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Microeconomics Current events - Assignment Example

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The major coffee producing regions of Colombia witnessed a rise in average temperature by one degree centigrade and a 25% rise in annual average rainfall. Both of these are beyond the normal suitable condition for coffee cultivation. …
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Microeconomics Current events

Download file to see previous pages... The decline in Colombian coffee production can be well grasped from the statistics that in the year 2006 the country produced more than 12 million pound bags of coffee and was optimistic to take this number to more than 17 million by 2014. However the catastrophe that has been illustrated so far has restricted the Colombian coffee production at nine million pounds bags in the year 2010. This displays a decline instead of much expected rise. Research has been going on to form a suitable Arabic coffee variant with indigenous qualities of Colombia that would be more resistant to pests and would be able to flourish even amidst heavy rain, however the final outcome is yet to be found. Courting this deadline in supply on one hand and rise in global demand for coffee on the other; price of the same is on a rise. The retail price of coffee coming from famous brands has risen by 25% and the figure in futures market is even higher at 85%.
The consequences for the Colombian coffee and the eventual impact on global coffee market from the same are following a simple logic. First of all global warming and erratic climatic condition are mostly due to anthropocentric activities over hundred of years; especially after the industrial revolution. Secondly the decline in supply and rise in demand for the coffee (following an improvement of economic status of the population of the countries like India and China) has quite obviously resulted in a price rise in short run (excess demand). Again the scenario hovering global warming and the global climatic condition does not seem too bright in future; hence little hope is there that the production of coffee will be blessed with environmental favour once again in near future resulting in higher supply for the same. ...Download file to see next pagesRead More
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