Global Coffee Trade

Question 1

Where is Coffee grown?

Answer 1

• Warm countries around the equator, biggest producers include Brazil, Vietnam, Colombia, Indonesia and Ethiopia
• ## Hot, wet environments

Question 2

What are the two types of coffee bean?

Answer 2

• Arabica and Robusta
• Arabica is usually higher quality and more expensive to produce, mainly grown in Southern America and Eastern Africa. It makes up around 70% of all coffee

Question 3

How is coffee traded globally?

Answer 3

• Mainly produced by less developed countries and consumed by developed countries
• Brazil is the largest producer, e.g. in 2015 it produced 20% of all coffee that year
• The USA is the largest importer of coffee, e.g. in 2015 it imported 20% of all coffee that year

Question 4

How does supply and demand work?

Answer 4

• When demand increases and supply remains the same, coffee prices will increase
• When supply increases and demand remains the same, global coffee prices will decrease
• A low price is good for coffee consumers, while a high price is good for coffee producers

Question 5

How can price fluctuations affect coffee farmers?

Answer 5

• E.g. the amount of coffee from Vietnam has increase steadily since 1987. By 1999 Vietnam was produced so much coffee that the price fell. This sent many south american coffee growers out of business because they couldn’t keep producing it at such a low price

Question 6

The coffee trade is dominated by TNCs. How do they affect coffee trade?

Answer 6

• Only around 7-10% of the price coffee is bought for in a supermarket goes the farmers because they sell the unprocessed bean, which is of low value. TNCs buy beans and roast them, increasing their value and so receiving a majority of the profits
• TNCs are mostly from devloped countries, so the profits go the developed countries rather than being reinvested in less developed countries
• Coffee farmers have little power to dictate prices, in contrast, TNCs have a lot of control over the global coffee market
• TNCs can choose where they buy their coffe from, e.g from the countries selling at the lowest price. Coffee producing countries compete in a ‘race to the bottom’ which involves cutting wages, labour regulations and environmental protection to attaract TNCs.

Question 7

What is fairtrade and how does it help farmers?

Answer 7

• Fairtrade works with organisations controlled by the farmers themselves
• Includes setting a fairtrade minimum price and maintains environmental standards and prohibits forced labour and child labour
• Fairtrade pays additional money into a communal fund for local communities to help them develop called fairtrade premium. Farming communities have been able to invset in computers, farming machinery and schools with this money
• Because of the higher prices fairtrade coffee demands, it is more expensive in the supermarkets