Coffee – a Global Commodity

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

Coffee has not only impacted the world socially, but it provides financial means for many countries who export their coffee beans.

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.

A commodity is a raw material or primary agricultural product that can be bought and sold. The market treats it as equipment or nearly so with no regard to who produced it. The original producer does not make the “big” money from the good that has become a commodity demanded by consumers. A commodity’s supply and demand is part of one universal market like corn, or wheat. A stereo is something that would not be considered a commodity. Other things are important about a stereo not that it is just a stereo but what brand and quality is in consideration when purchasing a stereo. Demand for one type might be much larger than the demand for another. This is not the case with commodities; they lose differentiation across their supply base. An

It is a globalised world. Being a part of this progressive society, growth is a key indicator of success. Global Trade is one such benchmark that differentiate nations and economies. Every nation has some policies to promote the strengths of their trade globally. Likewise, Colombia has been known to be the third-largest producer of coffee after Brazil and Vietnam (in terms of volumes produced) from a long-time. Coffee is the world’s most traded commodity and most of it is produced by the small-scale farmers. Hence, globalisation has had a great impact on its production as well as trade. Therefore, Colombia’s strength lies in the production of coffee but also promoting their strengths and honing them globally to their benefit. Coffee is not just a cash crop for the Colombians but it’s a way of life for them. The farmers associated with the credulous society of small scale coffee growers called National Federation of Coffee Growers of Colombia (NFC) (1) was founded in the year 1927.

focus on coffee and hereby take an approach similar to Boratav (2001) who examines terms

Coffee has played a major role in the lives of many people around the world. “Yet, poetic as its taste may be, coffee’s history is rife with controversy and politics…[becoming a] creator of revolutionary sedition in Arab countries and in Europe” (Pendergrast xvi). After reading Uncommon Grounds, it is apparent that the history of coffee is intertwined with the aspects of the globalization process, the role of Multi-National Corporations, and global economic issues.

The price of commodity is determined by means of competition between buyers and sellers, and relation between supply and demand-offer and desire. Whoever offers the greatest advantage to purchasers is certain to drive the other sellers off the field and secure for himself the greatest sale. (Marx, p.5)

Stephen Quinlan and Jose Gomez-Ibanez describes, in “The Coffee Crisis”, that in 2004 the governments of coffee producing countries were considering how to respond to rapid decline to coffee prices. In 2001, coffee prices hit a forty-year low, which resulted in extreme hardships for the local farming communities. On that note, this decline in coffee prices was considered “the coffee crisis.” The coffee crisis came to be thanks in part to coffees: overproduction, under-consumption and oligopoly market

Coffee was the top source of income for 25 million farmers in Latin America, Africa and Asia. Due to the lack of appropriate compensation for their harvest, communities in coffee- producing countries around the world are suffering. Coffee is a chief export for many developing nations and their entire economies are collapsing with the market. In 2004 the governments of coffee producing countries were adamant in finding the answer to the dramatic decline in coffee prices.

The Coffee industry is worth about $20 billion dollar, which is largely imported and consumed by industrialized nations and is mostly exported by developing 3rd world nations. However people of all backgrounds throughout the world drink more than 500 billion cups of coffee yearly. Coffee naturally grows in warm temperatures and is grown in over 50 countries in Africa, Asia, Central America, South America and the Caribbean Islands. Coffee farms give over 25 million farmers the financial livelihood in their nation. An amazing 67% of the world 's coffee is grown in Central and South America. 90% of the world 's coffee production happens in developing nations meanwhile most of coffee’s consumption takes place in industrialized nations.

Statistics show that over half of the American population consumes coffee on a daily basis. You may drink coffee hot, cold, mixed, or even in a frappuccino. Individuals are able to make coffee at home, or buy it on the go. Coffee provides people with caffeine, which ultimately gives energy for hardworking people all around the world. The main focus for this paper will cover the following topics, with coffee as the basis: causes for shifts in supply and demand, how coffee supply and demand influence price, quantity,

First we can look at the social sustainability and economic sustainability of coffee. Chocolate is often a gift given to one another on many occasions such as holiday’s or events. It is an excellent thank you gift, as people are pleased when they receive a box of chocolates and they are often an affordable gift (depending on brand). Chocolate is also used for hot chocolates, and cookies that bring people together in holiday seasons especially. It is used to make a social gesture or give you pleasure while consuming it, all while for the most part being cost efficient.

Commodity is term that every one of us has heard at one point or another in life. Commodity is a popular term thrown around in the financial industry, and was created five hundred years back somewhere in the 15th century in order to describe a financial benefit or profit. Today, commodities are considered as certain valuable goods that are produced in bulk and have certain uniform qualities across the board. According to Wikipedia the definition of a commodity is as;

Coffee is one of the most popular drinks in the world. Americans consume about 400 million cups of coffee per day. That is 4629.6 cups of coffee every second. Coffee beans can also be used in many other ways. It is used in culinary arts, fragrance uses, and even health benefits. For instance, coffee is used to prevent Parkinson’s disease, gallstones, and type 2 diabetes. Coffee is something that many people depend on. Some depend on it for its natural caffeine, practical uses, and health benefits, others for an income. Needless to say, that it is very important to millions of people around the world. Coffee is an important commodity to many people and climate change is negatively affecting the production of coffee to a point where it may go extinct in the next century, impacting an estimated 120 million people.