Economics of coffee
From Wikipedia, the free encyclopedia
Coffee is a popular beverage and an importantcommodity, and tens of millions of small producers in developing countries make their living growing coffee. Over 2.25 billion cups of coffee are consumed in the world every day.[1]Over 90% of coffee production takes place in developing countries, while consumption happens mainly in the industrialized economies.[1]
Worldwide, 25 million small producers rely on coffee for a living.[2]For instance, inBrazilalone, where almost a third of all the world's coffee is produced, over 5 million people are employed in the cultivation and harvesting of over 3 billion coffee plants;[2]it is a much more labour-intensive culture than alternative cultures of the same regions assugar caneor cattle, as it is not subject toautomation and requires constant attention.
Coffee is a major export commodity: it was the top agricultural export for twelve countries in 2004,[3]the world's seventh-largest legal agricultural export by value in 2005,[4]and "the second most valuable commodity exported by developing countries," from 1970 to circa 2000.[5][6][7]This last fact is frequently misstated; seecoffee commodity market.
Further, green (unroasted) coffee is one of the most traded agricultural commodities in the world,[8]and is traded infutures contractson many exchanges, including theNew York Board of Trade,New York Mercantile Exchange, New YorkIntercontinental Exchange, and theLondon International Financial Futures and Options Exchange. The world's largest transfer point for coffee is the port ofHamburg, Germany.[citation needed]
World production
Top Ten Green Coffee Producers – 2011(millions of metric tons)
Brazil / 2.70
Vietnam / 1.28
Indonesia / 0.63
Colombia / 0.47
Ethiopia / 0.37
Peru / 0.33
India / 0.30
Honduras / 0.28
Mexico / 0.25
Guatemala / 0.24
World Total / 8.46
Source:
UN Food & Agriculture Organisation(FAO)[1]
In 2009Brazilwas the world leader in production of green coffee, followed byVietnam, Indonesia,Colombiaand Ethiopia.[9]Arabica coffee beans are cultivated in Latin America, eastern Africa, Arabia, or Asia. Robusta coffee beans are grown in western and central Africa, throughout southeast Asia, and to some extent in Brazil.[10]
Beans from different countries or regions can usually be distinguished by differences in flavor, aroma,body, and acidity.[11]These taste characteristics are dependent not only on the coffee's growing region, but also on genetic subspecies (varietals) and processing.[12]Varietals are generally known by the region in which they are grown, such asColombian,JavaandKona.
Pricing[edit]
According to theComposite Indexof the London-based coffee export country groupInternational Coffee Organizationthe monthly coffee price averages in international trade had been well above 100 US cent/lb during the 1970s and 1980s, but then declined during the late 1990s reaching a minimum in September 2001 of just 41.17 US cent per lb and stayed low until 2004. The reasons for this decline included a collapse of theInternational Coffee Agreementof 1962–1989[15]with Cold War pressures, which had held the minimum coffee price at US$1.20 per pound.
The expansion of Brazilian coffee plantations andVietnam's entry into the market in 1994 when theUnited States trade embargoagainst it was lifted added supply pressures to growers. The market awarded the more efficient Vietnamese coffee suppliers with trade and caused less efficient coffee bean farmers in many countries such asBrazil, Nicaragua, andEthiopianot to be able to live off of their products, which at many times were priced below the cost of production, forcing many to quit the coffee bean production and move into slums in the cities. (Mai, 2006).
A coffee plantation on a hill nearOrosí, Costa Rica.
In 2005, however, the coffee prices rose (with the above-mentioned ICO Composite Index monthly averages between 78.79 (September) and 101.44 (March) US Cent per lb). This rise was likely caused by an increase in consumption inRussiaand China as well as a harvest which was about 10% to 20% lower than that in the record years before. Many coffee bean farmers can now live off their products, but not all of the extra-surplus trickles down to them, because rising petroleum prices make the transportation, roasting and packaging of the coffee beans more expensive.
Prices have risen from 2005 to 2009 and sharply in the second half of 2010 on fears of a bad harvest in key coffee-producing countries, with the ICO indicator price reaching 231 in March 2011[17]
References[edit]
1. ^Jump up to:abPonte, Stefano (2002)."The ‘Latte Revolution’? Regulation, Markets and Consumption in the Global Coffee Chain".World Development(Elsevier Science Ltd.). Retrieved24 December2014.
2. ^Jump up to:abFAO, 2007
3. Jump up^"FAO Statistical Yearbook 2004 Vol. 1/1 Table C.10: Most important imports and exports of agricultural products (in value terms) (2004)"(PDF). FAO Statistics Division. 2006. Archived fromthe originalon 2008-06-25. RetrievedSeptember 13,2007.
4. Jump up^"FAOSTAT Core Trade Data (commodities/years)". FAO Statistics Division. 2007. Archived fromthe originalon October 14, 2007. RetrievedOctober 24,2007.To retrieve export values: Select the "commodities/years" tab. Under "subject", select "Export value of primary commodity." Under "country," select "World." Under "commodity," hold down the shift key while selecting all commodities under the "single commodity" category. Select the desired year and click "show data." A list of all commodities and their export values will be displayed.
5. Jump up^Talbot, John M. (2004).Grounds for Agreement: The Political Economy of the Coffee Commodity Chain. Rowman & Littlefield. p.50.So many people who have written about coffee have gotten it wrong. Coffee is not the second most valuable primary commodity in world trade, as is often stated. [...] It is not the second most traded commodity, a nebulous formulation that occurs repeatedly in the media. Coffee is the second most valuable commodity exported by developing countries.
6. Jump up^Pendergrast, Mark (April 2009)."Coffee: Second to Oil?".Tea & Coffee Trade Journal: 38–41. Archived fromthe originalon April 1, 2009. RetrievedMay 27,2014.
7. Jump up^Pendergrast, Mark (1999).Uncommon Grounds: The History of Coffee and How It Transformed Our World. New York: Basic Books.ISBN978-0-465-03631-8.
8. Jump up^Mussatto, Solange I.; Machado, Ercília M. S.; Martins, Silvia; Teixeira, José A. (2011). "Production, Composition, and Application of Coffee and Its Industrial Residues".Food and Bioprocess Technology4(5): 661–72.doi:10.1007/s11947-011-0565-z.
9. Jump up^"Coffee: World Markets and Trade"(PDF).Foreign Agricultural ServiceOffice of Global Analysis.United States Department of Agriculture. December 2009. Retrieved26 March2010.
10. Jump up^"Botanical Aspects". London: International Coffee Organization. Retrieved4 January2010.
11. Jump up^Davids, Kenneth (2001).Coffee: A Guide to Buying Brewing and Enjoying(5th ed.). New York: St. Martin's Griffin.ISBN0-312-24665-X.
12. Jump up^Castle, Timothy James (1991).The Perfect Cup: A Coffee Lover's Guide to Buying, Brewing, and Tasting. Reading, Mass.: Aris Books. p.158.ISBN0-201-57048-3.
13. Jump up^"Bottled water pours past competition".DSN Retailing Today. 13 October 2003.
14. Jump up^Fact Sheets: Coffee Sales
15. Jump up^Daviron, Benoit; Ponte, Stefano (2005). "3".The Coffee Paradox. Zed Books, London & NY. p.86.ISBN1-84277-457-3
16. Jump up^Rickert, Eve (15 December 2005)."Environmental effects of the coffee crisis: a case study of land use and avian communities in Agua Buena, Costa Rica". M.Sc. Thesis, The Evergreen State College.
17. Jump up^ICO."ICO Indicator Prices".
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