The Coffee Crisis

Continuous war in combination with rampant drug trafficking has caused the coffee industry in Colombia to struggle for many years, though Colombia’s long history with coffee predates that struggle. The coffee plant first reached Colombia sometime in the late 1700s (Encyclopedia of World Trade: From Ancient Times to the Present) and Colombia entered the coffee trade in the 1830s (Wikipedia, Coffee Production in Colombia). The geography of Colombia lends itself well to coffee production. Located in southern South America, Colombia is home to the Andes Mountains, which provides an optimal altitude for coffee (and coca) to grow. The Andes have three sets of mountain ranges, the Western Cordillera, the Central Cordillera, and the Eastern Cordillera. The majority of the coffee plantations in Colombia are on the western side of the Eastern Cordillera (Philip’s World Factbook 2008-2009).

The “Coffee Wars – The Big Three: Starbucks, McDonald’s and Dunkin’ Donuts” article focuses on the company analysis of the Starbucks brand and how its main competitors, McDonald’s and Dunkin Donuts, has affected their brand and driven competition higher. Even though there are many companies trying to enter the specialty coffee market, these three companies own the majority of the market share. With Starbucks’ top quality and above average prices they hold a different market than the fast coffee/food market of Dunkin’ Donuts and Starbucks; yet the competitive moves Dunkin’ Donuts has made over the years in order to compete with Starbucks and surpass McDonald’s has driven competition up between all three companies. The competition has stiffened ever more in the past ten years due to the changing economy. This led to “the big three” to come up with different techniques to gain competitive advantage over the other. Although the competition between these companies is to gain most of the market share, consumers are still loyal to a certain brand; this makes it difficult to gain each other’s clientele. McDonald’s continues to appeal to customers who want value and speed, Dunkin’ Donuts focuses on the middle-class, while Starbucks a customer who desires a higher quality product along with being recognized for using the brand.

In years past, coffee was relatively inexpensive to buy because coffee was typically consumed in certain countries, but now that many more countries are consuming coffee, the supply is having a difficult time keeping up with the demand. For instance, if economists predicted in 1980 that the demand for coffee would increase between 50% and 80% by 1990, then it would stand to reason that farmers would have probably enlarged the size of their crops in order to accommodate the demand. However, in 1990 the demand for coffee only rose by 10% thereby creating a surplus of coffee on the market for consumers. Because coffee is so easily obtainable, and farmers are trying to sell their goods so the crops will not go to waste, prices begin to drop to help tempt purchasers, which helps the producers so they avoid losing their investment entirely.

Ever since the first coffee bean tree was discovered in Ethiopia, the bean became a pleasurable commodity that spread quickly to Yemen and other Asian countries. It wasn’t long before it came to Brazil, becoming one of the largest coffee producing countries in the world today. Throughout time, people came up with brewing systems and coffee-making machines that made it easy to manufacture coffee but it wasn’t like that in the early 1800’s. Slaves came into Brazil and were forced to work in difficult labor conditions to collect and roast coffee beans.

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”.

It is a globalised world. Being a part of this progressive society, growth is a key indicator of success. Global Trade is one such benchmark that differentiate nations and economies. Every nation has some policies to promote the strengths of their trade globally. Likewise, Colombia has been known to be the third-largest producer of coffee after Brazil and Vietnam (in terms of volumes produced) from a long-time. Coffee is the world’s most traded commodity and most of it is produced by the small-scale farmers. Hence, globalisation has had a great impact on its production as well as trade. Therefore, Colombia’s strength lies in the production of coffee but also promoting their strengths and honing them globally to their benefit. Coffee is not just a cash crop for the Colombians but it’s a way of life for them. The farmers associated with the credulous society of small scale coffee growers called National Federation of Coffee Growers of Colombia (NFC) (1) was founded in the year 1927.

