High hopes, low prices

Eduardo Camarena, a coffee grower in the Mexican state of Chiapas, has faced numerous personal challenges. He has had problems on his finca (ranch): the plants would not grow properly and he had to struggle with drought. Then, the “Nescafé Plan” was introduced. “Taking part in it,” says Camarena, while cheerful music plays in the background, “was the best decision I could have made in my life.” The agronomists from Nestlé showed him how to manage his business and how to improve the harvests. He says that, yes, he became a better human being. And the most important thing: “I could keep the promise I made to my late grandfather” and continue to run the family farm."

On 15th February 2024, nine years after the production of the Nestlé advertisement video described above, we are standing at the “Ruta del Café”, the road where each coffee farm abuts on another. Some 200 farmers from all over the region have gathered in the early morning to block the road leading from Tapachula, the main town of the Soconusco coffee region. Their anger is directed towards the Swiss food company. “Nestlé – Company without Ethics, impoverishes Chiapas” can be seen on one banner. On another: “When poverty is a fact, demonstrating is a right.” Eduardo Camarena, the farmer in the Nescafé video, stands in front of burning coffee sacks labelled “Plan Nescafé” and shouts “Plan Nescafé – pura mentira!” – “Nescafé Plan – nothing but lies!”

So what happened in the intervening period?

The big promise

The Ruta del Café is about one hour from Tapachula, where a dusty little road riddled with large stone blocks leads to his finca, “El Capricho” – with 70 hectares of land a medium-sized coffee farm. We climb into Camarena’s utility vehicle, which is no longer new, but still fully capable off-road. He immediately begins to tell his story. “The major problem in the region is that we have changed from Arabica to Robusta varieties. Fourteen years ago, agronomists from Nestlé came to the region. They told us that they would support us, if we switched varieties, with training courses and high-yield plants. This would enable us to double our incomes.”

Nestlé needs Robusta coffee, in particular for the production of Nescafé instant coffee; which is a booming market. Robusta varieties are generally more resistant and easier to grow than Arabica. They are also regarded as being of poorer quality and accordingly fetch lower prices.

Halfway to Camerena’s farm we meet a group of men, all small scale farmers with a maximum of two or three hectares of land, like the large majority of coffee producers in Soconusco and throughout the world. They too have switched to Robusta. They are visibly angry and one of them says,

Indeed, since converting to Robusta, they are totally dependent on the food giant. It’s true that they are not obliged to sell to Nestlé, but in the region there are practically no other buyers for Robusta.

The coffee is not procured by Nestlé directly, but through intermediary companies – in Tapachula these are mainly Casemex, EGOS and Merino – which buy the dried coffee cherries from the producers during the harvest period from October to March. Farmers with larger farms, such as Eduardo Camarena, bring their harvest to the companies’ warehouses themselves, while small farmers usually sell it on the farm to a middleman, known as a “coyote”, who organizes the transport to the intermediary companies. There, the beans are peeled in a process called milling, and sold on to Nestlé. As a representative of EGOS confirmed, 100 percent of their coffee goes to Nestlé.

After three years of the Nescafé Plan: “the end of the fiesta”

On arrival at “El Capricho”, Camarena shows us his Nescafé Plan documentation: the conditions, with which he must comply under the sustainability standard 4C (see box below), school documents, class photos. He shows us a class photo with the “first generation of the Nescafé School”. There he is with his 54 fellow students, all of whom come from federal states in the south of Mexico. For more than three years he attended courses and received Nestlé seedlings, while Nestlé agronomists instructed him on running his farm. Even Nestlé managers from Switzerland came to visit him. “And then,” he says with sarcasm, “the fiesta came to an end.”

He had poured a lot of money into the conversion of his farm, in order to comply with the 4C requirements with respect to working conditions and the environment. However, the sums did not add up with the prices being paid. “Even without the expensive fertilizer, production costs me almost 30 pesos per kilo. Nestlé pays me less than that.” The courses ran under the title “Joint Value Creation in the Coffee Company”. The aim of the course was to train the farmers to be entrepreneurs, with Nestlé promising that they would also profit. Camarena states bitterly:

Elmar Morales shares Camarena’s experiences. The coffee farmer lives with his wife, two small children and his parents on the family finca. He, too, believed Nestlé’s promise and in 2012 became one of the “second generation” of the Nescafé Plan farmers. Now, all he has left from it is anger and frustration. Morales is particularly hurt that his face and that of his mother have been used on Nescafé labels with the statement that drinking this coffee helps the farmers in Chiapas to a better life.

