Essay on Supply and Demand, Markets, Prices and Price Setting

Any change that lowers the quantity that buyers wish to purchase at any given price shifts the demand curve to the left.

Un-roasted coffee beans are fast becoming recognized as one of the best natural weight loss products to come down the pike in years. They are a major breakthrough in the science community and the weight loss industry. Their fat burning ability makes green coffee beans a dynamic force in any serious weight loss program. Plus, the anti-oxidant properties of the beans help keep the cells healthy, and are believed to hinder the generation of new fat cells.

Unfortunately, many still do not, but that is becoming less of a problem because of technoscapes, or the use and spread of technology. Because of the technology we are developing in the world, these farmers are able to form cooperatives and can work directly with large corporations such as Amazon, Sam’s Club, Costo, Nestle, and many more to create a better work environment that is more fair trade friendly and allows the farmers to make a livable profit from their products (“Coffee Farmers”). Not only have technoscapes allowed these big companies to work with the farmers, but it has also lead to the sale of fair trade certified coffee in catalogues, online shops, such as amazon as mentioned above, and in super stores, similar to Sam’s Club and Costco, as well as smaller stores, Trader Joe’s for

Most consumers buy coffee as a result of wanting the caffeine coffee supplies. Instead of buying coffee, consumers could choose to purchase another beverage with a high level of caffeine, such as a carbonated beverage, tea, or even an energy drink, or shot. Some consumers may also decide to purchase caffeine pills from a local pharmacy instead of forking out the cost for coffee.

The main mechanism for price stabilization was an export quota system that was distributed among its members. The results of the ICA can be called mixed at best, at worst unsuccessful according to existing price data. At best, the ICA managed to guarantee a minimum price but because not all coffee producing and coffee consuming countries were members of the regime a dual market developed. Eastern European and Middle Eastern countries were able to import coffee cheaply and under the price floor set by the ICA, especially by importing from newer country producers who were not party to the agreement.

One might ask themselves why a country like Guatemala continues to base its economy upon the production of coffee, if they only get about ten percent of global earnings back? At first it may not seem as if it is the best financial transaction for them, taking in such low profit margins, while still retaining much of the cost and risk involved in the crops creation. An easy answer to this is yes, their margins are often not great, but they produce enough volume to make it potentially very profitable. Because of the country’s huge commitment to coffee growth, coffee has had Guatemala see great economic reward from time to time. Like in the early 1970’s coffee was turning huge profits. “The economy boomed from 1971 thorough early 1974. Then, as a result of inflation (21.2% in 1973), the world energy crisis, and an annual population growth of 2.9%, the economic growth rate slowed from 7.6% for 1973 to 4.6% for 1974. During the second half of the 1970s, Guatemala's economic performance slowed further; during 1974–80, the average annual growth rate was 4.3%.” (Nations Encyclopedia)

The overall coffee market resembled that of an oligopoly, which is defined as “a market dominated by a few large producers of homogeneous or differentiated product.   Because of how few exist, oligopolies had considerable control over their prices, but each must consider the possible reaction of rivals to its own pricing, output, and advertising decisions” (McConnell, Brue & Flynn, 2012, p.223).   Oligopolies are also characterized by barriers to market entry (McConnell, Brue & Flynn, 2012).   Although there were many countries producing and exporting coffee, the market was largely dominated by a few countries (i.e., Brazil, Colombia, and later on, Vietnam). Oligopoly, by its very nature, limits transparency in the market place. Within ten years this country grew from a relatively insignificant producer to the world second largest – ahead of Colombia (producing ~11 million bags accounting for 10% world export) but behind Brazil (producing ~35 million bags accounting for 35% world export) – producing well over 11 million bags annually and accounting for approximately 12% of world exports (CRB, 2006).

Our objective for this case is to evaluate the level of profitability of adapting the “fair-trade” certification onto Nestlé’s new instant coffee product. To determine the priority, first and foremost is to evaluate potential direct or indirect affects to each stakeholder category in this situation.

