Coffee: An International Commodity

  • Created by: GJackson
  • Created on: 13-05-18 16:59
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  • Coffee: An International Commodity
    • Background
      • Been on the international market since the 1800's
      • Challenges with changes in climate, price volatility and increased consumption.
      • Post 1990
        • Introduced to the free market 1990 - Subject to supply an demand
        • Prices down by 1/3 between 1960-2001
        • 34 year high in 2011
    • Impact of free trade
      • Prices fluctuate greatly due to growth in supplies
      • There are 4 main coffee companies
        • Mondelez International
        • Nestle
        • Proctor and Gamble
        • Hillshire Brands and  D. E Master Blenders (Douwe Egberts)
        • Mondelez and D.E master blenders have since merged to become JACOBS DOUWE EGBERTS
      • Vietnam is now a major producer
      • Exports - 1963>45 million bags 2012>144 million bags
    • World Production
      • South America
        • 46% of global production
        • 75% of trees have a 2 year cycle
        • 2012-2013 leaf rust caused 2.7 million bags to be lost
      • Africa
        • Negative growth of production over last 50 years
        • Economic liberalisation has caused a decline of yields
        • Before the free market African countries were guaranteed exports to the EU
    • Global Consumption
      • 14/20 of the top consumers are European
      • Brazil consumes 5.2kg per capita per annum and produces 38 million bags per annum
      • 80% of UK households buy instant coffee
      • Worlds 2nd largest import after oil
      • Specialty coffee is becoming more popular as instant declines
    • Challenges
      • Price fluctuations cause uncertainty for producers.
      • Labour intensive industry - costs rising due to younger workforce.
      • Coffee trees are vulnerable to pests (leaf rust and coffee berry borer)
    • Socio-economic Impacts
      • MEDC's have greater access to market
      • Workers in the LEDC production companies have poor wages due to price competition
      • Wealth increases in countries that process and refine the product .... and decreases in agricultural countries.


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