The Coffee Crisis

958 Words4 Pages
The Coffee Crisis

MBA 6008-Global Economic Environment

Capella University

Theresa Patterson

December 18, 2011

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.
Coffee is consumed primarily in the northern hemisphere, particularly in Europe,
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Its flavor is substantially different than the flavor of arabica coffee, which is generally more favorable and considered to be ‘better’ coffee. It is used extensively in blended coffees with arabica, though, and one of the effects of the current coffee crisis is that the overabundance of robusto on the market is encouraging many companies to increase the amount of robusto coffee that goes into their blends.
Second, and more importantly, with income from producing coffee not even covering the expenses of growing it, the growers are forced to sacrifice quality in order to reap the highest possible prices. Robusto coffee yields far more coffee per acre of land than arabica coffee. Growing sun coffee rather than the better tasting but more labor intensive shade grown coffee also yields more product and thus, more profit. The low prices also encourage producers to rush through picking, including underripe and overripe berries in the harvest because they can no longer afford to pay for three separate pickings of the crop.
Fair Trade coffees are only one of the solutions being suggested for the current coffee crisis. While Fair Trade guarantees a floor price for raw coffee sold by coffee cooperatives, it is only one part of a comprehensive strategy to stabilize coffee prices at a level that will continue in supporting its growers. Another is the adoption of a set of quality standards for buyers. Both the UN and the ICO

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