Given that coffee is the West's wake-up tonic of choice, it is ironic that when it comes down to the matter of its production, most coffee drinkers seem to have their ethical alarm clocks set to snooze.

The Fairtrade Foundation is working to give consumers in the West a wake-up call to the fact that capricious, depressed and downright unfair commodity markets are jeopardising the livelihoods of many of the poorest and most vulnerable people on the planet. Plummeting coffee prices mean that many farmers across the world are earning less from their crop than it costs to produce - with devastating results.

Earlier this year, predictions of mass starvation in Ethiopia refocused attention on the country's vulnerability to natural disaster and falling markets. Coffee accounts for 60 per cent of Ethiopia's export earnings.

In 2001, export prices of coffee in Ethiopia fell by half - from 79 cents per pound in 2000 to 39 cents. Farmers received prices as low as 24 cents per pound in 2002.

"Ethiopian farmers have been taking their children out of school and have been pulling up their coffee bushes," says Harriet Lamb, executive director of the Fairtrade Foundation.

"One of the really awful things is that they feel they have been forgotten by the outside world on which they rely to buy their crops. One farmer told me on a recent visit I made to the country: 'We are like long-haired sheep. You don't see how thin we are getting'."

The Ethiopian story is not unique. From 1999 to 2000 farmers in Uganda saw their earnings slashed as the average annual price of robusta coffee fell by 39 per cent. To compound the problem, the country has to use hard-earned foreign currency to service debt repayments to the West.

Adding to the country's misery, while the price of coffee fell, the cost of oil, which Uganda has to import, rose by more than 50 per cent.

"Uganda's national budget simply disappeared," says Pauline Tiffin of the World Bank, who was a founder of Cafedirect and the Day Chocolate Company - two leading Fairtrade companies, "not just for debt repayment, but also for development."

In situations such as these, investment in schools, hospitals and sanitation facilities are typically the first things to suffer.

"This means that time and time again it is the poorest sections of very poor societies which are hit the hardest and hurt the most," says Ms Tiffin.

The basic problem for coffee farmers rests in the balance of supply and demand. Advances made by the world's largest producer, Brazil, and the Western-sponsored entry into the market of new producers like Vietnam, mean that the world grows more coffee than it drinks. As a result prices have tumbled - jeopardising the livelihoods of more than 20 million families worldwide.

The situation was aggravated by the abolition of supply regulations in the late 1980s. In the name of liberalisation, coffee farmers were placed at the mercy of the free market - a move which drew criticism from development agencies, non-governmental organisations and city traders in equal measure.

"It is said that a free market will find its own level and everything will be good for everyone," says Ian Breminer, Managing Director of Complete Coffee Ltd, a trading house dealing in green and soluble coffee. "This is blatantly not true in coffee. Since the collapse of prices in 1989 we have seen the coffee market go down and down and down. The process that producing countries are going through is extremely painful."

The abolition of international agreements that limited production meant the market was swamped with surplus coffee beans.

Simultaneously, advances in processing technology meant that lower grade beans could be used to produce coffee of a reasonable standard. Supply exceeded demand and prices tumbled.

At the same time, the national sales boards, to which farmers sold their crops and which gave some security to farmers ill-versed in the complexities of the world's major commodity exchanges, were dissolved. This meant individual farmers were placed at the mercy of passing middle men - today they have little option but to accept the prices these middlemen offer.

Looking at the structure of the market as a whole, experts agree that liberalisation has led to a David and Goliath scenario. Most coffee is grown by farmers tending an area of land the size of a tennis court, in a highly indebted developing country.

Pitted against these growers, the largest coffee buyers - including the household brands you see in the supermarkets - find themselves in the ascendancy.

As Ms Tiffen explains: "about 70 per cent of coffee is produced by small holders - and when you're just a little guy you don't just back up against a giant multi-national do you?"

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