The Coffee Crisis

1045 WordsJan 9, 20125 Pages
Joe Thomas School of Business and Technology: MBA 12/18/2011 U4A1- The Coffee Crisis Dr. John Halstead In “The Coffee Crisis”, the authors described that in 2004 the governments of coffee producing countries were considering how to respond to rapid decline to coffee prices. Coffee was the main source of income for about twenty-five million small land farmers in Latin America, Africa, and Asia. In 2001, coffee prices hit a forty year low; resulting in extreme hardship for many farming communities. The affect of this crisis lead to most farmers extracting their children from school; forcing them to work. In attempt to aid the farmers affected by this crisis, relief programs were established to financially assist farmers to survive…show more content…
In this situation, the U.S. and Costa Rica were put into a negotiation deadlock with the ICA; waiting to come to an agreement. Brazil and Vietnam expanded production in the 1990’s by expanding their production through focusing on the utilization of different beans and different production technologies. Brazilian entrepreneurs began to develop new coffee plantations in less frost-prone areas to the equator. In regard to Vietnam, the country was assisted by the development of irrigation systems. By the end of the 1990’s, Vietnam was the largest Robusta producer in the world, even though its costs were rising as the growth in the Vietnamese economy was increasing local income or wages. The authors elaborate on a second factor to blame for the coffee crisis which entailed the growing technical skills possessed by the five major roasters- Phillip Morris, Nestle, Sara Lee, Proctor and Gamble, and Tchibo. These companies accounted for 69 percent of the roasting and instant coffee manufacturing capacity. With an increase of Arabica prices after the Brazilian frost in 1997, roasting companies experimented with steam cleaning techniques to hide any bitter flavoring of Robusta when mixing with Arabica. These roasters were also educating themselves on how to use lower quality grades of coffee mixes; thus providing use for previously discarded beans to be sold to roasters who demanded a lower quality beans. In conclusion, the

More about The Coffee Crisis

Open Document