The Coffee Crisis
February 2, 2014
Introduction The highest source of income for Latin America, Asia, and African farmers is coffee. The countries that produce coffee are suffering from the lack of compensation for the harvest. The chief export for the different developing countries and their collapsing economies with the market is coffee. The governments of the countries that produce coffee were a concern about finding the resolution for the decrease of the coffee prices.
The countries like United States, Europe, and Japan are coffee consuming by their citizens. The two kinds of coffee are Robusta and Arabica. The robusta coffee is easy to grow, but acidic. The yield time with the Arabica coffee is low and mild. The Asian and African countries produce the Robusta coffee, which is instant coffee for local consumption and espresso. The compensation for Arabica coffee is two-thirds of the coffee production.
Coffee is cheaper, and the quality is low when its oversupply floods the market. Robusta coffee is less expensive because of how it has grown in Vietnam where the labor and requirements are less intense. The beans for robusta coffee are a lower grade than the Arabica beans. The Arabica beans grows and harvest in high altitudes. This surplus of the cheap value coffee made some roasters decrease the quality standards by increasing the number of robusta coffee in the blends to lower the prices.
The most traded product in the world market is coffee, which is second in the world (Coffee-The Engine of Ideas, 2014). The coffee production and sales support families around the world, especially for the developing countries. Some small farms still produces coffee by farmers with family, but there are larger coffee plantations. The agreement with the international in 1989 controls the prices for coffee. Then, the ICA collapses and there were different ideas about the impending coffee crisis. The bad weather in the South American countries was the cause for the failing material, which crops did not grow. The coffee sales were high from the results of the bad weather in South America through the mid-1990s. The rumors began to surface about the coffee crisis resolved soon enough but postpone. The Americans were not happy with the increase of the coffee prices and the coffee producers saw the effects of the coffee prices for commodity. Some other factors that contribute were responsible for the changes of coffee prices. In the mid-1990s, some farmers grew more coffee because of the high increase for the coffee prices. Since a coffee plant takes two years to grow fruit and reach maturity and four years to reach its peak production, the economy did not see the effects from the market. Vietnam returns to the market in the mid-1990s, which the country was in the coffee market in the past. The poor economy, war, and bad weather kept the Vietnam from the market for decades. During the mid-1990s, the Vietnam market made a major turn from being low in the coffee market to the second largest coffee exporter in the world. The coffee market starts from the re-entry of Vietnam to the current coffee crisis, which the expert traces its roots.
The effects of the coffee crisis change the different countries economy because coffee is an important source of the gross national product. Also, the coffee crisis changes the quality of the coffee which sells and as a cash crop. There are reasons for the quality decrease of coffee sold and bought. One of the reasons is the variety of robusta coffee in Vietnam. The robust flavor is different from the Arabica coffee flavor which is a favorable and better coffee. The robusta coffee blends with some Arabica beans, though; there is a lot of robusta coffee on the market. The market encourages many businesses to raise the amount...
References: Gomez-Ibanez & Quinlan 's 2004 case study, "The Coffee Crisis," pages 1–12
Coffee - The Engine of Ideas, (n.d.). Retrieved on January 26, 2014 from http://www.expo2015.org/node/4471
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