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 …show more content…
The grain lost its value and was without quality. The farmer’s were not rewarded based on the quality of the grain but the quantity. This made it very hard to determine the true value of a sack of grain, this apparent in coffee as well.
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.
Coffee is then sent to roasting facilities where it is blended. By “manipulating the composition of the blend, roasters
The inoculate Fair Trade coffee beans which satiate consumers ' morning desire for a pick-me-up as well as bettering the lives of the growers begin their journey in the Northern highlands of Sumatra in the Indonesian Island chain. Trader Joe’s Fair Trade Organic Sumatra Coffee beans are grown on the small Indonesian island of Sumatra in the tropical South Pacific. Rather than being produced on large Multinational Corporation owned-and-operated plantation style coffee farms, this global commodity begins its journey from creation to consumption on small, several acre large plots owned, operated, and harvested by small-scale farmers in the
Coffee is not just a drink. It’s a global commodity. Multinational coffee companies now dominate the industry worth over $80 billion, making coffee the most valuable trading commodity in the world after oil. While we continue to pay for our lattes and cappuccinos, the price paid to coffee farmers remains so low that many have been forced to abandon their coffee fields. This conundrum is most evident in no place other than Ethiopia, the birthplace of coffee.
Coffee has not only impacted the world socially, but it provides financial means for many countries who export their coffee beans.
focus on coffee and hereby take an approach similar to Boratav (2001) who examines terms
Coffee had lots of demand, but little supply. The country that could grow and export the most coffee had a substantial economic advantage over other countries in terms of commerce.
For each cup of fresh coffee, coffee beans should be grounded just before brewing. Therefore, for each customer, the coffee is treated as fresh produce. Coffee should not be overexposed to oxygen, light, heat and moisture. In order to save customer from the time of waiting for the clerk to grind their coffee, customers can grind their own coffee beans in the store. Instead of walking in to wait in line, customers can help the process by grinding their own coffee beans before getting in line. The grinder will be pre-set to grind the coffee beans to the perfect texture of fineness.
There’s not clear information about how coffee arrived in Colombia. The historic archive says that the Jesuits brought the seeds around 1730. The tradition says that the seeds arrived threw the east of the country, and the harvest where registries in Giron, Santander and Muzo, Boyacá. In 1835 the first commercial production produced 2560 bags and they were exported from Cucuta’s custom. Then the coffee extended to the center and west of the country in the departments of Cundinamarca, Antioquia and the zone of old Caldas. The consolidation of coffee as a product for exportation was from the second half of XIX century. The great expansion of the world economy in that period made that the Colombian peasants find an attractive opportunities in the International market. Between the end of 70s of the XIX century and the start of the XX century the annual production of coffee passed from 60.000 bags to 600.000 bags, this was made in the main big farms of the departments of Santander and Cundinamarca, having at the end of XIX century, 80 percent of the total coffee national production. There was a decline in the international prices in the first years of the XX century; this made a big change in the Colombian coffee cultivation. It can be concluded that in the period between
Finally, global economic issues have an immense influence on the world of coffee. Throughout history there has been a pattern that coffee producing countries are economically worse off than those that are consuming the coffee. Pendergrast mentions that “in 1950 the average income in consuming countries was three times that of coffee-growing nations. By the late 1960s it was five times great” (270). With that said, many producing coffee countries were facing endemics and malnourished peoples because workers were receiving absurdly low wages thus placing them into poverty and human suffering (271). Specifically, although 90 percent of El Salvador’s exports consisted of coffee in the 1930s, they agonized from “‘low wages, incredible filth…[under] conditions in fact not far removed from slavery’” (168). Global economic issues of these producing countries lead to dictators easily gaining power such as those in Guatemala, Nicaragua, and Honduras (170). Not only was politics a matter that resulted from global economic issues, “the high interest rates from financial institutions and price [squeezes]” lead to the economic struggle of farmers like those from Colombia due to
The documentary Black Gold, is about the world coffee market and an Ethiopian fair trade cooperative. Ethiopia being the birthplace of coffee is the largest producer of coffee in the world, producing some of the highest quality of coffee beans in the world, like Harar, Yuban and Sidamo types of coffee. The significant problems pointed out in this documentary show what is wrong in the global trading system. Mainly, while most of us continue have our lattes and specialty coffees, the amount paid to the Ethiopian coffee farmers is so low that a lot of them have been forced to chop down some of their coffee fields and rely on other crops to help them survive. The Ethiopian people are malnourished; they have no clean water, no healthcare, and no schools for their families. As quoted in the film, “They are living hand to mouth”.
Raw Materials (Coffee Beans): Coffee bean farming is not vertically integrated into Starbucks; the company purchases coffee beans from farmers. Starbucks choose to outsource farming due to the low potential hold-up problem. For its coffee, Starbucks uses only high-quality Arabica beans, instead of regular commodity and lower quality robusta beans. Since there are a lot of market participants trading Arabica beans (i.e. farmers & Arabica beans buyers), there is an established market price. Moreover, farm land has a low degree of asset specificity, and therefore farmers’ investments do not depend only on Starbucks as
As far back as 1860, coffee had become the major export in Colombia (Equal Exchange). By the 1920s, however, the coffee industry in the country was undergoing difficult times as a result of unstable international market forces. Thus, coffee growers were not guaranteed a steady income. Out of these circumstances arose an
The film highlights the fact that coffee is the most valued word commodity, second to oil. The beginning of the film shows the process in which coffee is made- from bean harvesting by workers in Ethiopia who make next to nothing, through several intermediated stages, and into the market. Although we spend countless amounts of money on coffee without thinking twice, the price that coffee farmers who produce this commodity are getting paid, is disgustingly low. Some of them have even been forced to walk away from their fields. There is no better place to see this
Throughout the Civil War, coffee was as prevalent on the battlefields as it is in offices today. In fact, the Union army was fueled by coffee. When soldiers did not have time to boil water they would chew on whole beans as they marched. Every night, Union campsites had tiny fires, to be able to boil pots of coffee (Norris). Soldiers preferred coffee over everything else because coffee, was almost always fresh due to the simple fact that it was delivered whole, because coffee was sold in bean form it made it a lot more difficult the supplier to try to minimize on the quality of the product. But this did not stop the dishonest suppliers to try to sell less for more money. Officials began to ask for coffee as whole beans because of some of the suppliers and contractors who tried to get more money per pound by putting sand and dirt into packages of ground coffee (Norris). Coffee was loved among soldiers but it was convenient to find easier ways to make
Coffee is one of the most profitable and most traded commodities on the planet. It is second in trade to that of oil and gas. There are so many issues that surround this product, otherwise known as black gold. Coffee growers typically only get around three cents from over $1.50 cup of coffee that is sold in the United States. The world surrounding coffee is not fair. There are so many problems that arise because of its lack of fair trade. According to the United Nations, women do around two thirds of the work are only rewarded five percent of the world’s income and own less than one percent of the world’s real property. Coffee is a luxury food that many people take for granted and because of that, a large portion of coffee growers and their workers are exploited leading to the lack of fair trade.
Coffee is a beverage that is globally consumed, but also a product that has different values in different parts of the world. The role coffee plays in society differs around the world, from the farmers who grew the crops to the people who constantly consume them. Social theoretical perspectives are capable of showing the different roles coffee has in different societies. Symbolic interactionism, functionalism, and Marxism are three theories which show coffee’s role sociologically. These theories show how coffee affects people physically, how it affects them emotionally, how it leads them to have interactions, how it connects different parts of society, and how it’s economically controlled by a select few.