Fair trade coffee also bypasses the coffee trader, therefore giving the producer higher profits. Fair trade coffee growers are guaranteed a minimum price of $1.26 per pound for their coffee. If the world coffee prices rise above this floor price, farmers will be paid a small premium $0.05 per pound above market price (Coffee Research Institute, 2006). This contributes to helping coffee farmers stay out of debt and provides some stability for both producers and sellers of coffee to an unstable market (Coffee Research Institute, 2006).

worried about the well being of these producers, we need to directly address the imbalances in the trading process and increase the producer’s benefit in fair trade. To do so these producer coops need to gain a part of the ownership in companies that sell their products in the north consuming markets. According the Jaffee, through his research and findings, when helping the fair trade coffee bean producers it untimely comes down to the long-term goal of these companies, if it is to simply increase their market and gain consumers or to actually transform the international fair trade market. An example of the northern power Jaffee gave was in a case where they pushed the mass production of a low-grade level of coffee but ended up failing against the organic fair trade coffee beans, which lead to the farmers of these low-grade coffees out of the field and into dire poverty. They were pushed to produce this coffee with not input of their own and it ended up costing them their lively hood with those that call the shots only feeling a small hit of the impact. 69 percent of the worlds coffee corporations, which are part of the ‘Big Five’: Nestlé, Prcot and Gamble, Craft and Sara Lee. These are the companies that make almost all of the decisions regarding fair trade but they do that over here, in North American with very little account of how their decision will affect their coffee-growing partners in the south and much of them honestly don’t care. These companies turn huge

After reading this paper, drinking a cup of coffee will never be the same. Coffee has become a major part of many people’s lives. It is a global commodity. Behind the oil industry, coffee places second on the world’s most traded commodities. Every day more than 2 billion cups of coffee are consumed (“The Economics of Coffee”). The World coffee market is controlled by Kraft General Foods (produces Maxwell House), Proctor & Gamble (produces Folgers), Sara Lee (Chock Full O’Nuts) , and Nestle (“The Economics of Coffee”). These major producers and the World Trade Organization (WTO) control coffee prices. Coffee plays a crucial role in many countries economies. Some of these countries include Burundi, Uganda, and Ethiopia. Ethiopia is the

Is it true that companies are dedicated and contributing to the development of farmer’s lives and their social and community improvement through Fair trade? We will if they are committed to what they say or not. However, fair trade itself is a very giant topic to discuss so I am going to focus on fair trade coffee and the main coffee traders like Starbucks. Also we will see if Fairtrade coffee is entirely ethical or

Nowadays, Fair trade products are hot items. In 2006 worldwide sales came up to 1.6 billion Euros of Fairtrade Certified Products. This was about 42% more than it was the year before. Even the products coffee and cocoa knew a bigger growth in the numbers 53% and 93% respectively (Fairtrade Labelling Organizations International Annual Report, 2006/07)

Fair trade is an international movement, which aims to bring equality and justice to producers in developing countries by exposing them to better trading conditions and promote sustainability. This movement’s focal point remains household and edible commodities (such as sugar, rice, tea, chocolate, honey, cotton and gold) that are usually produced in developing countries such as South Africa and India and are then exported to developed nations such as the United States of America and the United Kingdom or even consumed in domestic markets. This movement hopes to pursue even-handedness in trading done internationally by maintaining transparency, respect and communication between both the parties. It encourages sustainable development by providing improved knowledge of trading and its conditions to the producers and securing the entitlement of the rights of depreciated producers and labours in third world.

Coffee trading is done on the basis of auction system which backed by poor technology and clearing and payment system which drives up the processing and marketing cost and these leads to high consumer price this forcing coffee exporter to be powerless into global market. In addition to his small-scale farmers come to the market with little information and are at the mercy of coffee supplier or collector in the nearest and only market they know, unable to negotiate better prices or reduces their market risks.