Third, the ecological costs of Vietnam’s coffee boom, driven by the widespread use of chemical fertilizers and irrigated water, mostly under full-sun conditions, have been high and it is not yet clear what the full environmental impact will be in the future. When coffee production soared during the 1990s, the use of chemical fertilizer more than doubled. This expansion occurred under generally lax oversight and regulation, raising serious concerns about long-term water and soil contamination. The use of water for irrigation also grew substantially so that by the end of the 1990s, 90 percent of the country’s water use was for agriculture and 64 percent of agricultural land was under irrigation. This has given rise to growing concerns around water scarcity. Coffee production not only intensified, but also expanded, resulting in significant rates of deforestation; in the 1990s, forested areas in the Central Highlands declined by 19 percent. Much of this land was not optimal for coffee growing, which had the effect of further intensifying the use of chemical fertilizers and irrigation and, by extension, the extent of water and soil contamination, soil erosion, and water scarcity.13
Such impacts certainly point to the serious limitations of Vietnamese coffee statecraft and give pause to any overly optimistic appraisal of its developmental effects. There has, in fact, been little celebration of the rise of Vietnamese coffee among most international institutions, Western development organizations, and Western media.14 In the aftermath of the global coffee crisis, Vietnam’s role in flooding world markets with unprecedented quantities of cheap Robusta beans was often criticized for its shortsightedness and negative effects on other coffee countries. Given Vietnamese coffee’s mixed impacts on reducing poverty and inequality domestically, and its negative ecological effects, most commentators have adopted a cautious or critical overall assessment, and not without good reason.
Despite its limitations, however, critical assessments of Vietnamese coffee statecraft are misguided if aimed primarily at policy makers and the state elite within Vietnam, as opposed to the wider structural imperatives of the global economy and the specific dynamics of the coffee industry. Real-world markets are not open fields of abundant opportunity, ripe with possibilities, easy and straightforward to access and compete in. Instead, they are intensely competitive at the international level, with trading, processing, and retailing dominated by a handful of oligarchic corporations, and production and supply dominated by long-established countries possessing decades of experience, and often significant political and economic weight. Seeking to break into established markets means, to a certain degree, succumbing to the rules of the dominant game, adapting policies and actions to meet the imperatives of global capitalism and the unpredictable vagaries of world market forces. These forces are beyond any single state’s control, even while they exist in an international system managed by states that contend with each other in the interest of economic statecraft. The resulting competitive pressures lead to situations in which social crisis for some – such as the global coffee crisis – can result in economic advantage for others.
Vietnam was more or less compelled to take a “gamble” and find a means to fight its way into estab-lished global markets to meet ever-intensifying imperatives stemming from its territorial and capitalist logics. The expansion of a capitalist economy based on semi-private landholdings gave way to a class of export-dependent farmers and rural workers seeking income and employment; an increasingly urban, industrial economy seeking domestic markets to sell or lend to; and a state ever more dependent on its ability to find export commodities to gain foreign exchange, extract tariff and tax revenues, and promote political stability. Under these conditions, Vietnam’s political elite rolled the dice on coffee, although the extent to which they did or did not understand the full impact of the gamble they were taking may never be clear. According to the World Bank’s thorough investigation into the coffee crisis, “Vietnam may or may not have historically determined that the short-term pain of such an expansion might be worth the long-term gain in international market share.”15
Conclusion
The assessment in this chapter reveals how the state played a key role in driving both the rapid emergence of Vietnamese coffee and the global coffee crisis. Contra the assumption of many free traders, market patterns in the world coffee industry are not primarily determined by the free flow of supply and demand, but are managed and to a large extent driven by economic statecraft. It is not just that states intervene in markets, but rather that they set the context in which markets function. The capitalist economy and international trade require states to enforce private property along with countless other laws and regulations. Once the rules are in place, of course, market forces are extremely powerful, unleashing often-overwhelming market imperatives that can be stronger than many individual states. The Vietnamese state may have played a central role in the expansion of its coffee industry, but once global market forces were unleashed and the crisis took root, it could not simply put the genie back in the bottle. Instead, it had to ride out the crisis like other coffee states.
The case for recognizing the centrality of the state should not be taken to suggest that the state is always “good” – in fact, the majority of states have very poor records in managing coffee statecraft in the interests of the majority of farmers and workers. And yet, this actuality does not remove the fact that the state is always there. Regardless of whether or not trade economists argue that there are efficiency gains to be made from the elimination of the state from the market, such an occurrence is impossible in the context of a capitalist economy, which requires states to ensure its very existence. This means that economic policy designed to combat poverty and injustice in the global coffee industry must take into account the centrality of the state if it is to have the possibility of substantive and long-term impacts.
