116. Dockworkers' Strike: Payback Time

 

Dockworkers on strike from Maine to Texas demand fairness. AP News.

Oct. 1, 2024: A strike by dockworkers at 36 ports from Maine to Texas, the first since 1977, began walking the picket lines early Tuesday morning, according to AP News. (click here)

From our perspective at Artisan Coffee Imports, the message is clear: this is payback time and the coffee industry should take note. It's a coincidence, but appropriate, that today is International Coffee Day, a day where the industry celebrates the extensive, often unseen collaboration among countless people across the globe, all working together to deliver that perfect cup each day.

Three years ago the shipping lines took advantage of a post-COVID landslide of shipping demand and raised prices to levels that were beyond gauging. (click here) Their profits tripled. They lined their pockets and those of their shareholders. They should not be at all surprised that the dockworkers who made those profits possible were watching while they worked extra-hours, with extra health-care consequences and zero and minimal pay increases or benefits. 

From AP News: Shipping companies made billions during the pandemic by charging high prices, he said. “Now we want them to pay back. They’re going to pay back,” Local ILA president Boise Butler said.

Apparently, executives in the big shipping lines and at the ports (who are the employers of the dockworkers) are aghast at the ILA labor union's demands. They've been unable to negotiate a contract and haven't even had formal negotiations since June. The ILA has made demands like:

• a 77% pay raise over the six-year life of the contract.
• a complete ban on automation.

These are just demands in the face of estimates like this one of the profits shipping lines have raked in: in 2021 alone, the maritime shipping industry doubled the profits made in the past two decades. (source) 

Making profits is not inherently a bad thing - but what you do with them is. Did the shipping lines work to ensure that dockworkers received compensation, better healthcare, better retirement benefits and did they invest in increased safety on the job? Did they think creatively about funding re-training programs for today's dockworkers so that they would be happy to allow automation?  If a worker can see themselves as the one hired to run the machines - on the docks and perhaps elsewhere, it's an easier change. We need leaders who can envision a transition with their profits - a transition that moves workers into new opportunities with jobs outside the shipping industry where they are begging for people who can manage, repair and maintain robots.  If you don't remember who is actually doing the work, they will remind you.

I hope the strike will not be long. I hope the executives will realize their distributions to shareholders needed to extend to the workforce and this is the time, since it wasn't done three years ago. 

More power to you, ILA. I hope the leaders of global, multi-national coffee roasting companies are taking notes about what happens when we forget on whose backs all those "reported earnings" are built -- or, in the case of coffee -- on whose backs those profits are grown.

"The arc of the moral universe is long, but it bends towards justice"  

Dr. Martin Luther King Jr.

115. Analysis of Rwanda Cherry Price 2024 and the "credit vs cash" issue

Feb. 19, 2024

NAEB's 2024 farmgate price was announced last week at 480 rwf/kg cherry which seems high compared to the 410 rwf/kg cherry of last year. However, when the two are adjusted for the decrease in the value of the Rwandan franc vs the dollar they are practically equal. The strain of inflation is real in its own way, though, of course.

The real, undeniable upward price pressure for Rwanda this year will come from increased competition due to the removal of the zoning policy. This is a huge relief for me and for farmers. NAEB has finally ended its experiment with this unsustainable law which was jeapordizing Rwanda's long-term future as a supplier of top-quality specialty coffee. The zoning policy, simply put, forced farmers to sell to only one washing station in the name of traceability.  

Now all washing stations will have to compete for cherry, bringing market forces to the markets in which farmers sell their cherry, which is a good thing to the extent that markets work in this agricultural sector. For those that may not know, washing stations in Rwanda have three basic ownership structures. There is private and coooperative owned, cooperative owned meaning the farmers themsevles operate it and keep the profits. Among the privates, there are Rwandan private owners and multinational private owners.

In the short term, removing the zoning policy may seem to be a disadvantage for cooperatives versus their multinationals competitors with lots of cash reserves. However, this disadvantage existed before and during the zoning policy. As recent as the 2022 season, we saw site collectors being disloyal to their employer (a cooperative board), because the coop offered them credit while those owned by multinational corporations (MNCs) offered cash. The MNCs offered the same "price", but cash instead of an IOU to be paid in three months after the season ends. In other words, the zoning policy did not correct this market imperfection.

