Coffee and economic growth in Colombia: rise and social change

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"Coffee is King": The rise and fall of coffee in Colombia, economic growth and social change.

Colombia first became an exporting area in the sixteenth century, under the Spanish arrangement of mercantilism. Spanish imperial rule defined a great deal of Colombia's social and economic development. The colony became an exporter of raw materials, predominantly precious metals, to the mother country. With its colonial position came a highly planned socioeconomic system founded on slavery, indentured servitude, and restricted foreign contact. Colombia's contemporary economy, based on coffee and other agricultural exports, did not materialize until well after its independence in 1810, when local entrepreneurs were free to take advantage of on world markets other than Spain. The late nineteenth century saw the development of tobacco and coffee export industries, which really enlarged the merchant class and led to population growth and the enlargement of cities. Wealth was concentrated in agriculture and commerce, two areas that centered on opening channels to world markets, a process that continued slowly but progressively throughout the nineteenth century (Colombia -- Economy, n.d.).

Coffee, comprising growing and processing, is one of the most significant legitimate industries in Colombia (Ramirez-Vallejo, 2003). Economic modernization, supported by the coffee industry, became important at the turn of the century. Modernization brought social changes and mounting demands that produced a variety of challenges to the leading position of the traditional elite. "The populist movements of the 1940s and 1970s, the military dictatorship of the 1950s, the rise of guerrilla activity in the 1960s through the 1980s, and the emergence of drug traffickers as a major economic and social element in the 1970s and 1980s" (Columbia History, n.d.). The augment in industrialization and the immigration of peasants to the cities speed up the rate of urbanization and the development of urban working and lower classes. "The heightened need for infrastructure, both within a given city and among urban areas, spurred the growing involvement of the state in the economy, especially during the reformist period in the 1930s and 1940s. By the 1980s, the state had become an important investor in and manager of strategic sectors of the economy, such as energy resources, transportation, and communications" (Columbia History, n.d.).

Colombia has a profound tradition as a coffee producing and exporting nation. Coffee sector doings has laid the foundation for the country's economic growth and development. The manufacture and marketing of coffee mobilizes significant human and financial resources and stimulates a complete course of economic interrelations. "Commercial growing dates back to the 1870s. In the 1920s, Colombia exported 2.3 million 70-kilo bags of coffee, valued at over $106 million. This total represented 65% of Colombian exports for that year. In 2001, with exports of over 10 million bags representing $1.4 billion in revenue, coffee continued to play a key role in the Colombian economy. As of 2001, Colombia produced 10% of the world's coffee total exports" (Ramirez-Vallejo, 2003).

In the mid 1970s coffee in Columbia made up about half of their legal exports. Throughout the global roar in the 1990s, as retail shops began opening up on street corners throughout the developed world, Columbia's coffee industry bottomed out. By 1995, Columbia's coffee bean industry had endured immensely. Coffee dropped from fifty percent to a mere seven percent of their legal exports. Thousands of farmers left the country, many more traded coffee for more profitable cash crops such as coca and opium. And now oil has taken the place of coffee as the number one legal export, even though coffee farmers persist to employ the most workers of any industry in Columbia (Frank, 2004).

"Coffee prices in South America peaked during the late 1960s to 1970s, a pound of coffee from the fields of Columbia sold at an average of $3 per pound. But by October 2001, the price of coffee per pound had dropped to $0.62 per pound. The Columbian market at the time was regulated by The Columbia Coffee Federation (FNC); a quasi-labor union that represented coffee producers. The organization itself was founded in 1928, and quickly became the political voice for rural farmers who had little clout and minimal access to policy makers" (Frank, 2004). Almost all coffee farmers were profiting during these rewarding years. Agriculture was the business to be in if one wanted to make a good legal living in Columbia. However, the golden years didn't last long and things took a turn for the worse (Frank, 2004).

As of 2000, coffee made up almost four percent Colombian GDP and fourteen percent of Colombian exports. The coffee industry offers employment for over eight hundred thousand people, representing almost a third of entire rural employment. For more than one century coffee produced the preponderance of the country's overseas income, and today its greatest financial and social significance lies in its ability to create employment, reallocate income, and encourage area development, sustaining the social stability of the coffee zones (Ramirez-Vallejo, 2003).