The collapse of the ICA in 1989 did not mark the end of state involvement in the coffee market, but rather a transformation in relations between coffee states and the degree or intensity of competition between them. From a certain level of collective action during the 1960s–80s, coffee states shifted in the 1990s toward more competitive action, intensifying their efforts to gain comparative advantage over each other. Picking up steam throughout the 1980s, Vietnam proved to be particularly well situated and adept at taking advantage of the new conditions, bursting into coffee markets in the 1990s in a manner that sparked global chaos, only to end up as the world’s indisputable second largest coffee exporter when the dust settled. Whereas the previous ICA quota regime would likely have provided collective checks and slowed the pace of Vietnam’s entry, the post-ICA regime encouraged and intensified competition between individual states.
Reflecting on the political dynamics that have underpinned Vietnam’s economic success, the long-standing advice by free trade think tanks and corporate lobby groups on how to address poverty and insecurity in the coffee industry (through individual or isolated efforts to improve productivity, quality, and diversification, as well as expand consumption) would seem of minor consequence when compared to the major impacts on world prices and trade patterns caused by the coffee statecraft of competing capitalist states vying for economic advantage. Such advice can be useful to individual states and to individual farmers – if they have the resources and capacity to act on it, which is generally the privilege of the wealthy few – as it can allow them to better compete against each other. But it does not resolve or address the wider political, social, and economic issues at play in the global coffee economy.
Progressive think tanks, nongovernmental organizations, and social justice advocates have, for their part, better understood the impact of the decline of the ICA on intensifying competition, price swings, and market chaos. But these groups have also too often accepted the notion of the triumph of the market over the state, overemphasizing the apparent decline of state power. As a result, they have increasingly turned their intention away from the state, perceived to be weak and ineffective, and toward efforts to influence c
orporate behavior directly by pressing for fair trade, organic, sustainable certification standards and better corporate social responsibility. This shift is, in many ways, understandable, espe-cially with state officials perpetually claiming they lack the ability to control global markets. Moreover, in the era of transnational capital, corporate giants do, on the surface, dominate the global economy through their immense, and historically unprecedented, economic weight, global reach, and political influence.
This dominance, however, is ultimately exercised through complex layers of institutions, rules, and regulations put in place and managed by states domestically and internationally. Corporations acting on their own must meet the broader demands imposed on them by the global economy, the conditions of which continue to be steered by the territorial and capital logics of states. Nowhere is this more apparent than during the past two and a half decades of “free trade” in the coffee industry. During this time, state policy in Vietnam – a lower-middle-income country with an economy ranked 55th in the world – made a major impact on global market conditions and the livelihoods of millions of coffee families.16 The global shift from collective action to intensified competition among coffee states that has characterized the free trade era in the coffee world has been accompanied with a general denial among state officials of their ability to control markets, even while their actions have continued to say otherwise. Under these political conditions, social justice advocates have increasingly felt the need to turn away from states and toward market-driven, nongovernmental certification schemes and corporate social responsibility to address poverty and inequality in the coffee industry. The results, as chapter 5 describes, have been important gains for the ethical trade movement, but of only modest reach and breadth, and with little overall impact on the structural roots of coffee’s deep, uneven patterns of trade and production.
CHAPTER FIVE
Fair trade and corporate power
Given commonly held views of the modern state as unresponsive, inefficient, undemocratic, or ineffective at substantially addressing concerns around inequality, poverty, and underdevelopment in the coffee industry, social justice groups, nongovernmental organizations, international institutions, and government itself have turned increasingly toward the market as a tool for guiding progressive social change through various forms of “ethical consumerism” – fair trade, organic, sustainable coffees and an array of corporate social responsibility programs. Through market action, consumers are seen as being able to influence corporate behavior in a manner beneficial to coffee farmers and workers, while bypassing the inefficient, repressive, or disinterested state.
The previous chapters already raise some warning flags for the general understanding of the global coffee market implicit in this view. First, the rise of ethical consumerism must be understood not merely as a strategic attempt to find new avenues to promote development in the coffee sector, but as the flip side of the expansion of neoliberal reforms since the 1970s and the gradual decline in the commitment of states to socially regulate the coffee market domestically and internationally. The rise of ethical consumerism is part and parcel of the rise of neoliberal governance, wherein legally mandated, state-directed forms of social protection are increasingly abandoned in favor of private, market-driven, voluntary initiatives.
