School of Business and Technology: MBA
U4A1- The Coffee Crisis
Dr. John Halstead
In “The Coffee Crisis”, the authors described that in 2004 the governments of coffee producing countries were considering how to respond to rapid decline to coffee prices. Coffee was the main source of income for about twenty-five million small land farmers in Latin America, Africa, and Asia. In 2001, coffee prices hit a forty year low; resulting in extreme hardship for many farming communities. The affect of this crisis lead to most farmers extracting their children from school; forcing them to work. In attempt to aid the farmers affected by this crisis, relief programs were established to financially assist farmers to survive the low prices. However, most of the countries attempting to provide aid were not wealthy, thus resulting in the inability to sustain aid for the coffee farmers. The authors state that the question that hung in the balance was whether or not coffee prices would remain low. If the prices continued to stay low and coffee farmers continued to suffer; should the countries encourage the coffee farmers to abandon their crop and switch to something else? To begin to understand the crisis, the authors provide a background on coffee. Coffee is a crop that does best in an area that has a warm climate and plentiful rain. Coffee is centrally grown near the equator, however is primarily consumed in the northern hemisphere. It is traded in 60 kilo bags and the annual crop exceeded 100 million bags in recent years. “In 2003, for example, 101 million bags were produced of which roughly 95 million bags were consumed and the remaining 6 million added to storage in the hopes of fetching higher prices in later years”(p. 2). There are two main types of coffee; Robusta and Arabica. Robusta is easy to grow, however it yields lower and contains more of an acidy content. It grows from sea level to 800 meters and is produced mainly in Asia and some...