The Coffee Crisis: Case Study - Essay Example

Some even opted to switch to other cash crops such as coca, to fill the gap left by the losses in coffee sales while some governments initiated financial aid programs to assist their farmers survive. It was not easy for some poor countries to do this, rather they stayed in dilemma of whether coffee prices would continue with this trend, and if so, should the farmers quit the coffee industry? (Quinlan et al, 1). All in all, it is rational to argue that the coffee industry is extremely competitive and if world producers do not compete successfully, they can lose their farmers, customers, experience, or a possibility of less sales and profitability.

The concept of operating in different market and industry structures have economic implications when viewed in a decision-making perspective. In decision-making, industry and market structures have a vital role through their impact on the producer and the consumers; that is, the characteristics and extent of competition within these structures affect the choice behavior. For instance, according to the case study on coffee crisis, it can be analyzed that in the coffee market and industry, situational variables notably affect consumer thoughts of sustainability and hence product cross elasticity.

In such situations, to the extremes that pertinent situational variables change, boundaries in the differing market or industry may shift, apart from the changes based on the products and consumer-based characteristics, thus affecting sales. In general terms, a change in shifters or variables in a given demand and supply model will create a change in both of them, and have impacts on the particular product. A shift in the supply or demand curve alters the equilibrium quantity and equilibrium price for a good or service.

More specifically, demand and supply has effects on the coffee industry. According to the Kennedy school of Government Case program, “coffee crisis” in the last 15 years, the U.S, which alone consumes