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/.
I don't drink coffee, or any caffeine for that matter, but I do know quite a few people who enjoy their morning Starbucks. It doesn't surprise me that coffee is such a huge generator of money, but what does make me sad is that the workers who toil in the sun to gather the coffee beans don't always make even the minimum wage. Maybe that's what keeps prices relatively low, but that's a huge opportunity cost.
ReplyDeleteAs an avid coffee drinker, I appreciate the amount of coffee that is imported to America, but I never really thought about the cost. The moral cost, that is. It is fairly easy and convenient for global superpowers like America to take advantage of their developing neighbors. Countries like guatemala literally cannot afford to demand higher wages, because then importers will take their business elsewhere. With the rise of worker’s rights movements across the globe and especially in America (pertaining specifically to where we get our imports and how we get them), i’m sure there are more ethical sources, but at a higher price. Higher price means less demand, so these ethically acquired coffee beans aren’t going to leave store shelves as frequently as the mass imported counterparts. I may have to think twice next time I order a cup of coffee.
ReplyDeletePersonally, I don't like coffee. Yet almost everyone else in my family drinks a fair amount of coffee on a regular basis. Whether it be in the morning, or when they have a sudden impulse to make a pot in the middle of the day. However, since I don't drink it at all, I have never paid attention to how much it costs, nor how it impacts the economy. I actually find it very interesting how a tiny coffee bean can become as big of a staple to the well-being of the nation, yet many people don't even realize it.
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ReplyDeleteEven though I don't drink coffee, I see my family and friends consuming coffee at least 2 times a day. It is really interesting on how everyone thinks coffee is their daily diet but after I read this article, I am sure everyone will be amazed by the economy behind coffee. We all know that coffee comes from plants where those plants are grown by farmers and sell their coffee beans to various companies. Very few farmers get an appropriate wage or result for their hard work, they are always ignored and left to loses. On the other hand, coffee companies like Starbucks and caribou buy coffee beans from the farmers and process them to make different types of coffee. The coffee industry could be considered as a perfect competitive market via monopolistic competition because the companies sell the same coffee but in different flavors; depending on the profit, these companies can enter or exit anytime. Coffee will never lose its demand which makes the industry to grow larger, so that it could satisfy its booming consumers.
ReplyDeletePersonally I love coffee, but only specific kinds. The average person drinks about 1.6 cups of coffee a day, which adds to a routine and something people believe they need to go on with their day. People have simply made coffee a priority in the morning like brushing your teeth every time you wake up. The producers are making big bucks on coffee just because it is so popular itself, but with the different kinds and flavors, the people could and will demand for more. It surprises me that the farmers who produce the coffee don't get paid as much as minimum wage at least, considering how popular coffee is itself.
ReplyDeleteI never knew that there are that many farmers and countries that are involving in producing coffee. Farmers should get paid more than 3 dollar a day since coffee is so popular in the U.S. and other countries. I’m sure there is enough profit made that more money could go to the farmers. I think coffee will continue to increase since normally once a person starts drink it they normally need it every day. Plus more and more people in this generation are drinking coffee which would increase the production along with the GDP.
ReplyDeleteCoffee to me is also seen as oil as a product, because no matter what the price is were still going to buy it. As you proved above, people think of coffee as a morning need and apart of our morning routine. But when prices rise and even though people are going to complain, no one is going to stop giving their business to coffee companies. Which is always help for for the companies. As you talked about the workers, that's probably why most coffee drink prices are more expensive now because they need to keep up with production.
ReplyDeleteI agree that coffee brings in an extreme amount of revenue. People have learned to rely on it to wake them up in the morning and find it an essential part of their daily rituals. In terms of the pay that coffee producers receive, I am reminded of sweat shops. It is easy for America to import coffee from places that pay their workers less because it is cheaper for us. However, I think that if we made more of our own coffee within the borders of our country we could create more jobs. The amount of workers needed would be quite large and could contribute to a decrease in the unemployment rate. Therefore something that comes across as just a morning tradition, could actually become an even bigger part of our economy.
