Coffee Commodity Chain

Recently people have become more and more conscious of what they put into their bodies and where it comes from. An unprecedented amount of information is now readily available to most Americans with the advent of the Internet. This has resulted in a great increase in transparency of the many aspects of imported products. Consequently, programs have been established to help ensure that these products are produced in more ethical and humane ways. To many Americans, the Fair Trade labeled bags of coffee they purchase that give them the energy they need to go about their day in addition to being a socially conscious decision but to many it is a means for survival and an escape from a cycle of debt that traps many similar non-Fair Trade growers generation after generation

Coffee is globally traded commodity. It is the second-most traded commodity with oil being the first. Coffee is generally traded in financial instruments known as futures contracts, and this is mainly done through the New York Board of Trade. In recent years, countries producing coffee has been increasing. Established producers like Colombia have faced bigger competition from these countries seeking to enter the market. Because of increasing number in countries it makes it harder for coffee producers to influence prices. Over the last few centuries, coffee has grown into one of the world’s most popular drink. There has been strong growth for coffee as it has become a fashionable drink. Coffee has replaced alcohol as a drink of choice for workers

It is impossible to overestimate coffee’s global importance. Valued at over $100 billion, it is the second most sought-after commodity. Ponte, an expert on the coffee-trade, maintains that over two billion cups are consumed daily. The majority of consumption occurs in developed countries, whilst 90% of production takes place in developing countries. For many nations, coffee cultivation forms the backbone of their economy, an essential avenue for employment and revenue. In Brazil alone, the industry employs an astounding five million people. Seeing as millions depend on this commodity, I always felt good about buying my daily coffee– I was contributing to the economic enfranchisement of millions! However, recent readings have cast a doubt on my strategy.

The 21st century has seen several companies cross international borders to look for new markets to conduct their business and increase shareholders’ return. The process was fuelled by opening of borders and advancement in transport mode and technology in the 21st century. The situation has complicated the attempts to fully understand the process of global production. However, the research and different literatures in the recent past have given customers and scholar a good read on forms of labour which go into producing the product or service, and how this work is globally distributed (Coe, Dicken and Hess 2008, p.274). The development has made customers to strongly know what they want and what they consume. Therefore, this essay will analyze the Global Production Network (GPN) of coffee and discuss who benefits most from the structure of this GPN. In the analysis, the essay will focus on three different aspects. First, the paper will analyze various forms of labour that go into creating the product and how is this work globally distributed. The essay will also analyze how the value is captured at each stage of production distributed along the network. Lastly, the essay will focus on the institutional arrangements that explain the structure of this GPN.

The researchers were looking into the diverse ways of preparation and consumption of the coffee in numerous countries across

Costa Rica now provided raw material for Starbucks which accounted for about 15 percent of the total coffee beans Starbucks needed every year. Costa Rica as one of the raw material suppliers plays an important role in global value chain. Coffee has played a pivotal role in the development of Costa Rica. It has shaped social, cultural and political institutions and is still one of country’s major agricultural exports. (Anywhere, 2016) The global value chain in this coffee industry can be described that Starbucks, the centre in this coffee global value chain, purchasing raw materials (coffee beans) from coffee farms in Costa Rica, reprocessing and reproducing in retail shops, selling the finished products (various kinds of coffee) to customers in the world.

The caffeine in coffee become an ethical increase over alcohol and have become a fashionable social beverage. It was interesting to see how it started off as this very exotic drink only for the upper class and then turned into what it is now. Coffee is a very fashionable drink that does not cost much that many have led their days with in today’s society.

