Coffee and the Economy

Jessica Esser

Mr.Reuter

Econ

13 Nov 2016

                                        Coffee and the Economy

The sun creeps over the horizon as the word begins to wake up for the day. All over the world they are preparing to start their morning commute. No matter who they are or where they are going, each one of them starts the day off with a cup of coffee. According to “I Need Coffee. com”,  “coffee is the second-most traded commodity with oil being the first”(Carrier1). Coffee benefits people all over the world. Both with its caffeine, but also with the revenue it . It produces money for countries that consume it as well as those who grow it.

Coffee is a giant part of the economy in many countries globally. In places like South America and Vietnam it runs a big portion of the product they export increasing their GDP. According to Global Exchange. org,“There are approximately 25 million farmers and coffee workers in over 50 countries involved in producing coffee around the world...An estimated 11 million hectares of the world's farmland are dedicated to coffee cultivation... Around the globe, the annual consumption of coffee has expanded to 12 billion pounds (Global Exchange. org)”. America is the top consumer of coffee globally. “According to the International Coffee Organization, the US imported 2.72 billion pounds of coffee from September 2001 to September 2002 2(Global Exhnge. org)”. Along with just about everything else, America really loves to import the coffee they get. This helps countries that produce coffee, help raise productivity and overall GDP. However it is not always a fair trade for those who farm the product.

Not all who produce coffee are paid their fair share. According to Global Exchange. com “In Guatemala for example, coffee pickers have to pick a 100-pound quota in order to get the minimum wage of less than 3 dollars a day. A recent study of plantations in Guatemala showed that over half of all coffee pickers don't receive the minimum wage, in violation of Guatemalan labor laws”(Global Exchange. org) With the rising demand of coffee these conditions may take a toll on the workers and amount they are able to produce. This, in turn may cause a negative externality, for coffee producing countries and the companies who own the farms, as well as raising the prices of coffee for those who consume it. Another factor that contributes to changing prices of coffee is weather. Due to the fact that it is a crop, the external forces such as droughts, floods, and animals can cause shortages of supplies. The image below is a graph from I need coffee. com that shows that, “ pricing is driven up and down by variables like changing weather conditions in the major producing countries, political turmoil, speculation about production levels, changing transportation costs and other unexpected factors” (carrier2). In years where the price was higher such as 96’ or 97’ we see a large increase were likely factor played into the spiking of the selling price. Coffee is one of the most influential crops worldwide, often making a big impact on countries GDP however its price is susceptible to change from external forces.

Works cited

“Coffee FAQ | Global Exchange.” Coffee FAQ | Global Exchange, www.globalexchange.org/fairtrade/coffee/faq.

@INeedCoffee. “Coffee Price Economics - I Need Coffee.” I Need Coffee, 1 Aug. 2014, ineedcoffee.com/coffee-price-economics/.                       

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