ReplyDeleteI don't like coffee, nor do I drink it, but a lot of my friends and family do. I never knew that so much coffee was imported into the United States, but since Farmers plant coffee seeds, they should get paid more considering they're already not. However, I believe that coffee will continue to exceed overtime since people just love their coffee. Plus, I heard coffee is addicting, so then again, an increase will be shown, and the GDP will rise too.
ReplyDeleteI had never thought about how coffee could have such an impact on the global economy. I also found it interesting how the United States is the number one consumer of coffee worldwide. It was weird how not all the countries get paid the same amount of money for their coffee beans. I have never really paid attention to the price of coffee and how it has an effect on the economy.
ReplyDeletePersonally, I love coffee and try to get it every morning before I come to school. Coffee is one of the things that I spend a lot of my money on. I also did not realize that so many farmers and different countries are involved in producing coffee. I also believe that everyone who produces it should get paid more money since coffee is so popular in the U.S. and so many people get it every morning. They also should get paid more because this generation drink so much coffee and production and the GDP is increasing.
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ReplyDeleteCoffee, one may declare, is a fundamental human need, or at least a widely craved product globally. Like many things in the economy, coffee, I learned through reading this blog, is affected by seasons and weather like many crops. One fact that surprised me, well, rather, perturbed me, was the unfair wages paid to Guatemalan coffee pickers. Coffee, we learned, contributes considerably to American production and GDP. As an avid coffee drinker, I was surprised by this mistreatment and the consequences that may follow should this continue. Perhaps, by acknowledging the unfair wage paid to the hard workers who supply our desperately demanded coffee, we can evoke change, lest our coffee supply grow endangered. Thanks you !
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ReplyDeleteIt's scary to think that not only coffee power your day, but it also helps power up the U.S. economy. Not only importing coffee affects our economy but many other ingredients such as:sweeteners, flavoring, wages and taxes. Its interesting how so many small things can sum up our U.S. economy. There are many farmers producing coffee all over the world, but yet they are not getting a good wage. As one of the world's most traded products-second in value only to oil-the coffee industry employs millions of people around the world through its growing, processing and trading. But while the coffee trade is vital to the politics, survival and economies of many developing nations, the industry's pricing and futures are decided in conference rooms and on stock exchange floors in some of the world's wealthiest cities.Coffee accounts for nearly half of the total net exports from tropical countries and is representative of the economic and agricultural issues that developing countries face today.I agree that coffee will never loose its demand.
ReplyDeleteI agree with Emily on this one, except for the fact that I don't think about sweat shops when it comes to coffee. I just think about all the shops that sell coffee in the morning. I also think about how McDonald's sells their coffee for just $1 in the morning but then there are places like Starbucks that sell cups of coffee at like $5 a cup. I guess that just adds to the economy, but just like Emily said, if we did make our own coffee, it would add to our economy.
ReplyDeleteAs an avid coffee drinker this is quite harrowing. I knew things like sweatshops existed of the clothing industry, but I never thought about the conditions of workers of coffee. The demand for coffee is really high, and so the supply of coffee is also high. But I don't know if it is worth the lives of other people. There must be some way that is more efficient for both the consumers and suppliers. For companies such as Collectivo Coffee or Starbucks, their entire brand is surrounded by this one good. And so finding a way to make both parties satisfied is another problem of its own. This really changes things, but to be honest, I will still buy the product since I rely on it so much.
ReplyDeleteI'm not so much a coffee drinker myself, but I definitely believe the consumers of coffee should get paid more. Coffee is most adults go-to drink every morning due to the caffeine in it and since so many people spend their money on coffee the consumers should get paid a lot more than they already are. The amount of coffee sold also depends on the company who is selling it. For instance, Starbucks is a popular company known for their really good caffeine drinks therefore they have a higher demand for coffee unlike Mcdonalds who's coffee isn't as good as Starbucks.
ReplyDeleteStarbucks and MC Donald's are the biggest competitors that sell the best coffee in the for the cold months. Pumpkin Spice is just no starting up and so with this being said the market for this perpendicular drink in November is high so now that MC Donald is selling the drink for a cheaper price than Starbucks, there will be more people buying from them. When we get to December the peppermint coffee will be Starbucks strength in making because MC Donald's none that I know of have been created. Even after the Holidays Starbucks is the place to go to for coffee, tea ,and shakes.
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