the AMSA processing plant in response to a surprise drop in prices being paid out for beans. The tensions escalated to the point that some of the company’s offices were set on fire. In response, the firm sued the coffee growers for damages, but this lawsuit came to nothing until May 2023 when agents from the Veracruz Attorney General’s Office arrested Ruiz and four colleagues for alleged “damages.”

From the perspective of farmers, the case filed against them had the complicity of the state authorities, as the coffee-processing industries represent a bastion in the local economy. In 2021, the economic impact of this product in the state was 1.3 billion pesos ($64 million), according to data from the federal government.

The Empower investigation refers to the complicity between politicians and businesspeople, which indicates that there are also economic contributions from — and agreements with — executives. Two Nestlé subsidiaries alone have “30 agreements and 540 public contracts with at least 33 [departments]” from the public administration.

The investigation points to marketing companies as the origin of labor exploitation, with production processes undertaken by people with few resources, often Indigenous families, who plant and harvest the crop on smallholdings. Coffee prices in Mexico are largely determined by its final buyers, among which Nestlé, which purchases approximately 25% of Mexican coffee, and Starbucks stand out.

Nestlé and Starbucks are involved in a trade dispute over coffee production in Mexico, with the latter handling 24% of global production and using it to produce Nescafé, Nespresso, and Dolce Gusto. Starbucks also distributes capsules and other products sold in supermarkets. The chain buys Mexican coffee beans and ships them to the United States, where they are roasted and re-imported via Alsea. Starbucks also acquires beans through AMSA, the same trading company used by the Swiss company.

For their business to be profitable, trading companies must keep a percentage of the value of the coffee, further reducing the price paid to farmers. This process can lead to coffee prices being reduced so much that they are insufficient to cover even the expenses invested in production. Coffee producers in Mexico receive an average of 18 pesos ($0.89) per kilo of coffee cherries, which is less than 10 kilos needed to make just a kilo of roasted coffee.

Nestlé has indicated that the 2024-2025 cycle has been the highest they have paid to their direct suppliers in Mexico, and they believe that coffee growers should earn a sufficient income to maintain a decent standard of living. They assure EL PAÍS that all of their coffee operations comply with local laws and international standards. Starbucks has not responded to queries from EL PAÍS.

Arturo García, a producer from the southwestern Mexican state of Guerrero, says that the traders are “vultures” who are circling the coffee business. He recalls that the policy of the last six-year term, during which intermediaries were attacked, ended up hitting local cooperatives while not making a dent in the activities of smugglers or hoarders.

Empower’s research adds that the lack of collective organizing diminishes producers’ bargaining power and increases their financial dependence. Many are forced to resort to monetary or in-kind loans, such as fertilizers or seedlings, which are often granted by the same companies that later buy their coffee beans.

The growth of robusta coffee in Mexico is evident in the plantations that have begun to spread throughout the country. Hectares have been cleared to plant this tree, which doesn’t exceed a height of 13 feet and must be planted in full sun, often accompanied by deforestation to reduce shade. This variety produces a lower quality fruit that is cheaper on the market, which attracts large coffee producers worldwide. Some countries like Brazil have turned to harvesting robusta to sell it to large firms. However, the Mexican countryside has resisted pressure to stop planting arabica, which is a more environmentally-friendly variety. For the moment, these deforested hectares remain a residual number in national production.

Nestlé has encouraged farmers through its intermediaries to plant robusta, but people haven’t done it. Pressure came in the form of penalties on the price of arabica, or technical assistance given to them for free if they switched to robusta. Coffee growers were also given plants through social responsibility programs and were paid a small premium on their production if it was robusta — “something insignificant” — to get them to abandon their standard variety and switch to the preference of the large companies.

The “robustization” of Mexican coffee, driven mainly by Nestlé and programs operated by monopolies to control the production of Mexican coffee, constitutes a major threat to the environment due to its deforestation potential and the possible elimination of the coffee varieties traditionally cultivated in the country. The resistance that the Mexican countryside currently maintains forced Nestlé to import coffee beans from abroad, to be processed in its Mexico-based factories. Farmers claim that the flooding of the market with this variety brought in from abroad has affected the price paid to arabica producers.

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