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Coffee trade and globalization
Role of coffee in the economy
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I am studying the effects of the consumption that coffee has on us, to see if it is good for our nation since it is the second most valuable traded commodity in the world and also to see if it benefits our health as it is said to do. There are many issues that go into play with how coffee is produced and exported. While researching this topic, I have found many trends. One being, problems with fair trade, whether if it is beneficial to the producers, the south and us, the consumers. Second, it has been predicted that the climate change in the South will cause a major crisis in the production of coffee, interfering with the amount that will be produced. The overall supply will go down; therefore, causing the prices to increase. Lastly, research …show more content…
The fair trade market is an approach to a more feasible development that helps the farmers improve the production of coffee by providing them with many resources. The Fair Trade certified label helps the consumers in knowing that their coffee is high quality (6).” Economics of Fair Trade” states that the Fair Trade sets a minimum set price for their coffee that covers the price it costs to produce it. It links farmer cooperatives directly to the United States, creating long term contract and livable lifestyle. Farmers are receiving better incomes that enable them to live a better lifestyle. As it benefits the farmers it does hold a major part in the North. By giving the South a fairer price, it benefits the United States because this is done through trade not aid. The United States receives their high quality coffee and in return knowing that their “dollar” is helping them grow the coffee efficiently (Economics of Fair Trade). The Fair Trade Market is vital for the nation in either consuming the coffee or using the finances to make ends …show more content…
Amy Mayer claims that coffee requires a temperature range of 15 to 23 degrees Celsius. A slightest change in this temperature range will interfere in the proper growth of the coffee beans. Other climatic conditions can negatively affect the production as well such as rainfall, soil composition, and pest and disease infestations. Pests are becoming a huge problem as climate warms. They are eating away the coffee leaves. This is costing the South a lot of money in the loss of crops. It is a major problem because it is putting the supply of high quality coffee at risk a great deal. Over the long term, this could potentially mean that the prices of coffee will rise more than they have. Even though states down south will be able to grow coffee, it will not make up for the loss. There is said to be two ways in dealing with this problem, migration or adaptation. This will cause problems financially to the farmers and to the United States in not importing enough coffee
...ystem primarily responsible for promoting global competition. Free trade also promotes shifts in production so as to fit the “comparative advantage” model. Though free trade is widely practiced concerns with how to regulate free trade, something supposedly unregulated, countries have to subject themselves to the controversial institutions of the IMF and WTO. Fair trade policies while potentially creating smaller markets support workers’ rights in both the U.S. and developing nations. Though the pros and cons of globalization continue to be debated the United States can no longer escape its role in the global economy nor can it impose policies that are detrimental to the United States founding ideals. However policies that play towards the advantages of both free and fair trade could stimulate a healthy domestic economy that is also competitive in the global market.
small farmers grow it as a cash crop, a crop that they can sell to try
It wasn’t until the 1700s that the secrets of coffee growing were finally wrestled from the growers in Yemen and the Red Sea region, and coffee began to be grown as a plantation crop (Cowan, 76). Coffee’s switch from being a specialty product to a plantation crop is truly why coffee became available in large quantities and developed as a global beverage. Before this change, there simply wasn’t enough coffee available to be consumed the way it was by the end of the 1800s. Before the introduction of plantation crops, “matching supply with the nascent consumer demand for coffee in Britain was not an easy task” (Cowan, 61). Essentially, even though there was an increase of demand for coffee in England, the East India Company could not meet that demand until plantation crops enabled the supply to
...tion and has left a wound that Central America has never fully overcome. The villain of the coffee crisis is undoubtedly colonialism and its exploitation. Dutch disease has crippled Central America’s economy today that the majority of Central American states are considered third world and undeveloped. Globalization is not off the hook however for globalization was of the original catalyst that started the wildfire of Dutch disease. There is no way to be certain but it is likely that Central America economy and the coffee production industry more specifically have been so crippled by Dutch disease that ending exploitation may not be enough. The crippled coffee producing industry remains in a coffee crisis long after decolonization and the efforts of international organization and fair-trade policies are make a deep impact. What will it take to end the coffee crisis?
Starbucks Coffee is a chain that sells Fairtrade Certified coffee. Starbucks began purchasing in 2000 and now became one of the world’s prime purchasers of Fairtrade Certified coffee (“Coffee.”). Fairtrade International Charter’s has five core principles that companies are to achieve for certification and the next paragraphs will showcase how Starbucks achieves them.
Coffee is a worldwide cash crop of which demand has exponentially increased over the years. “Coffee is (after oil) the world’s second most important traded commodity” (Cleaver 61). Competing coffee brewing companies wage war on offering the freshest, best tasting coffee the market has to offer. With such stiff competition there must be enough coffee beans deemed to be good enough in quality to supply the increasing demand. Starbucks can be considered one of today’s top competitors if not thee top coffee manufacturer presently in business. This successful company has had a huge impact on the coffee industry as well as the world. They have gone through great length to provide consumers with an excellent product as well as create a legacy that shows how to best go about running a massive corporation while keeping the environment clean and healthy.
