Scarcity and surfeit : the ecology of Africa's conflicts

Conflict and Coffee in Burundi 137

The beneficiaries in this arrangement have largely been American and

European middlemen and roasters who hold an important place in the coffee

commodity chain. Over 40% of global coffee trade is in the hands of only four

companies, led by Starbucks, which holds 50% of sales in the terminal markets.

Three-quarters of the roasting business in the United States, home of the world's

largest instant coffee industry, is in the hands of only three roasters, with General

Foods, Nestle for Maxwell House and Nescafe respectively leading the indusny.

This international market structure creates an oligopolistic market whose pene-

tration by producing countries remains a daunting chalienge.

The fairfalternative trade movement has emerged to reduce the length of

the chain to benefit the primary producer.lw Fair trade is based on the need

for more equitable, less exploitative dealings with coffee producers. It empha-

sises minimum prices for inputs, credit availability at concessionary rates.

long-term relationships with farmers' cooperatives where they exist, and the

bypassing of middlemen. The Fair Trade initiative, however, remains a nas-

cent developed world initiative that will take time to penetrate the complex

web of intermediaries in the coffee production chain on the end of primary

production and processing.

Distribution of Income

The distribution of income from the coffee subsector has until recently been
determined by OCIBU. As stated earlier, OClBU set out a payment schedule
for all the players in the subsector. A commission chaired by OClBU that
includes government ministries and agencies' representatives, farmers, wash-
ing stations, hulling factories and exporters representatives now schedules
the payments. The payment schedule is set out in the grille de remuneration
qualitatiue that factors in production projections, export prices and sales, as
well as the cost of intermediaries.
Increase in producer price in tandem with increased production and rev-
enue has, however, not been matched. The IMF laments that
"... Despite these important nominal increments and superior quality
of Burundi's arabica, producer prices have typically remained below
corresponding prices in neighbouring countries and have displayed a
low degree of correlation with international coffee prices ... All these
have eroded the incentives for coffee production at the level of farmers
and have thus undermined the competitiveness of Burundi as a coffee
producer and exporter. Moreover a not insignificant - and increasing -
part of production is regularly being smuggled to neighbouring coun-
tries, especially during periods of relatively low producer prices."lO'

The price stabilisation role of OClBU allowed it to reserve payment during
bumper revenue harvests to guard against revenue shortfalls in times of