At the end of January 2024, he met with Eduardo Camarena and other coffee farmers to express their displeasure to the local media and write a letter of protest to Nestlé. They complained that the price of 26 pesos they currently receive for their coffee is completely inadequate and demand a minimum price of 35 Mexican pesos per kilo (1.80 Euros, as of February 24). According to them, this would barely be enough to cover production costs.

The current price paid is significantly lower than the previous year's price, despite the fact that the Robusta price on the globally authoritative London Stock Exchange has climbed by 50 percent in the same period to its highest level in 30 years. Nestlé states that its pricing is based on trends on the international markets. The farmers say that, in the past, a low price was often justified by the low market rate. Now that this is high, however, it apparently plays no role.

The low price is all the more problematic for farmers as they have to contend with a sharp rise in production and living costs. Those who could afford it therefore held back their coffee for the time being. However, many were forced to sell at the beginning of the current season as they needed the money to finance the rest of the harvest.

To make a good living from growing coffee, they believe they would need around 40 to 50 pesos. However, asking such prices seems completely illusory in view of the current situation. As one female farmer puts it, "We are not asking for the pearls of the Holy Virgin! All that we demand is a price that lets us live with dignity.” However, in response to the protest letter, Nestlé initially declared that it was not responsible. The producers should address their concerns to the local intermediary companies.

On the morning of 5^th February, 25 coffee farmers gather outside the gates of Casemex to complain to the head of the company. Elmar Morales takes the floor. In an agitated voice, he says: “At the Nescafé School they taught us to double production. Then they dropped us. They taught us values, principles and ethics. What has happened to all the theory?” The head of Casemex listens, a little pale but patiently. He confirms what has long been clear to everyone present: that he cannot change the price – which is set by Nestlé. He would pass on their complaints to the company and let them know as soon as he received an answer.

A few days later we are in a taxi with Octaviano Morales Salas on the way to Villaflor, about one-and-a-half hours away from Tapachula. Three hundred and twenty land owners live in the district, farming between half a hectare and 15 hectares of land, explains the 70-year old. They were all intended to make a living from Robusta coffee, which they produce for Nestlé. Morales Salas calls it “el café de los pobres”, the poor man’s coffee.

On this February day a “junta” is taking place. This is a meeting, held every two to three months, at which the representatives from the surrounding villages come together to discuss concerns and to make decisions. The low price of coffee is on today’s agenda. Eventually some 40 people arrive at the community hall. Morales Salas takes the floor and deplores the consequences of Nestlé’s pricing policy.

After the meeting, this smallholder explains that it’s too expensive for most farmers in the area to participate in 4C. They would have to fulfil conditions that would cause a lot of extra work and high costs. In theory, Nestlé pays a surcharge of 1.20 pesos per kilo (6 cents) for 4C. However, according to Morales Salas, even this minimal surcharge remains mostly theoretical. In practice, buyers would push the price down again by complaining about quality, so that they would often still get the better price from the “Coyote”. That’s why most of them would prefer to sell to him. Although the middlemen with the apt name do not pay good prices either, they do not impose any conditions on production. Many small farmers are also dependent on them because they grant them loans, albeit at extortionate interest rates. This is because the money from coffee sales does not last until the next harvest, and most of them have hardly any opportunities for additional income, so food is also scarce in July and August.

It's also interesting to note that conventionally produced coffee also appears to end up with EGOS, Casemex or Merino via Coyote. The intermediary companies are expected to guarantee that the coffee they buy is 4C-certified. They form so-called “4C units”, directly managed by Nestlé, and are therefore responsible for implementing the sustainability standard on the farms from which Nestlé sources coffee.

We wanted to confront the intermediaries and 4C certification offices with these allegations. However, our enquiries remained unanswered despite repeated follow-ups. Nestlé has not answered our questions on this topic either.

