The Global Coffee Trade Flashcards
About coffee
Coffee grows in hot wet areas close to the equator. As a result, coffee production is dominated by countries in South America, the Caribbean, Asia and Africa. The biggest coffee producers are Brazil, Vietnam, Colombia, Indonesia and Ethiopia.
Types of Coffee
There are main types of coffee bean arabica and robusta Arabica is normally higher quality but more expensive to produce than robusta, Arabica is mainly grown in South America and eastern Africa, while robusta is mainly grown in western Africa and Asia, though many countries grow both. Around 70% of world coffee production is arabica
Coffee Traded Globally
Coffee, like many low-value foods and products, is mainly produced by less developed countries and consumed by developed countries.Brazil is the largest coffee producer in the world-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.
The USA is the largest importer of coffee in the world- -in 2015 it imported around 20% of the world’s coffee.
Coffee Trade dominated by TNCs
Only around 7-10% of the price of coffee bought in a supermarket goes to coffee farmers, because coffee farmers only sell the unprocessed bean, which is of low value. Transnational Corporations buy and roast the beans, increasing their value- they receive the majority of the profits by selling the processed coffee to consumers.
Where are the TNC’s from
While coffee farmers are based in less developed countries, the TNCs are mainly from developed countries- the profits go to developed countries rather than being reinvested in less developed countries.
Examples
TNCs have a lot of control over the global coffee market-just four companies (ECOM, Louis Dreyfus, Neumann and VOLCAFE) control around 40% of global coffee exports
What is ‘race to the bottom’
TNCs can pick and choose where they buy their coffee from, e.g. from the countries or farmers selling their coffee beans at the lowest price. Coffee-producing countries compete with each other to cut wages, labour regulations and environmental protection in order to attract TNCs-this is known as a ‘race to the bottom’.
Fairtrade campaign helps farmers
Fairtrade’s aims include setting the Fairtrade Minimum Price, which is the minimum price that a coffee buyer has to pay the producer organisation to cover all of the farmer’s costs. This aims to prevent coffee farmers from going out of business or falling into poverty.
Fairtrade works with farmers to maintain environmental standards and to prohibit forced labour and child labour.
