COFFEE SLUMP FUELS PERU'S COCA BONANZA

Oxfam is launching a campaign to help coffee-growers in Brazil, Colombia
and Peru achieve a just price for their beans.

With coffee prices so low, many growers in Peru are switching to coca in
order to make ends meet.

With 225,000 hectares under cultivation, Peru's coffee production pales in
comparison with two of its South American neighbours, Brazil and Colombia.

But it is still one of the world's top 10 producers and its coffee is top
quality.

Yet because most of its 125,000 coffee growers are smallholders - with
little marketing muscle - they have suffered a disproportionately large
amount of pain from the slump in world coffee prices.

Most of Peru's coffee grows on the eastern foothills of the Andes.

In many areas, coffee competes for plantation space with coca, the raw
material for cocaine.

Crop of choice

It is a battle the coca leaf often wins.

The regional cost of growing coffee is more than $1.5 per kilogramme; the
world market price just half a dollar per kg.

This compares with $3.5 per kg for coca.

Peru is once again on its way to supplanting Colombia as the world's
largest coca producer.

Yet Peruvians do not like growing coca.

They know the social costs involved.

The Peruvian and US governments are even less keen on the coca leaf, even
though it is more likely to be chewed than made into drugs.

But Oxfam says Peru's government is not doing nearly enough.

It should offer loans, which can be repaid once coffee prices recover; help
farmers diversify into other crops; and encourage more Peruvians to drink
coffee.

For their part, multinationals like Nestle and Kraft, need to stop buying
cheap coffee and focus on quality beans like those grown in Peru.

With coffee prices so low, one only has to look north to Colombia to see
what happens when drugs become the crop of choice.