3.12. Global Food Commodity Flashcards
Who produces and consumes coffee?
Produced by LICs and consumed by HICs
Who is the largest coffee producer in the world?
Brazil - in 2015 it exported around 20% of the world’s coffee
It has around 300,000 coffee farms and produces around 2.5 million tonnes per year.
Who is the largest importer of coffee?
The USA - in 2015 it imported around 20% of the world’s coffee.
European countries, Japan, Canada and Russia also import a lot of coffee.
What does price of coffee depend on?
- Supply and demand
- If demand for coffee increases and supply remains the same, the global coffee prices will increase -> more people competing to buy a limited quantity so they have to pay more
- If supply increases and demand remains the same, the global coffee price will decrease -> more coffee than people need so people don’t need to pay as much
What price is good for coffee consumers?
A low price is good for consumers and a high price is good for producers
What happens if the price is high?
People will produce more coffee because they are attracted by the idea of making more money- causes the price to fall
What happens if price is low?
People may buy more coffee- may cause prices to rise
Who can price fluctuations affect?
Coffee farmers
e.g. amount of coffee exported from Vietnam has steadily increased since 1987 and prices fell which put many South American coffee growers out of business as they couldn’t afford to keep producing it at such as low price.
How much of the price of coffee bought in a supermarket goes to coffee farmers?
7-10%- they only sell the unprocessed bean, which is of low value
TNCs buy the beans and roast them, increasing their value and making most of the profits
Where are TNCs mainly from?
Developed countries- profits go to developed countries rather than being reinvested in less developed countries
Who are most coffee producers?
- Small scale farmers with little land who depend on selling coffee, so they have little power to dictate prices
- In contrast, TNCs have a lot of control over the global coffee market
- 4 companies control around 40% of global coffee exports
What can TNCs do?
- Pick and choose where they get their coffee from
- Coffee producing countries compete with each other to cut wages, labour regulations and environmental protection in order to attract TNCs - this is known as ‘race to the bottom’
What can race to the bottom cause?
Coffee farmers to go out of business or cause long term damage to farmland
Positive social impacts of global trade
- Increased employment opportunities at different skill levels
- More education and training leads to increased social mobility
- Increased consumer choice
- Increased product quality
- Technology transfers
- Increased political stability
- Improved infrastructure for trade benefits society
Positive economic impacts of global trade
- Increase in foreign exchange
- Competition results in lower consumer prices
- Multiplier effect leads to increased income
- Increase in personal wealth increases disposable income and demand for products and services increases.
- Technology transfers
Positive environmental impact of global trade
Consumer awareness puts pressure on companies and IGOs to tackle ethical and environmental issues
Negative social impact of trade
- Many manufacturing and some service jobs are lower income/ seasonal
- External shocks caused reduced demand and closure of factories and unemployment
- Unemployment or forced to migrate if companies relocate
- Loss or adaptation local culture and traditions
- Loss of empowerment- decisions made in the USA, China and EU have impacts on local communities
- Time zones may make work patterns of employees less family orientated
Negative economic impacts of global trade
- Higher paid quaternary workers brought in from other countries
- External shocks caused reduced demand and closure of factories and unemployment
- Profits go to shareholders in home country so reduced’ trickle down’ effect
- Increased prices for, or loss of local products that don’t benefit from economies of scale or need special expertise
- Increased interdependence - events in other countries have a direct impact on a nation’s economy
Negative environmental impact of global trade
Environmental issues