​Over time, the tradition of taking the highly lucrative cash crop of coffee has become universal to the extent that its production is marred with interference from political, social, economic, and scientific concepts that affect its production. In Central America, the major countries that produce coffee include Costa Rica, El Salvador, Guatemala, Honduras, Mexico and Nicaragua. In these countries, coffee is among the largest traded commodities. Normally, this production takes place through small-scale farmers who are largely dependent on larger corporations to bridge the gap between them and the consumers. Coffee production in Central America is affected by social, economic, globalization and political factors that

In looking at the history of coffee through the book Uncommon Grounds, we have seen coffee move throughout the world. Coffee originated in Ethiopia and grown wildly that was discovered by a goat name Kaldi. It was first eaten as a berry, then boiled, then roasted and finally, grinded to what we now know drink today and have created new ways to drink it as well. Coffee is the second most traded commodity and is grown in the Southern Hemisphere and consumed in the Northern Hemisphere. Here in the United States, it is evident that Americans love their coffee and drink it many times throughout the day. It can be argued that the “world coffee supply would continue to grow, stimulated in large part by the seemingly bottomless American coffee cup.”

By the late 1930’s with the government interference in coffee production, the economy was ready to grow, however, WW II got in the way. Although output increased through better utilization of existing capacity, there was little industrial and infrastructure investment, except for

These factors contributed to economic, social and natural bases degradation of the country (pg 1).” According to authors McDaniel, Byrne and Byrne, Nicaragua is one of the poorest countries where the people make a living by fishing and agriculture. However, “Agriculture plays a significant role in the country’s economy accounting for 21.5% of value added GDP and employs nearly 47% of the country’s population (10). Also not only climate change threatens agriculture, but negatively impacts rural households (11). Many About Nicaragua’s economy, Climate Change, Agriculture and Food Security (CCAFS) reports that the country is one the “poorest” countries of Central America. Coffee beans are mainly Central America’s backbone of the Central Americans. For Nicaragua, it brings “fifth to a quarter of export revenues.” However due to climate change, it can worse affect coffee growing due to its sensitivity that can cause a heavy economic loss. In order for the country to adapt to this climate change, the government launched a National Adaptation Plan that will help coffee farmers adapt to climate change and to “diversify coffee based incomes. Also, CCAFS reports that the International Fund for Agricultural Development (IFAD) provided $24 million to assist the coffee farmers by providing technology to help poor famers adapt, improve, and increase incentives for

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

Assuming that the demand and supply for premium coffees are in equilibrium, the price will be at a constant, without significant pressure from the market. If Starbucks introduced the world to premium blends, this would cause a positive shift in the demand curve. There a higher equilibrium price and higher quantity when demand increases and supply remain unchanged. As prices increase, and the market moves to a new equilibrium, we will see higher wages, more advances and investments in technology and infrastructure, and greater competition. As production become more efficient and competition becomes greater, supply will increase and cause prices to settle back down. There are several factors that will impact the long-term equilibrium, such as changes in supply. For example, if a hard freeze eliminated Brazil’s premium coffee crop, this would cause a negative shift in the supply curve. Assuming demand remains constant a negative shift in the supply curve will cause quantity to decrease and equilibrium price to increase. Research shows that in 2011 a frost occurred in Brazil's southeastern coffee growing belt. Traders worried that next year's yields could be hurt. At the same time, heavy rains during harvest forced Columbia to reduce its crop estimate for 2011. Understanding the impact of problems along the supply chain and how the changes in supply

Statistics show that over half of the American population consumes coffee on a daily basis. You may drink coffee hot, cold, mixed, or even in a frappuccino. Individuals are able to make coffee at home, or buy it on the go. Coffee provides people with caffeine, which ultimately gives energy for hardworking people all around the world. The main focus for this paper will cover the following topics, with coffee as the basis: causes for shifts in supply and demand, how coffee supply and demand influence price, quantity,

Suddenly, there is far too much coffee on the world market, and so the price falls sharply again. Some coffee farmers have to leave their farms and try to find other work, so that in the following years

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