Coffee producers in Soconusco are currently struggling with many problems. Plagues of fungi and pests are repeatedly reducing their harvest, and they are increasingly feeling the effects of climate change. They calculate that insufficient rainfall in 2023 has led to a reduction in yields of 10 to 15 percent. To make things worse, there is an acute shortage of labour for harvesting the coffee and for plantation management. The workers traditionally come from neighbouring Guatemala, where there is even greater poverty. They earn around 10 Euros per day – a wage that the coffee farmers can hardly afford to pay and scarcely enough for the workers to live on. Tortilla, the staple foodstuff in Chiapas, currently costs 1.20 Euros per kilo. And at the current rate of exchange of the peso it is scarcely worth the Guatemalans’ while to come to Chiapas to work. In any case, many of them prefer to try their luck in the north of the country or in the USA.

We travel with Marbella Salas and her husband Luis Figueroa to their “ranchito”, as they call their 5 hectare coffee farm. Salas points to a row of plants, which are all scarcely a metre high: “Those are clones from Nestlé.” They are increasingly replacing their traditional plants with potentially higher-yielding cultures. She explains, however, that many of the coffee farmers in the region would prefer the traditional plants. This is because the Nestlé seedlings would only bear a small quantity of fruit if they are not fertilized, and most of the farmers cannot afford these products. They can only manage because Luis also works in construction during the Summer months. In addition, the clones quickly die if there is not enough rain. And they have to be replaced every eight years, whereas the traditional plants can grow for 50 years.

On the lane to their farm we meet a man about 60 years old, followed by a clearly younger man; both are carrying machetes. The older man starts to chat with us. He is a small farmer and produces Arabica and Robusta for Nestlé on 2.5 hectares. While he chats with his neighbours Marbella and Luis, we talk to the young man, his employee. Like all the workers we meet, he is very reluctant to speak out, unlike the farmers. Nevertheless, he is quick to say: “I dream of migrating to the USA this year.” He is hoping for a work visa, as he has no money to make the journey. Five years ago he worked on a larger finca, but he only lasted there for two weeks. “On the large farms you have to get up at 4 o’clock,” he says, “and there is usually only water, beans and tortilla to eat.” If you want to sleep on a mattress with a blanket, you have to bring your own.

The misery of the workers in Soconusco has already been documented in 2016 in the Mexican-US film Cosecha de Miseria. On the farm of one of Eduardo Camarena’s neighbours, a 4C farmer like him, the film discovered that the accommodation conditions were unfit for human habitation. In addition, everywhere on the Ruta del Café the team of reporters met children from Guatemala, who picked the berries and dragged sacks of coffee weighing up to 50 kilos.

Has the situation improved since then? “It is impossible to tell,” explains Julio García, an adviser for the ILO (International Labour Organisation) in Chiapas and the author of a study on the subject. There are simply no figures available, and during our visit we did not witness scenes similar to those depicted in the film. García confirmed our suspicion that this was simply because the harvest workers from Guatemala did not come this year – they traditionally bring their children with them. But the risk factors for children in the coffee sector in Chiapas, according to García, have certainly not been reduced.

The greatest risk is still posed by the very low incomes of the farmers, caused primarily by the low prices for coffee. As a consequence, especially in the case of small farmers in Chiapas and all over the world, child labour within the family is widespread. Many fall into poverty with devastating consequences, ranging from insufficient healthcare through lack of educational opportunities to seasonal food insecurity.

The development economist Vera Espindola worked as a coffee expert at the Mexican Ministry of Agriculture and now works in a specialty coffee company. “The prices received by the coffee producers – both for Arabica and for Robusta – usually barely cover the production costs,” she says. Usually this means that they live in poverty and without an income that would cover the most important basic needs.

In Espindola’s opinion the main reason for this is “the fundamental asymmetries of power between purchasers and farmers”. This disparity has become more acute in the last 15 years, according to the expert. This contrasts with the fact that coffee companies have launched countless voluntary sustainability programs and sector initiatives during this period, which should have improved the living conditions of producers. It’s estimated that around 5.5 million – almost half – of the world’s coffee farmers continue to live in poverty, and the vast majority of coffee producers are far from earning a living income. The right to such an income is one of the human rights enshrined in the International Covenant on Economic, Social and Cultural Rights. However, while coffee companies have been making more and more profits, the proportion of value creation that goes to the producers – the workers usually do not even figure in this calculation – has even fallen.