Second, the notion that states are being bypassed through direct engagement with corporations is, in many ways, misleading, as corporate power is intricately interwoven with the capitalist state and vice versa. Through a territorial logic, states work to defend and promote the interests of nationally based corporations abroad, perceived as essential for the state in providing revenue, employment, and economic and social stability, while corporations in turn exercise a dominant influence in determining state priorities abroad through their overall economic weight, control of major media and information outlets, and direct influence over government through political contributions, donations, and bribes. Through a capitalist logic, the very rules and regulations created and enforced by capitalist states give rise to the existence of corporate entities, which in turn work to further modify state policies in the interest of private profits. Since the early 1980s, these two logics, in the context of declining profitable investment opportunities for Northern-based companies, have compelled powerful capitalist states to more aggressively seek out new markets, investment opportunities, cheap labor, and resources abroad, while cutting social spending and corporate taxes, and privatizing previously underexploited or commonly held resources.1
Within this context, critics have argued that the ethical consumerist movement has emerged as a form of limited, market-driven, ad hoc social protection on the cheap to replace the existence of and aspirations for broader, more universal, more extensive social protections typically associated with state-managed activities. This differs sharply from the more “empowering” vision of ethical consumerism offered by its diverse promoters. Among advocates, one often hears reference to the existence of “consumer society” or “consumer culture” or “consumer sovereignty,” wherein industry is driven by consumers who ultimately use their “consumer power” to determine the market patterns that private companies merely respond to. From this perspective, the existence or lack of socially and ecologically just methods of production and trade in coffee and other industries is not primarily a result of decisions made by corporations and states, but an outcome of consumer behavior – collectively, consumers are “sovereigns” who drive corporate action through their purchasing decisions.
Far from the consumer being king of the market, however, consumers are generally called upon to exercise their consumer power without access to meaningful or substantive information on where a product is produced, under what conditions, and with what social and ecological impacts. Instead, they make market determinations under the manipulation of massive corporate advertising campaigns designed to engineer consumer choices before individuals ever hit the market in the first place. By one calculation, in the United States alone big business spends over a trillion dollars a year on corporate marketing – over 20 times the annual amount estimated by the UN required to eliminate world hunger.2 Under these conditions, middle-class consumers on a global scale crowd into supermarket chains, saturated with corporate images and messages, to select from an artificial array of branded goods produced in similar ways by an increasingly narrow range of corporate giants – what sociologist Anthony Winson refers to as “pseudo-variety.”3
Coffee consumption would appear to take place not within the context of a much celebrated “consumer culture,” but rather within a corporate culture. After a long and continuing process of mergers, bankruptcies, and acquisitions, the global coffee chain has become dominated by a handful of corporate juggernauts, with just five roasters responsible for purchasing nearly half of the world’s supply of green coffee beans: Kraft Foods Group, Nestlé, Sara Lee, Procter & Gamble, and Tchibo. These companies’ oligopolistic control over access to core Northern consumer markets has given them the power to manipulate prices on the global coffee market, and their immense size has given them significant advantages over domestic competitors due to their economies of scale, access to new technologies and innovations, and massive marketing budgets and “brand power.” Increasingly since the 1970s, giant roasters and retailers have pushed the industrialization, mass distribution, and homogenous consumption of international brands through multimillion-dollar marketing strategies.
And yet, it is not only corporations that have vied for consumer loyalties. Growing up alongside the further expansion of corporate power has been the specialty coffee industry, which has offered niche markets for those seeking better ethical, environmental, and health standards, including various forms of fair trade, organic, and sustainable coffees. The best of these initiatives, of which fair trade certification should be considered the industry ethics leader, have been built through substantial “bottom-up” involvement from social justice groups working with small farmer organizatio
ns and have attained limited but important social gains for the participants. These gains, as I will argue, have not been able to match the breadth and impact of state-driven projects, and there is evidence in recent years of fair trade being swallowed up or shuttled aside by watered-down, big money, corporate social responsibility initiatives. While ethical consumerism has grown significantly in popularity in recent years, it is not clear that this popularity has translated into the sort of substantive gains needed by the world’s poorest coffee families, as fair traders must limit their goals to the confines set by a global market beyond their ability to control through “consumer power.”
Coffee branding
Corporate power and wealth within the global coffee chain are based not solely on market share and oligopolistic dominance of roasting and distributing, however essential they are, but also on the ability to define the coffee identity, norms, and quality standards. Sociologists Benoit Daviron and Stefano Ponte have argued that market power in the coffee industry comes not just from struggling to gain the material value of the coffee beans, but increasingly from their “in-person” service and symbolic (subjective elements rooted in a commodity’s reputation) qualities as well.4 Developing and capturing these in-person and symbolic qualities has sparked ever more intensive and expensive marketing battles, ones in which coffee industry leaders have proven particularly skillful and successful at.
Coffee Page 10