In the forseeable future, we can see solutions to the credit vs. cash issue, which seem more likely to happen if there is no zoning policy restricting farmer choice. For one, cooperatives might do a better job communicating (or "advertising") the advantages of cooperatives for farmers and the community vs. the 'cold cash' that an MNC buyer offers. Cooperatives are there year-round, in the community, offering services like school fee loans, help for the elderly, jobs for the young, women's groups for solidarity and training, and of course, the second-payment that cooperatives try to pay their members. That second payment comes because the coop is farmer-owned and operated. They can emphasize what a difference that is compared to what an owner who lives in Switzerland is doing with the profits on a coffee sale.

A second, clearly helpful solution would be for the government of Rwanda to advocate even more for appropriate agricultural financing for cooperative and Rwandan-owned post-harvest processing organizations. Access to pre-harvest capital is an imperfect market, or said differently, an uneven playing field. MNCs have access to low-cost capital with which to buy cherry and cooperatives have high interest costs (I've heard as high as 24% when the rest of the market was at 16%) and sometimes are denied any access at all. There are high risks, of course. There are good reasons for banks to charge high interest rates and refuse to lend. But there are also innovations in financing that should be accessed on behalf of cooperatives. For example, could financing for several cooperatives in one region be bundled and offered to a lender with average risk over a longer period than what might be offered to a single entity?

On the issue of traceability, we hope that the governmenet of Rwanda continues its good efforts to enhance traceability of Rwanda's specialty coffee. Instead of regulating farmers, it would seem more feasible from the government's perspective, to regulate operators of large transport trucks. Rwanda is a small country with a limited number of paved roads. Is it possible to post enough police checks in each coffee region during peak season to make sure no one is transporting tonnes of southwestern Rusizi cherry to Rwanda's less productive eastern province? I don't know. I hope the experts in NAEB are considering their options to be sure confidence is maintained in the traceability of Rwandan coffee.

114. Improving Access to Pesticides for Women in Rwanda

Understanding the Gap In Access to Pesticide

Research published by the Africa Great Lakes Coffee Support Program found that Rwandan female household heads are less likely than male household heads to receive pesticide for their coffee crop (Gerard, Clay, Lopez, Bowman, & Rukazambuga, 2018). Pesticide is important in controlling coffee pests such as the antestia bug, which is associated with the potato taste defect (PTD) —a defect that reduces the value of coffee from Africa’s Great Lakes Region (Bigirimana, Gerard, Mota-Sanchez, & Gut, 2018).

Many roasters fear potato taste defect (PTD) in Rwandan and Burundian coffee. It's a particularly difficult defect because it cannot be screened out before export. There is no tell-tale black mark on a bean, nor can you cup a sample and be 100% sure that the rest of the bag of beans are the same (good or bad). There might be only one bean with PTD in an an entire 132 lbs jute bag, and it can look perfect!

Since detection of PTD is impossible, the industry focuses instead on prevention. That's where pesticide and integrated pest management comes in. Female headed households are about 18% of Rwanda's coffee population. If these farmers are not getting access to pesticides, they are not part of the prevention solution.

In 2015-2017, the study mentioned above was completed by a research team from Michigan State University and shed some light on why this gender difference exists.

The researchers asked female household heads two questions: 

(1) why, if all farmers are supposed to receive pesticide, are female household heads less likely than male household heads to use it? 

(2) What approaches might improve female household heads’ pesticide access and use?

CLICK HERE to read the paper. 

The study finds the following reasons for the gap between females and males receiving and using pesticide.

Reason 1: Difficulty of spraying pesticide because of heavy sprayers—women in Rwanda generally hire laborers rather than doing their own spraying.

Reason 2: Challenges in accessing pesticide from distribution centers, including not being told when pesticide is available and being given insufficient amounts of pesticide.

Additional barriers to pesticide use: cost and difficulty of hiring laborers; concern that pesticide may be dangerous for women to spray.

The researchers then recommend ways to overcome these challenges:

(1) encourage coffee washing stations to spray female household heads’ farms for them (as is done by some cooperatives); 

(2) study barriers to equitable distribution at the local level.

The findings are themselves important as guidance to agronomists and extension services, but the research is also remarkable. This study is an example of how valuable gender disaggregated data can be. The original field survey in 2015 and 2017 collected the data showing a gap exists. Step two was for another research team in 2020 to ask "why?" They designed the study and implemented additional field research to understand and share the answers.