July 3, 2020 / 9:38 AM / a month ago

Breakingviews - Review: The callous roots of caffeine capitalism

Dan Streetman, vice president of wholesale and coffee buyer for Irving Farm Coffee Roasters, holds a handful of La Bendicion coffee beans from Nicaragua at Irving Farm in the Manhattan borough of New York September 23, 2014.

LONDON (Reuters Breakingviews) - The British author Tim Marshall once wrote that Africa is “equally cursed and blessed by its resources – blessed in so far as it has natural riches in abundance, but cursed because outsiders have long plundered them”. Augustine Sedgewick’s “Coffeeland” describes El Salvador’s own dubious blessing: the fertile soil on the slopes of the Santa Ana Volcano in the west of the Central American country. The problems raised by its dependence on abundant and enormously productive coffee plantations are reminiscent of those faced by many African nations today.

“Coffeeland” centres on James Hill, a travelling textiles salesman who arrived in El Salvador in the late 19th century from Manchester. At the time, the English city and its surrounding towns were home to the most productive cotton mills in the world. Hill wanted to apply the Industrial Revolution’s innovations to the rural Salvadoran economy. By the second half of the 20th century, coffee accounted for over 90% of the country’s exports, and the Hills were among the “Fourteen Families” who dominated the country politically and economically.  

One of Hill’s innovations was to pay workers at least partly in food. This would not have worked in the thousands of years before the coffee boom, when Salvadorans tended to feed themselves by farming communal land. But following aggressive land-privatisation programmes, many locals were forced to work on coffee plantations to stay alive. Even then, owners took care to annihilate any food – like avocados, papayas or figs – that had the temerity to grow alongside the coffee. 

Hill often comes across as a Dickensian villain. But “Coffeeland” is not just about him. Sedgewick has a knack for compelling digressions, and anybody even remotely interested in the history of the caffeinated drink – including the advent of the now-ubiquitous “coffee break” – will find the book an engrossing read. Short chapters and sudden jumps across geography, time and subject matter give the story vigour, though readers might question the need for a chapter on energy as a scientific concept. 

One problem with a country being so enormously reliant on coffee is that there is little room to innovate. The risk of being undercut by competitors also put pressure on plantation owners to drive down costs, leading to social division and unrest. During the 1980s, El Salvador suffered a civil war funded in part by abductions of rich landowners, including one of Hill’s descendants. In the preceding decades, the country was ruled by a military dictatorship perhaps best defined by the “La Matanza” massacre of 1932, which followed a working-class uprising. This sort of strife was largely absent before the coffee boom. Although it was a small nation lacking an Atlantic coastline, “the other side of the country’s commercial isolation was economic equality,” Sedgewick writes. European travellers in the 19th century observed an “absence of all extreme poverty”.

El Salvador’s challenges are reminiscent of those of many African nations, which are also economically dependent on their natural riches. After centuries of colonial exploitation followed by decades of neglect, the 21st century has thrust the continent’s abundant resources into the spotlight once again. In 2009, China overtook the United States as Africa’s main trading partner, according to the China Africa Research Initiative. The question is whether African countries avoid El Salvador’s fate and begin to lessen their reliance on natural resources. World Bank data from 2009 to 2018 shows that oil-rich countries such as Nigeria and Angola have barely pivoted away from fossil fuel exports.

After the Spanish were booted out of Latin America, Britain’s Foreign Secretary George Canning famously declared, “Spanish America is free, and if we do not mismanage our affairs sadly, she is English.” However, he did not mean that literally. Since El Salvador was never a formal part of the British empire, entrepreneurs felt even less obligation to contribute to the development of a middle class or to any more sustainable industries. 

Similarly, while China touts investment in African schools, universities and badly needed infrastructure, the People’s Republic takes no direct responsibility for the wealth it is helping unlock reaching ordinary people.

British entrepreneurs like James Hill did not sail to Latin America in the name of “gold, God and glory” as the Spanish did. Instead, as Sedgewick writes, they brought the principles of prices, wages and profits. Many of China’s investments in Africa are similarly businesslike: The objective is a reliable supply of natural resources. But without a serious emphasis on developing manufacturing and other industries, many countries risk falling into – or perpetuating – an unhealthy reliance on natural resources. That makes “Coffeeland” a cautionary tale.

Breakingviews

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