We can understand the relation between commodity and trade development through the study of coffee and it’s origins. Over about 90% of coffee is produced in the South, and consumed in the North. Or a long time Latin America has provided most of the world’s coffee. Coffee comes from a cherry produced by a tree that requires a warm climate without any sudden temperature shifts or frost and it needs plenty of rain. This climate is ideal for coffee between the tropics of Cancer and Capricorn. During the movement of coffee from harvest to export the first step is to separate the coffee bean from the skin and the pulp of the cherry, this results in what is called “green” coffee. Before it is exported the coffee is cleaned and sorted into lots that have different quality attributes, something like the grain elevators. The lots vary as they go from country to country based on the size, the shape shape and the deficiencies it might have or the way it is processed. At this point in the process the coffee still has it’s individual quality and value.

People around the world consume numerous goods every day. There are several things that determine what quantities and how frequently they are consumed and those influences can either work in tandem or act individually to influence a person. It is these foundations that set an average for what consumers will purchase and the volume of goods to be created by agriculturalists and industrialists. This is known as economic consumption patterns, and these patterns are carefully studied by economists. With the data that they glean from this assessment economists can then use that information to provide the economy with data

The first link in the coffee commodity chain is at the producer, in this case, that's the farmer. Coffee farms have a wide range of sizes varying from five acres to one thousand acres. Smaller operation farmers collectively produce more than half of the supply of global coffee; although in some occasions, large coffee farming operations will supply a nation’s entire coffee output. Much of the coffee industry’s infrastructure (producing, processing, marketing) caters to the needs of larger coffee farmers in a large number of instances. These large operations typically have growing and processing facilities on one property and are owned by one person or small group of people. Many small operation farmers and workers are at the mercy of the

A commodity is an exchangeable good/material that is both bought and sold freely as an item of commerce. Commodities originate their value from human labor, yet, notably in the Western world, they are passed back and forth without concern or notice. They gather in masses in brand name grocery stores and shops, but their point of origin and cultivation is unknown; as such, they are only seen as items to be purchased, sold, and consumed. Living in a capitalistic society, we are unaware of the “mysterious origins” of our everyday products, and therefore, unable to see the symbolic and material practices we conduct daily in our consumption of commodities, such as coffee. A common item of consumption that is featured most everywhere, the

Many multinational corporations in the coffee industry have succeeded tremendously such as Starbucks. Each of these corporations has strategies that helped them continue to expand to nations of different cultures, ethnicities, governmental practices, and locations.

Assuming that the demand and supply for premium coffees are in equilibrium, the price will be at a constant, without significant pressure from the market. If Starbucks introduced the world to premium blends, this would cause a positive shift in the demand curve. There a higher equilibrium price and higher quantity when demand increases and supply remain unchanged. As prices increase, and the market moves to a new equilibrium, we will see higher wages, more advances and investments in technology and infrastructure, and greater competition. As production become more efficient and competition becomes greater, supply will increase and cause prices to settle back down. There are several factors that will impact the long-term equilibrium, such as changes in supply. For example, if a hard freeze eliminated Brazil’s premium coffee crop, this would cause a negative shift in the supply curve. Assuming demand remains constant a negative shift in the supply curve will cause quantity to decrease and equilibrium price to increase. Research shows that in 2011 a frost occurred in Brazil's southeastern coffee growing belt. Traders worried that next year's yields could be hurt. At the same time, heavy rains during harvest forced Columbia to reduce its crop estimate for 2011. Understanding the impact of problems along the supply chain and how the changes in supply

Pricing of commodities are arrived at basically from the forces of demand and supply, a decrease in supply of a basic commodity or a commodity with a high utility value causes the demand to rise suddenly. There are

How do you start your morning? 93 per cent of the world will have the same result drinking a cup of Coffee. These days’ people will lose their minds if they don’t have caffeine in their system they would even try different types of coffee such as (cappuccino, espresso, latte…) the customers demanding for product choice, for quality values have made coffee a popular demand to the public worldwide. Value and Quality are the reason in which the customer choices an organization’s products in comparison to other competitions. So how does a tree that produces coffee is located possibly a 1000 meters up on a mountain in South America such as Brazil or in Asia or even African turn up in a cup of Nescafe inside your house and inside millions of people’s