Dienstag, 15. August 2017

A few questions for Federal Minister of Economic Cooperation and Development Müller about Kenya during his visit in Bad Tölz on August 28, 2017

The local press released the date for an interesting visit in Bad Tölz, a small town somewhat 50 kilometers south of Munich: Gerd Müller, Minister of Economic Cooperation and Development is visiting by invitation of the local branch of the CSU party.

What a joyous day for the residents of the region, which offers plenty of opportunity to ask him a few quite simple questions to learn and understand about his views of fairtrade, e.g. in the coffee sector.

Ten Euros and Fifty Cents
I remember very well before his last departure to Kenya how he talked about fairtrade on Public Radio, Bayerischer Rundfunk. He did not refrain from rendering, that all of us as individuals have an obligation to make fairtrade possible, especially since the ratio between a pack of coffee in the shelfs of a supermarket in Germany at a cost of around ten euros and incomes of 50 cents that farmers in Kenya could generate out of this big amount is fairly imbalanced. Immediately, these statements by the ministers raised questions in my head.

A German proverb talks of comparing apples with pairs, when something is wrong in a calculation. Isn't the Minister comparing two things that do not belong together in the way he presents the coffee trade?

What is the price of green coffee in Germany?
Your excellency, currently green coffee from Kenya sells at a rate between 7,54 USD and 15,21 USD per kg, ex Hamburg, given you buy one sack (offerlist of August 8, 2017, well renown dealer in Hamburg). A simple conclusion: Roasted Kenyan coffee at a price of ten euros in Germany is an impossibility.

What do Kenyan farmers really get out of their coffee?
Kenyan farmers would not be extremely happy about 50 cents for a kilogramm of coffee, but eventually it could be regarded as an income on the higher end, when you compare several years of trading it on. This, let us call it gross income, sees some deductions yet, when the cooperatives take out the debts the farmer owes them from accumulated years. You can already understand, that the farmer is condemned to passivity. Before he sees money, the cooperative has the right and opportunity to deduct something from it. The farmer is the last beneficiary in a long value chain. Sounds better than it actually is. To keep a literally long story short: He gets the leftovers several months after he had delivered his coffee at the gate to the industry.

The sword of the Minister is blunt
If someone wishes to buy Kenyan coffee in a shop in Germany, the asking price approximately starts at 25 euros. In the same moment, the Kenyan farmer is not getting 50 cents for a kilogramm on a regular basis. I assume that Minister Müller is in full control of his words and therefore, I have to ask who in the end is benefitting from this juggling with figures? Is it a coffee industry in Germany, that as a reaction starts throwing so-called special editions of Kenyan coffee on the market, while giving a promise to promote a social project somewhere around the world? Let us face the facts: To call a coffee Kenyan (one of the best options a coffee can be called), it only takes little, following the rules of German law. A small percentage in a pack of roasted coffee actually needs to be from Kenya. All the rest in this pack can be coffee of much lesser quality and price. Can this be called a bluff package? Let us all start calculating when purchasing coffee the next time. We are able to do so.

Fairtrade industry, Bio and resulting sales price
It sounds so nice, but where is the critical consumers making  his home-work, when it comes to to understanding where and how a price for a commodity, in this case coffee, is fixed? Correct, you have to go and check the commodity markets. First stop might be the Nairobi Coffee Exchange, every tuesday, open for the public. Furthermore, coffee is traded in very big stock exchange places around the globe. Pars pro toto let me mention New York. Let me introduce a keyword in connection with prices for coffee that everybody should research: Hedging. Physically most of the global coffee is stocked in gigantic warehouses in the freeport of Hamburg.

What to think of the two coffee evangelists Fairtrade and Bio?
I think whoever sees a personal advantage for himself should make good use of it. May it be virtual or real.

Personally, I can do very good without the two. On the other hand, what I regard as indispensable are quality, quality control and appropriate payments for the farmers. Neither do I regard Fairtrade nor Bio necessarily intertwined with these important factors of actual or future trade relations.

My genuine quality coffees: no Fairtrade, no Bio. And this is very good.

By the way, your excellency: What about Fairtrade on the governent level in Germany or Europe?

Catchword 2,19 Euro tax for roasted coffee per kg plus seven percent VAT on top
Dear Gerd Müller, be honest with your fellow citizens. Why holding back, when it comes to the not so fair behavior of the German government? Isn't it Germany that makes endless profits with each cup of coffee we Germans consume? Precisely speaking: 2,19 Euros per kilogram directly to the pockets of the Finance minister. Only a few countries stick to this old but awful tradition. Let us see who it is: Belgium (0,2479 Euro/kg), Denmark (approx. 0,85 Euro/kg plus 25% VAT), Latvia (approx. 1,37 Euro/kg), Norway (1,14% of customs value) and Switzerland (2% VAT).

Start becoming a fairtrader yourself, Mr Müller!
Go directly to your colleague, the Minister of Finance and start what you urge from others. Start acting fair. Send this money directly to the Kenyan farmers. Half of it in cash, with the other half start a foundation for Training, Marketing and Education for the farmers and their families. Do it on a local level in Kenya. While doing so, do not connect yourself to partners from the global industry of goodwilling people or power brokers. This could be your first step to become a fair trader, since the money would arrive to the extend of 100 percent, where it is needed.

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