The acceptability would mainly affect the supplier, consumers, shareholders, community and mangers because they all have legitimate reason considers about the surroundings issues about coffee. In fact, suppliers will the most impact since Starbucks have to negotiate with them on prices however Starbucks also invested 70million on the ethically sourcing approach with certainly increase the cost for coffee. In addition, if suppliers agree Starbucks will earn additional revenues if supplier of raw materials
In the United States, coffee is the second largest import (Roosevelt, 2004). Furthermore, the United States, consumes one-fifth of all the worlds¡¦ coffee (Global Exchange, 2004). The present industry is expanding. It is estimated that North America¡¦s sector will reach saturation levels within 5 year (Datamonitor. n.d.). According to National Coffee Association (NCA), 8 out of 10 Americans consume coffee. In addition, it is estimated that half of the American population drinks coffee daily. The international market remains highly competitive. It is estimated that 3,300 cups of coffee are consumed every second of the day worldwide (Ecomall, n.d.). The latest trends included dual drinkers, an increase in senior citizens...
The movement particularly emphasizes on exports from developing countries to developed countries, with products such as handicrafts, coffee, cocoa, sugar, tea, bananas, honey, cotton, wine, fresh fruit, chocolate, flowers and gold. Moreover, coffee is one of the most widely traded goods in the world. For many developing countries, coffee trade is an important source of income. Producers can provide a better trading and improve terms of trade. Moreover, this allows producers to improve workers’ living environment and future life in general (De Pelsmacker, Driessen and Rayp, 2005).
The coffee market must adapt to a change in consumer attitudes or else it may be threatened by health and lifestyle issues. In 2003 the hot drinks market declined by an estimated 2.3%. Consumers, especially young people, are becoming more health conscious which makes coffee a less attractive choice; the increasing number of alternatives available such as health and energy drinks are becoming competitors in the coffee industry. Research carried out by Mintel shows that there is an increased diversification of tea, with a trend towards premium and herbal teas. The coffee industry are responded to this change in attitude by provision of de-caf drinks, options such as soy milk, and alternative drinks such as freshly squeezed fruit juices, chai lattes and herbal teas.
Besides the high demand and cost for gasoline these days, coffee is considered the second most traded commodity on worldwide markets next to oil. "Coffee is grown in more than 50 countries in a band around the equator and provides a living for more than 20 million farmers. Altogether, up to 100 million people worldwide are involved in the growing, processing, trading and retailing of the product" (Spilling the Beans , ). In 2001, coffee farmers and plantations produced over 15 billion pounds of coffee while the world market only bought 13 billion pounds. The overproduction in the coffee industry is not a usual thing and is one of the major reasons why prices vary throughout the industry.
In order for international trade to work well, governments must allow the world market to determine how goods are sold, manufactured and traded for all to economically prosper. While all nations may have the capability to produce any goods or services needed by their population, it is not possible for all nations to have a comparative advantage for producing a good due to natural resources of the country or other available resources needed to produce a good or service. The example of trading among states comprising the United States is an example of how free trade works best without the interve...
All around the world, millions of people start their busy days with a cup of coffee. It is a staple and often an addiction to those living in modern society. People rely on the miracle caffeinated drink to help through their day to day lives. With such a high demand for coffee, there is no surprise the industry is worth $100 billion dollars worldwide (businessinsider). Coffee is grown all around the world and many countries rely on the beloved bean as their main source of income. Following crude oil, coffee is the most desired product in the world (businessinsider). Lower class countries are typically the growers of the coffee bean, and the industrialized nations are the main consumers. Coffee shops are the fastest growing niche in the restaurant business (businessinsider). This is no surprise considering a Starbucks Coffee or Pete’s Coffee is on every corner. Brazil is the leading producer of the green coffee bean followed by Vietnam, Indonesia, Columbia and Ethiopia ("Coffee: World Markets and Trade). Taste characteristics such as flavor, acidity, body, and aroma distinguish various types of beans. (Castle, Timothy James). These characteristics are defined by the area the bean was grown as well as how it was processed. The two primary types of coffee produced are Arabica and Robusta. Around 100 million bags, or 76% of all coffee consumed, is roast and ground. Instant coffee is the next runner up with 31.1 million bags sold annually. Instant coffee is coffee in freeze-dried powder or spray dried powder Decaffeinated coffee is last landing in the single digit percentile of each country’s consumption of coffee (coffee exporters guide).
Free trade is a form of economic policy which allows countries to import and export goods among each other with no government interference. In recent years there has been a general consensus in economist’s stance on free trade. They view free trade as an asset. Free trade allows for an abundance of goods with increased varieties and increased availability. The products become cheaper for consumers and no one company monopolizes an industry. The system of free trade has been highly controversial. While free trade benefits consumers it has the potential to hurt manufacturers and businesses thus creating a debate between supporters of free trade and those with antagonistic positions.
Fair Trade is a simple idea that improves the living and working conditions of small farmers and workers. The Fair Trade movement promotes the standards for fair labor conditions, fair pricing, direct trade, environmentalism, social policy, and community development. Businesses wishing to adopt Fair Trade practices have to purchase certification licenses, which then leads to Fair Trade Labeling Organization (FLO) sending representatives to the farms from which the products are purchased and ensures that the farmers adhere to the procedures outlined in the Fair Trade standards. Products marked by the Fair Trade label contain 100% Fair Trade certified contents. Buying Fair Trade Certified products, consumers are helping the lives of famers out of poverty through investments in their farms/communities, protecting the environment, and developing the business skills for trading. The practice of Fair Trading a good way to not only help cause awareness but also improve the lives of the workers.