Coffee Production on the International Markets - Term Paper Example

Coffee Production on the International MarketsCoffee production is largely dependent on what happens in the international markets. Since a significant portion of coffee is tailored for export, the circumstances of coffee development and trade are, to a reasonable degree, a direct reaction to events in the specific global markets. For so long primary producers of coffee berries, mostly in developing countries such Kenya, have complained about the exploitation of poor farmers. This is made even worse by intermediaries who buy this coffee and export them to developed nations for productions processes.

At the centre of this controversy have been the likes of Starbucks Coffee triggering the formation of Fair-trade Labeling Organizations (FSO). Unfortunately, FLO has faced a number of challenges in rolling out its “sustainability criteria.” This has especially been attributed to overreliance on supply chain relations in the administration and management of this endeavor (Jaffee 12). While Fair trade has sought to offer solutions for economic sustainability at the producer level, it fails to provide solution to macro-economic variations which dictate price and credit behavior.

This has triggered massive campaigns within the consumer markets in favor of fair-trade labeled coffees. The global supply of coffee is approximated to have been 8 percent above the demand as per 2003 world’s depressed prices. This in turn led to world’s coffee prices hitting its all time lowest in 30 years, having declined by about 50 percent in a span of three years. Governments eager to boost their export earnings contributed heavily to these scenario as they encouraged their farmers to grow more coffee.

All this was done oblivious of the catastrophic impact on the world market. East African countries such as Uganda, Ethiopia, and Kenya are among the coffee producers that were heavily hit by this price slump. The low coffee prices in the global market had rippling effect as small farmers who contribute significantly to the total production started feeling exploited. Fair trade was thus adopted to restore some sanity in within the coffee industry. The specific objective was to protect small farmers in the developing world from exploitation by the developed world.

Fair trade thus guarantees $1.26/pound (a living wage) in addition to access to credit facilities from cooperatives (Ruben, Ruerd, and Simone 23).The creation and consequent demand for Fair-trade labeled coffee has forced the likes of Starbucks and Dunkin Donuts to rise up to the occasion and address social responsibilities as demanded by the developing countries. As by 2011, the global sales of Fair-trade certified coffee had experienced an exponential growth of up to 7 times as compared to when it was launched.

Starbucks sold 20 percent of fair-trade coffee in the US as per 2011 while Dunkin Donuts uses fair-trade coffee in all of its espresso drinks. In 2009, Starbucks went a notch higher to meet its social responsibility by opening Farmer support centre in Kigali, Rwanda as it even transformed to become the world’s largest buyer of fair-trade certified coffee. To date, the market for fair trade coffees has fundamentally been enhanced by the unrelenting publicity efforts of NGOs across the globe.

In spite of consumer surveys indicating reasonable level of public awareness and willingness to buy fair-trade certified coffees in given markets, actual market share point a pessimistic picture with demand of these products being below 5 percent (Potts 31).Works CitedPotts, Jason, et al. "Sustainability in the coffee sector: Exploring opportunities for international cooperation." IISD, UNCTAD (2011).Jaffee, Daniel. "Weak coffee: Certification and co-optation in the fair trade movement." Social Problems 59.1 (2012): 94-116.

Ruben, Ruerd, and Simone Verkaart. "Comparing fair and responsible coffee standards in East Africa." Routledge, London, UK (2011): 61-81.