For Ric Rhinehart, a coffee expert and former CEO of the global Specialty Coffee Association, the global umbrella organization for specialty coffee, it’s no surprise that these sustainability efforts have not borne fruit: “The corporations’ promises are completely misleading, as they use their own metrics of sustainability, which is directed towards squeezing the maximum added value from the farmers.” 

Negotiations with Nestlé – a farce

“Precio justo, precio justo!” – "fair prices, fair prices!” – chants the group of about 200 people, who have gathered on the Ruta del Café in the early morning of 15^th February. After waiting in vain for a reaction from Nestlé, they back up their demand with a road-block. For the entire morning they block the road on the outskirts of Tapachula, where the intermediate trading companies are located. In front of the cameras of the local media they burn Nescafé Plan coffee sacks and Nestlé Robusta seedlings.

The pressure seems to work. A local government representative promises the protesters a discussion with Nestlé Mexico in Tuxtla Gutierrez, the capital of Chiapas. At the meeting ten days later, the coffee producers, who have travelled from Tapachula, discover that no-one from the Nestlé purchasing department has appeared and those present have no authority to discuss prices. However, in three days’ time they would receive a response to their price demand. Sure enough, the answer arrives punctually, delivering a single word: No.

The whole thing has become “una burla de Nestlé” (“mockery by Nestlé”) – a farce – laments coffee farmer Julio Castillo, who was at the meeting. As was the case last year, the price was gradually increased, but not to the minimum price demanded. In fact, taking inflation into account, they are actually getting less in real terms than last year. However, they are forced to sell. Slowly but surely, the coffee deteriorates and they are threatened with losing everything. In addition, many of them have to settle pressing debts.

The farmers have run out of steam. Castillo explains: “We are coffee farmers. We neither want nor are we able to spend our time fighting with Nestlé.” All they would wish is that the Nescafé Plan become what it was meant to be: that is, a programme in which coffee producers and the company work together in an amicable fashion, for the good of all.

They now want to use the months until the next harvest, explains Castillo, to organize themselves better, so that the fiasco of the price of this harvest season is not repeated. However, Eduardo Camarena says that he is not very optimistic. He is afraid that Nestlé will intensify even further its aggressive purchasing policy, and that in addition the harvest threatens to be even worse than this year because of the current drought. However, for him – as for most of the Soconusco coffee producers – giving up is not an option. “I love coffee” he explains briefly and succinctly. In addition, most of the farmers here could not afford to convert to another crop.

What was the message of the Nescafé advertising clip again? Eduardo Camarena promised his grandfather to continue to work the farm. However, in order for this to be fulfilled, not only in the film but also in real life, he neither needs courses in farm management nor over-bred seedlings. The only thing that he actually needs is that the Swiss food giant pay him a price for the coffee that is sufficient to survive on.

Nestlé’s reaction

In its initial reaction to the current research, Nestlé replied that the company strongly believes that “coffee farmers should earn a sufficient income to maintain a decent standard of living for them and their families.” However, in a “coffee market contingent on supply and demand”, there were “no easy solutions“ to ensure that this is achieved. The group states that it does not have a minimum price guarantee, but that it offers “the most competitive prices in an open marketplace” as well as “a premium for responsibly sourced coffee” depending on the origin and quality required.

In its response, Nestlé does not say a single word about our questions on the specific situation in Soconusco and the coffee farmers’ protests. The question of why Nestlé has not responded to their price demands remains unanswered. Instead, the company informs us that more than 7000 coffee producers in Chiapas are participating in the Nescafé Plan, which “supports coffee-growing communities to increase productivity, reduce input costs, and improve livelihoods”. Nestlé maintains that the company “is strongly committed to the responsible and sustainable sourcing of coffee” in Mexico and values the positive impact this commitment has “on the economy and the development of Mexican coffee-growing communities”.

The farmers who grow coffee for Nestlé in Chiapas have launched a petition to Nestlé. Public Eye supports the campaign - please sign their appeal (in Spanish):

^Imprint

Text: Florian Blumer
Collaboration: Carla Hoinkes, Mariana Morales
English translation and editing: Swisstranslate / alphadoc
Photos and videos: Damián Sánchez, Florian Blumer
Map and web implementation: Fabian Lang