The Coffee Industry Is Unequal. A Marxist Economic Theory Explains How.

Coffee is cheap. Despite rising retail prices over the past few years, it remains affordable for the bulk of consumers in the Global North. Because coffee is inexpensive, we drink a lot of it—more than two billion cups every day, worldwide.

It’s all too easy to take coffee for granted. Instead of seeing it as an agricultural commodity—one that takes significant resources, and immense labour, to grow, harvest, process, transport, roast, and brew—consumers are more likely to think of their morning coffee as a basic staple.

The fact that so few coffee drinkers are cognisant of these complexities is by design. The price of coffee is typically kept as low as possible for the end consumer, but that doesn’t mean the industry doesn’t have costs, whether monetary, environmental, or social. It’s just that they’ve been displaced onto someone else—in this case, farmers and workers in producing countries. 

The coffee industry has operated according to these lopsided power dynamics since colonial times, when rich nations in Europe extracted wealth and raw materials from their subjugated dominions. Today, many countries in the Global South are still reliant on exporting cash crops and raw materials to the Global North, often importing the finished goods at a higher price. As Fidel Castro put it in a famous 1953 speech, “We export sugar to import candy, we export hides to import shoes, we export iron to import plows”.

This exemplifies unequal exchange, a Marxist economic theory coined by Arghiri Emmanuel in 1972 which posits that rich countries in the Global North are able to grow their economies and prosper by keeping more of the value of trade with the Global South. “[Rich] countries retain the highest-profit industries for themselves, and push agriculture and other less profitable industries, kind of keep them concentrated in poor countries”, says Kelly Austin, professor of sociology and global studies at Lehigh University in Pennsylvania. 

Take, for example, instant coffee. This sector of the industry is dominated by the largest coffee companies, who source and import the very cheapest beans they can. Those beans are sent to factories which use advanced equipment to process them into instant coffee. That final product is then sold at a significant markup, and often exported back to the very countries that grew the coffee in the first place.

These dynamics go beyond just trade. Rich countries and multinational corporations also externalise the environmental costs of their consumption. Since the 1970s, neoliberal “green development” policies have pushed coffee farmers to intensify their production, clearing shade trees in order to boost yields and meet growing demand. 

The result has been consistently cheap coffee prices for consumers, but stagnant income for farmers, and environmental and social harms for their communities. Coffee does come at a cost—it’s just that those in the Global North aren’t footing the bill.

‘Development is a Zero-Sum Game’

Unequal exchange is part of the wider World Systems Theory, developed by the sociologist Immanuel Wallerstein in the 1970s. It views the global economy as a single interconnected system made up of core, periphery, and semi-periphery countries. Core countries are the richest, most developed, and most powerful, while periphery countries are the least powerful, and generally rely on exporting raw materials and providing cheap labour. Semi-periphery countries are somewhere in between, and act as a buffer between the two.

These categories aren’t fixed, and can change over time. Spain and Portugal were both core countries during the height of their colonial power, but declined to semi-periphery status as their dominance waned. “Development is a zero-sum game in the world system”, says Austin. “It’s for some countries to kind of rise and ascend, essentially through exploitation of other countries”.

Unequal exchange, Austin explains, “really emphasises how trade and the structure of trade and the types of commodities that are traded help to preserve this hierarchy of rich countries and poor countries. Inequalities that are realised through international trade allow rich countries to make more profits off of trade than poor countries do, thus perpetuating economic inequalities”.

Coffee fits neatly into this theory. As Karl Wienhold, Luís Silveira Santos, and Luis F. Goulao wrote in a recent paper, “coffee production and consumption align with the archetypal world system with the vast majority grown in countries of the periphery and consumed in the core”. Where once this system was strictly colonial, today the power of imperial states has largely passed to global multinationals. The top five coffee traders and top 10 roasting companies, all of which are based in Western Europe and the U.S., control about 50% of global trade.

“In coffee, trading and roasting are persistently more profitable—accumulating capital and getting bigger and more efficient machines and stronger brands—making it more difficult for new entrants to compete”, Wienhold tells me. At the same time, he says, “farming is persistently unprofitable, and more difficult to accumulate capital to hope to expand [and] challenge buyers’ power”.

The Green Coffee Revolution

Trade is only one aspect of how unequal exchange shapes the coffee industry. As companies in the Global North captured the coffee industry’s profits, they also outsourced the environmental and social costs of its production to the Global South. This process has been turbocharged over the past 50 years, mirroring the wider Green Revolution in agriculture.

The Green Revolution was kickstarted in the 1940s, when agronomist Norman Borlaug developed high-yielding, disease-resistant wheat varieties. Largely financed by banks, foundations, and development agencies in the Global North, the movement was characterised by the introduction of synthetic fertilisers and pesticides, mechanisation of farming practices, and the building of irrigation infrastructure. It allowed countries across the Global South to vastly increase their food production, and Borlaug has been credited with saving more than a billion lives from famine.

