The Economy of Coffee Supply Glut, Crashing Prices, Desperate Farmers: What's the solution?(Statistical Data Included)

By Schoenholt, Donald N. | Whole Earth, Summer 2002 | Go to article overview

The Economy of Coffee Supply Glut, Crashing Prices, Desperate Farmers: What's the solution?(Statistical Data Included)


Schoenholt, Donald N., Whole Earth


The coffee crisis, which has seen prices of green coffee plummet 40 percent in a one-year period, to below $.50/lb., is scary, and it is real. It threatens to have devastating effects on coffee farmers, the environment, and whole countries dependent on the coffee trade. (See "Coffee, Certification, and Consumers," page 25.)

Several voices have blamed Vietnam's rise as a major producer of cheap robusta coffee as contributing to the world robusta glut and subsequent low green coffee prices for all species, and most varieties and origins. Vietnam's entry into the export coffee market with such sustained ferocity has put pressure on world coffee prices. But Vietnam has as much a right as any other nation to grow and offer coffee to world markets.

The World Bank has actively promoted the development of Vietnam's coffee exports, as has the Asian Development Bank. These world agencies that encouraged and backed Vietnam's development have themselves played into the hands of a monumental oversupply disaster.

There is more. The United Nations has sponsored programs in Bolivia and Colombia encouraging farmers to switch from cocoa to coffee farming. The International Coffee Organization provided funds to Angola for the revival of its coffee production after a long civil war decimated production.

Not surprisingly, the World Bank looks upon Vietnam's coffee victory with pride. "Vietnam has become a successful producer," the San Francisco Chronicle quoted Don Mitchell, principal economist at the World Bank. "In general we consider it to be a huge success." He added that nations (such as Guatemala, with a three-dollar-per-day minimum wage) that cannot compete with Vietnam's one-dollar-per-day labor costs or Brazil's mechanized plantations need to shift to farming other crops.

The world price for robusta coffees has sunk under the weight of oversupply, and has dragged the better arabica grades down with it.

We see specialty green coffee prices fighting the downtrend, but they are not worth what they were eighteen months ago. There are notable specialty coffee retail success stories, but these are, in global terms, on a very small scale. Specialty coffee continues to be a high-profile business populated by small independent operators. While closely held companies do not report earnings publicly, few publicly traded companies are showing profits at all.

If specialty coffee cannot keep money in the pockets of the farmer, our failure will result in a growing scarcity of the best grades. It is feared that, as a practical matter, some varieties of arabica coffees could actually cease to exist in world commerce.

The current coffee crisis will run its course, just as those of the past did. Producers will sustain real pain, and some farmers will stop farming. Coffee farm workers and their families, perhaps in large numbers, will be displaced. Consumption will continue to grow in new markets in Eastern Europe and Asia. The out-of-home market will continue to grow in North America, and Western Europe, even in some producer nations such as Brazil.

The market dynamic will reverse as supply of stocks and demand equalizes. The rebound will be hurtful to the consumer, and may be severe enough to curtail consumption due to high prices. In time again there will be oversupply because high prices will bring a new wave of planting in an effort to cash in on the high price levels, which will in turn begin the round again. The economic cycles of coffee are as old as the coffee trade.

The question remains whether this generation of coffee leaders, who have accomplished so much for the consumer in the way of product and price point choices, can do as much for their farmer partners. Whether we can find the answers to prevent the repetition of this unhealthy business environment once and for all is a healthy challenge. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Economy of Coffee Supply Glut, Crashing Prices, Desperate Farmers: What's the solution?(Statistical Data Included)
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.