Anacafé Responds to Danwatch Report on Labor Conditions in Guatemala

Last month, the Danish organization Danwatch published Bitter Coffee II, the group’s second major investigative report on labor conditions in the coffee sector, primarily regarding farmworkers.

Following its report earlier this year on forced labor concerns in parts of Brazil, the second report focused on Guatemala, sharing its own investigative observations and interviews with people working in coffee and in labor enforcement.

Anacafé, the nation’s coffee organization, which has been supporting Guatemalan coffee for more than half a century, was contacted during the investigation and briefly mentioned during the report. Representatives of Anacafé have since reached out to Daily Coffee News to share more about their reactions to the report and, more generally, broader issues shaping the coffee labor landscape throughout the country.

In response to Danwatch requests during the investigation, Anacafé wrote the organization a long letter addressing each of the issues Danwatch alleged in its report, particularly those related to illegal child labor, signs of forced labor, and threats to unions and attempts to organize labor. That letter is available in full here. The group has also sent a more condensed response letter to Daily Coffee News, published below in full:

Response from Anacafé

Last week, Danish Organization Danwatch released a report titled ¨Bitter Coffee II¨ alleging that the Guatemalan Coffee Sector is plagued with Child labor and forced labor. This report is not only a challenge to the Guatemalan Coffee Sector but to the whole coffee industry. In response to Danwatch´s interview questions back in June 2016, The National Coffee Association of Guatemala (Anacafé) gave a detailed response with facts and statistics about the Guatemalan Coffee Sector (read Anacafé´s response.) However the report only presented very small quotes of the answer sent from Anacafé that does not provide a full context about the coffee sector´s reality. In the same way the report makes the reader assume that the allegations are a widespread practice and that the Guatemalan Coffee sector has not been proactive to confront the current obstacles. For this reason, we would like to share our response.

Guatemala has a lot of obstacles to overcome, especially in the rural coffee sector.

Our vision is to continuously improve conditions for producers and people who work in this industry. There is a vital need for collective and inclusive dialogues that will promote measurable improvements to address the challenges of this sector, including not only farmworker inclusion but the consideration and healthy growth of the producing sector. Still, there is active work going on in the Guatemalan coffee sector addressing the existing challenges. The issues facing producing nations are very complex, and in order to overcome them, they will require the commitment, resources, and collaboration of producers, trade, certifying agencies, industry, and governments.

For over 56 years, ANACAFE has represented the interests of more than 125,000 coffee producers in the Republic of Guatemala.  Coffee is grown in 204 of the 340 municipalities of the country making it the most important source of job creation of the agro-industrial sector, which is estimated in more than 500,000 direct jobs.  Additionally, this sector is a leading contributor to foreign exchange generation, as well as, income in rural areas of the country.

Aware of the need of joining efforts in order to face the challenges, ANACAFE was created with the financial contribution of all the coffee growers. Through ANACAFE, coffee producers receive technical support and services that allow coffee growers to comply with national and international standards and regulations related to this sector.  In cooperation with other agricultural clusters, Guatemala´s coffee sector has worked hard to promote best practices. Over 50% of our budget is allocated to activities that prevent child labor, forced labor, and for training and skill building programs. Our major asset is our workforce, it represents approximately 65% of our production cost and this is why coffee producers are always seeking to find better ways to improve farmworkers´ skills.

These initiatives are not new; they have always been part ANACAFE’s work program.  In addition, for more than 21 years, FUNCAFE (The Foundation for Rural Development of the Coffee Sector) has been working on programs to promote education, health, and food security.  All these efforts are focused on strengthening workers and those communities dependent of this important sector though education, food security, health, and programs for gender integration.

We believe the report did not include all the efforts and information made available to Datwatch in Anacafé´s initial response, for which we provide short answers to the allegations below and our original response attached:

Allegation 1 – Gourmet coffee picked by young children

In accordance with priority public policies of the State of Guatemala, since 1998 the coffee sector has worked actively and on a permanent basis through the Foundation for Rural Development of the Coffee Sector -FUNCAFE- to prevent child labour and improve living conditions in rural communities, especially in the areas of education, health and food/nutritional security, contributing with 10 of the 17 objectives of sustainable development promoted by the United Nations for 2030.

With the technical support of the International Labour Organization –ILO-, a pilot program was implemented in the western part of the country (a region with the highest percentage of children involved in some kind of task, including family activities), to prevent child labour. The results were satisfactory and good practices were systematized in order to adopt them as permanent programs within the work FUNCAFE develops. The activities were strategically linked to formal and informal education, from kindergarten to high school education, and are articulated in accordance with national plans looking into the future as of 2020.

In protection of children and adolescents, in addition to the specific actions already mentioned, public policies are promoted through the participation of the representative of FUNCAFE in the National Council to Prevent and Eradicate Child Labour –CONAPETI, for its Spanish acronym-. Some of the actions that have resulted from CONAPETI are:

1. The creation of 12 departmental committees that aim to make Guatemala a country free of child labour, and that in addition of awareness campaigns, it promotes actions to improve family income through productive projects intended for parents.
2. The proposal to amend the law to harmonize the minimum working age to with the years of free schooling provided by the State of Guatemala, elevating the minimum age for admission to employment to 16 years of age.
3. The proposal to pass into law the agreement that identifies, at the national level, the worst forms of child labour, which now are prohibited for minors, such as: tasks that involve exposure to agrochemicals, fertilizers, pesticides, insecticides, herbicides, and fuels.
4. The proposal to incorporate criminal sanctions to the non-compliance of the previous provisions.

It is worth mentioning some important aspects related to migration of Guatemalan workers:

The migration, in the case of coffee picking and other agricultural activities that require intensive workforce during harvest, is temporal and workers go back to their place of origin. The coffee production peak is during the months of November, December and January, same period of school vacations, which begin in October and end on January 14th of each year, and therefore this cultural practice of migrant workers that displace together with their families, does not affect directly their children’s access to education.