The ideas behind the Green Revolution also impacted coffee. In the 1970s, as coffee leaf rust spread across Latin America, financial institutions and development agencies encouraged producers to “technify” their farming practices. This process involved removing shade trees, planting more productive and rust-resistant coffee varieties, and increasing the use of chemical inputs.

In the decades since, such monoculture production systems have to a large extent replaced the diverse, shade-covered farms that once produced the bulk of the world’s coffee. In Colombia, for example, more than 60% of coffee-producing land was converted from shade- to sun-grown between 1970 and 1990. In Latin America as a whole, it was close to 50%. In the 21st century, according to the 2018 Coffee Barometer, fewer than a quarter of all coffee farms employ multi-layered, diversified shade.

As well as promising to protect against the threat of coffee leaf rust, monoculture or intensified production systems were sold as benefiting farmers economically. Higher-yielding varieties, planted more densely in full sun, increase productivity and thus income—at least in the short term. 

While its successes are obvious and praiseworthy, many of the Green Revolution’s hallmark practices have drawn scrutiny in recent decades. In coffee, intensified monocultural production has brought about severe consequences for the environment and community health. While it may boost yields, intensification does so by causing deforestation and biodiversity loss and putting pressure on water sources from irrigation. 

Such systems also rely heavily on pesticides and fertilisers. The global agrochemical industry, which produces the chemical inputs upon which monoculture coffee plantations rely, is controlled by a handful of multinationals. Their products are increasingly both manufactured and applied in Global South countries (while often being banned in the Global North). This practice allows another slew of global corporations to profit from coffee farmers who, with their shade trees gone and soil depleted, have found themselves ever more dependent on chemical inputs.

The harm from these pesticides is not just environmental. As I have written before, the workers spraying them are often poorly equipped and trained, and can suffer negative health consequences as a result. Some have even died. Runoff from pesticide and fertiliser contaminates drinking water, as well as the soil and even the air, further harming coffee-growing communities.

Coffee’s Hidden Labour

According to Austin, the coffee industry functions as one of the clearest examples of unequal exchange in the modern economy. “When we think about commodities that contribute to a disproportionate share of trade and ecological burden, coffee really rises to the top”, she says.

Coffee is the world’s most widely traded tropical product, and is an important source of export earnings for many countries. Despite local demand increasing in some producing regions, most coffee is still bought and consumed in the Global North where, as a rule, it can’t be grown.

Despite this longstanding dynamic, Austin says, misconceptions abound on both sides of the supply chain: Consumers often fail to realise that coffee is an agricultural product, while many farmers have never even tasted the final beverage themselves. “These blind spots are emblematic of the larger structure of trade and global inequality, which really obscures, on both sides, where our commodities come from, what they’re used for, and who really profits from them”, she says.

Austin has conducted fieldwork in Eastern Uganda for more than a decade. In 2017, she published a study based on interviews with producers in the Bududa district that illustrated the economic, social, and environmental costs of coffee production to farmers and their communities. Coffee is the only export crop grown in Bududa, and the lack of cooperatives and other support in the region means that farmers receive very little for their harvest.

From the interviews, Austin estimated that, on average, farmers in Bududa make about 2.5 cents from every cup of coffee sold in the Global North. In 2016, the average price of a cup of coffee in the U.S. was $2.70, meaning that farmers were receiving less than 1% of the final cup price.

Despite doing most of the coffee planting, tending, and harvesting, Austin found, women additionally receive almost nothing for their labour, as men control the final sale and often keep the money for themselves. “These factors contribute to processes of unequal exchange, as the hidden value of women’s labor allows for greater accumulation of surplus at the top of the coffee commodity chain”, Austin writes.

The Exchange Remains Unequal

For 500 years, European nations forcibly extracted wealth in the form of natural resources and labour from their colonial possessions. Today, while former territories are independent and the coffee trade is built on quote-unquote free markets, many colonial-era imbalances remain. 

In the conclusion of their recent paper, Wienhold and his co-authors note that, as colonial mastery in coffee gave way to corporate dominance, those in power had to refine their methods of control in order to continue extracting value. Instead of outright subjugation and slavery—although that does still exist—the modern industry embraced “neoliberal ideologies of entrepreneurial meritocracy” and held up the free market as all-powerful. Therefore, they write, “many of the most severely exploited farmers control the means of production and even own the land they work, yet somehow remain unable to escape domination”.

The twin forces of ever-increasing demand and consumer resistance to price rises inevitably pressure coffee farmers to expand production at the lowest possible cost. This, in turn, causes deforestation and intensification. As the climate crisis deepens, and we are warned over and over of the dangers facing coffee, it can begin to feel existential.

The industry’s growing interest in agroforestry and regenerative agriculture is a hopeful sign, as is the increased focus on alternative sourcing models and efforts to give farmers more power within the supply chain. But at the end of the day, as long as coffee remains cheap in the Global North, it will continue to be extractive and detrimental to those who grow it. That is the exchange, and it remains unequal.