The Global Coffee Trade Flashcards
Where is coffee grown?
Hot, wet areas close to the equator.
The number one producer in Africa is Ethiopia, and other big producers include Brazil, Vietnam, Columbia and Indonesia.
Overview of coffee production
Coffee plants are grown in nurseries, and after 6 to 12 months they are moved to farms where they produce the beans that we use to make coffee.
Most coffee is grown on small holdings rather than large plantations.
The main coffee TNCs
Nestle
Kraft foods
Procter and Gamble
Sara Lee corporations
Issues in coffee production - disease
Coffee plants are susceptible to a range of diseases e.g. bacteria blight and coffee leaf rust both harm leaves and prevent growth.
Coffee berry disease causes dark spots to appear on beans and destroys them within days.
Issues in coffee production - pests
Coffee farmers have to look our for insects and other pests.
e.g. Black twig borer is an insect native to Asia that tunnels into the branches of coffee plants and destroys them.
Issues in coffee production - climate and weather
Climate change can affect growth.
Certain weather conditions make the outbreak of pests more likely.
Diseases like bacteria blight can easily spread in very wet weather, whilst droughts make cicada more likely.
Issues in coffee production - fertilisers
Farmers use fertilisers and pesticides which cause environmental problems. These are often imported so are expensive.
Nature of coffee trade
Developing countries are the producers and developed countries are the consumers.
There has been a 1.9% increase per year in coffee consumption over the last 50 years. The coffee industry was valued at £170 billion in 2012.
Brazil
The largest producer of coffee.
Exported around 20% of the world’s coffee in 2015.
300,000 coffee farms producing 2.5 million tonnes per year.
USA
Largest importer of coffee.
Imported around 20% of the world’s coffee in 2015.
European countries, Japan, Canada and Russia are also large importers.
The International Coffee Agreement
In 1963, the ICA came into force to regulate the price of coffee supplies through an export quota system.
The system collapsed in 1990, leading to a 30 year low coffee prices in 1993.
Why do coffee prices fluctuate?
Demand>supply = increase in price
People are competing to buy a limited quantity so they have to pay more for it.
Supply>demand = decrease in price
There is more coffee than people need so they don’t have to pay as much for it.
High prices = more producers because they are attracted to the idea of making money, prices then fall again.
How do price fluctuations affect farmers?
Vietnam - coffee imports have increased steadily since 1987. By 1999, Vietnam was producing over 450 million kg of coffee a year, which caused the price to fall dramtically from $1.19 per kg in Jan 2000, to $0.68 per kg by March 2001.
This caused many South American farmers to go out of business as they couldn’t afford to keep producing it at such a low price.
TNCs
The coffee trade is dominated by TNCs.
They have the power to regulate coffee prices so can sometimes pay even less than it cost to grow.
Just 7-10% of the price of coffee bought in supermarkets goes to coffee farmers.
As TNCs tend to be located in developed countries, profit do not go back to the developing countries.
Just 4 companies control 40% of global coffee trade.
Coffee producers
Small-scale farmers whose community depends on selling coffee.
They have very little power to dictate prices as TNCs can simply go elsewhere, meaning they will have no business at all.
