A Social and Economic Perspective
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.
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.
"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.
Standards for Fair Trade
The Problems with Fair trade
"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.
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.