Coffee

A Social and Economic Perspective

Introduction

Coffee is a very popular commodity all around the world. It is not only consumed by many of people worldwide, but it is also produced by many people as well. Although it is produced by many people, the wages that they get paid vary by country and by the type of coffee bean.

Top 10 Coffee Exporting Countries 2010-2011

From 2010-2011 the top 10 coffee producing countries are shown below.

1.) Brazil 2.) Vietnam 3.) Indonesia 4.) Columbia 5.) Ethiopia 6.) Peru 7.) India

8.)Honduras 9.) Mexico 10.) Guatemala

Problems with Coffee

Consumption vs. Profit

"Annual coffee consumption worldwide is estimated to be around 400 billion cups, or 12,000 cups per second. But for many of the world’s 25 million coffee farmers, coffee is a labour intensive crop that frequently yields very little financial return."

Although millions of people drink coffee, coffee farmers, especially in third world countries, often do not make enough money to live off of.

http://fairtrade.ca/en/products/coffee-0

Volatility of the Market

Coffee is a crop that takes around four years to grow, which makes it hard for farmers to adjust to the volatile market. As a result of the volatility of the coffee market, many coffee farmers have to sell for low prices. This is a problem because this a business that many coffee farmers live off of, and if they are not getting paid enough, then they will not be able to provide for their families or survive. Although coffee is an inelastic commodity, the supply is very elastic as there are so many coffee suppliers out there, in addition to several different coffee beans. These factors also contribute to making the coffee market so volatile.

Climate Change

"Sustained rains, droughts, higher temperatures, diseases, and pests attributed to climate change are hurting coffee crops and production. Wholesale prices worldwide are roughly double what they were a year ago. These worries aren’t new or fanciful. They point to disasters going on right now. Climate change is rocking coffee farming."

These climate changes affect the coffee crops in a negative manner. If the crops are not grown to be high quality, or if not as much good coffee is grown because of the drastic climate changes, then this will lead farmers to lose money. They will not make as much money and this will be a problem as it will be much harder for them to care for their families.

http://www.yaleclimatemediaforum.org/2011/06/climate-changes-putting-coffee-production-at-risk/

http://www.grida.no/publications/vg/climate/page/3090.aspx

Fair Trade

What is it?

Fair trade is something that brings a high sense of fairness in terms of wages in to the coffee producing business. It implicates several rules and standards in order to make sure that third world countries are earning a proper wages for producing coffee.

Standards for Fair Trade

There are several standards that are mandatory for fair trade coffee. Fair trade creates a balance between coffee farmers and corporations. This is to ensure that the farmers are getting paid an appropriate amount of money as there are many large corporations selling coffee that do not pay the farmers a fair wage.

The Problems with Fair trade

Quality

"Fair trade coffee growers have little to no incentive to grow the best crop as they are guaranteed the highest prices no matter what. In some cases, fair trade growers have been known to sell lower quality crops in the fair trade market and then sell higher quality coffee beans in the non-fair trade market for a competitive price. A guaranteed price means that growers do not have to guarantee quality."

With little motivation the coffee produced by fair trade may not be the best quality. This will cause people to not want to buy fair trade products, which will result in there being an excess supply of fair trade coffee that is not being sold.

http://blog.acton.org/archives/57082-is-fair-trade-coffee-curing-poverty.html

Regulation Against Child Labour

"Another significant problem with the fair trade movement is the regulation against child labor. This rule may ultimately hurt children. According to Hester, the school year in Honduras is built around the coffee picking season. Families pick coffee together all contributing to the family’s income. Children are not allowed to work under fair trade rules, so if adults own a fair trade farm, their children will look for work down the road at another non fair trade coffee farm. Thus, they will no longer with their parents or older siblings, but will be working on their own. In effect, child labor is not eliminated it is simply displaced."

The regulation against child labour seems to have been made with good intentions, yet the outcome is much different than what was intended. Families are separated, they lose money and child labour continues. This regulation not only separates families, but it also makes the families lose money as they are not working as effectively without their children. As a result, they lose money and this makes it difficult for the farmers to provide for their families.

http://blog.acton.org/archives/57082-is-fair-trade-coffee-curing-poverty.html

Wages

There are several different currencies around the world, yet fair trade sets the wages at one price. The standards of living differ by each country, and by setting only one specific wage for all countries may not fulfill the needs of all the farmers in the different countries. The wages may too low for a family to survive, which defeats the purpose of fair trade altogether.

Possible Solutions

Setting an Appropriate Wage

Instead of having one fixed price for all countries, there should be different wages for all of the different countries depending on what a livable wage is considered to be. This would ensure that the farmers are receiving an appropriate amount of money for their hard work in order to care for themselves and their families. In addition to having different wages, the wages should be set at a reasonable limit so that the farmers would have a considerable amount of motivation to harvest and sell high quality crops.

Schooling For Children

Children play a large role in helping their families to harvest the coffee crops, but the regulation against child labour causes problems with this. Schools are built and children are attending, which is a great accomplishment, but the times that the schools run cut into the harvest periods of coffee. Perhaps if the scheduling of the schools was rearranged so that the children could still attend school, but also help their families out as well, then families would be better off. There could also be a limit on how long children should be working in order to still retain a policy. This would ensure that the children would not have to work elsewhere in order to help their families earn money. They would still be able to live with their families and attend school at the same time.

Conclusion

Coffee producers in several third world countries are often not paid enough for their work which makes it hard for them to survive and provide for their families. Fair trade was created to solve this problem, yet their are problems with fair trade itself. Although there are several issues with coffee production that need to be resolved, there are also methods that are currently trying to bring fairness and equality to this business. Brainstorming ideas and different solutions is the best way to resolve the issues with coffee production and help out the coffee producers in third world countries.