Since coffee picking is one of the main sources of employment in the rural areas, the crisis caused by coffee prices in 2001 gave place to the migration of several coffee pickers to the metropolitan area to work with a lower remuneration, a situation which repeated during the financial crisis of 2008 and 2009.

It is also important to take into account the effects that with time internal migrations have in the structure of coffee production. Many workers that have migrated from coffee plantations work today have their own small coffee farms, increasing the number of small producers, most of whom are organized in different associations. ANACAFE promotes producer organizations, first by creating Friendship and Working Groups that will later become cooperatives. Forty-five percent of these groups represent micro and small producers that work in family based units and that do not need to recruit more workers, and ANACAFE has a work program to promote their formalization.

Allegation 2 – Young children pick coffee under armed guard

The conditions of insecurity of the country and the inability of the authorities to guarantee civil security conditions and the right to private property, force Guatemalans to pay for private security services. Numbers show that 25% of production costs of agricultural products are associated with security costs. Producers that are not able to cover these costs are more exposed to having their coffee stolen during the harvest, storage or transportation processes.

While this title, ¨Young children pick coffee under armed guard¨, almost gives the understanding that children are picking coffee at gun point. The reality is that private security is not only used in the agricultural sector to prevent theft, but all over the country due to Violence. The presence of individual gangs and criminal groups, or those associated with organized crime, has made it necessary to increase private security services. Urban homes, restaurants, public places, and even schools are not foreign to the presence of armed guards.

Allegation 3 – Union organizers put their lives on the line

The coffee sector respects the freedom of association and to join unions, as well as the right of workers to choose the kind of association they prefer. The kind of association that has been more successful for the coffee sector is “Solidarity Association”, promoting a culture of saving, solidarity, teamwork and a harmonious relationship between workers and employers.

ANACAFE has success stories of coffee productive units, where workers are organized in a solidarity association, and through which several services are provided, such as: the supply of groceries and basic food basket products, transportation, and savings and loan funds. Even ANACAFE has had its own Solidarity Association at its headquarters for more than 25 years.

Allegation 4 – Widespread indicators of forced labour on Guatemala’s coffee plantations

Anacafé has a Learning How to Compete Better Program, for the dissemination of information and training among its members that includes issues on labour regulation compliance, work contracts, salary and labour benefits payments, working days, occupational safety and health, non-discrimination, etc.

It is worth noting that the compliance of labour regulations applies to the coffee sector that recruits employees to work their crops, this is not the case for small producers that work for themselves (self-employed) and that represent 29.5% of the population in the rural areas, according to data from ENCOVI 2014.

Regarding payments, the minimum wages in Guatemala are reviewed annually by the National Commission on Wages, comprised by representatives of the government, workers and employers. The amount established each year is the same for all agricultural and non-agricultural activities, regardless of the different living conditions in rural areas.

In the past eight years the minimum wage has increased by 55%, and this percentage is higher than the increase reported for international coffee prices, and this situation does not allow improvement of living conditions of small producers, for whom growing coffee represents their main source of income.

The following graphic shows the trends of coffee prices and the increase reported on minimum wages. Even when the percentage of the coffee price seems to be high, the absolute value of the average price is lower than the average production cost.

A common practice in many countries of origin is to pay temporary coffee pickers according to productivity and the amount of coffee they pick. Producers are not able to afford cherries over-ripening on trees as this can come at a huge financial loss. In Guatemala they are paid by the quintal to encourage productivity. Some extremely skilled coffee pickers can collect more than 2.5 quintales of coffee by themselves, giving them the potential to earn more than minimum wage.

Even if coffee growers promote and apply sustainable practices, this all has to make economic sense. In order for this initiative to be successful it is imperative that the industry and coffee drinkers be a part of the process. The figures below show the importance of involving all stakeholders in the supply chain of these efforts:

• From one kilo of roasted and ground coffee you can make 100 cups, which in a European restaurant sells, for at least, two dollars per cup; this represents an income of 200 dollars per kilo, and producers, with the current market prices, are only paid 2.6 dollars per kilo. Coffee drinkers are not aware that only less than 1% of what they pay is given to the producers.

Furthermore, while many countries’ currencies have depreciated against the Dollar, with exchange rates that favor foreign trade. The Guatemalan Quetzal has appreciated against the Dollar. This has mainly resulted in less gross income for local exporters/producers, and it´s a competitive loss against other countries. Low prices, increasing costs of production, lower productivity due to climate change and Coffee Rust impact, and appreciating exchange rates are taking a toll on profitability and the sustainability of the coffee sector. Some farms are being abandoned or replaced with other crops, and the younger generations that do not see a future in coffee, are migrating and moving to other activities.

We believe that the value of the producer in the coffee chain is not properly acknowledged; that there is a clear disparity in the distribution of economic benefits; and that the major part of these stay in the industry and establishments that provide services to the consumers. The objectives of sustainable development for 2030 hope to eradicate poverty everywhere and forever, and this is only possible through global commitment and solidarity.

Our coffee sector faces challenges and these are not ignored by Guatemalan Coffee Growers. The sustainability of the industry needs to be evaluated with an integrated and holistic view, considering the social, environmental, and economic elements that comprise sustainability. However, this involves the collaboration and involvement of all actors of the coffee chain and not just one end. In a ¨$200bn retail revenue market, farmers only receive $15bn¨ according to the Colombian growers’ federation (read quote here in the financial Times). We need to be an inclusive industry that enforces prosperity for each actor of the value chain. The Guatemalan Coffee sector is willing and open to meet and work together on initiatives that will bring prosperity to the families of this sector.