Coffee Industry
Production
 Coffee grows in hot, wet areas close to the equator in countries in South America, the
Caribbean, Asia and Africa
 10 million tonnes produced per year
 Biggest coffee producers are Brazil, Vietnam, Colombia, Indonesia and Ethiopia
 Two types of coffee bean- arabica and robusta with arabica costing more to produce as higher
quality and grown in South America and eastern Africa while robusta is grown in western Africa
and Asia. 70% of production is arabica
 90% of production is in developing countries
 Demand for coffee is growing with output of robusta beans growing by 6.7% in 2018
 Coffee plants grown in nurseries and moved to farms after 6-12 months where they produce
beans on smallholdings so small scale
 Source of income for 12.5m households and 25 million individuals
 Issues: susceptible to disease e.g. bacterial blight and coffee leaf rust which harms leaves and
prevent growth. Coffee Berry Disease causes dark sports and destroys them within days.
Reduces yield and means production fluctuates so limited economic security, however, it is a
global commodity.
Insects and pests like Black Twig Borer in Asia tunnels into branches and destroys plant
Certain weather conditions make disease and pests more likely- bacterial blight in wet weather
and cicadas in droughts
Fertilisers and pesticides can be imported but this is expensive
Global warming
Less people in young generations are choosing to farm coffee beans as it is unreliable so they
migrate to urban areas for more opportunities
Patterns
 Coffee, like other low-value goods, are produced mainly by LICs and consumed by HICS. Brazil is
the larger producer- exported 20% of the world’s coffee in 2015, 300000 coffee farms and
produces 2.5m tonnes per year
 USA is largest importer- imported 20% of world’s coffee in 2015
 Demand is growing- in 2016, Europe imported almost 3 million tonnes which is a 10% increase
from 2006
 Price of coffee fluctuates in accordance with supply and demand e.g. amount of coffee exported
by Vietnamese farmers increased steadily from 1987. In 1999, exporting over 450,000 tonnes so
an increase in supply caused a fall in price from $1.19 per kg in January to $0.68 in March 2001.
Coffee farms went out of business
Role of TNCs
 Only around 7-10% of the price of coffee goes to coffee farmers as they sell the low value,
unprocessed bean. TNCs buy the beans and roast them, increasing their value to receive the
majority of the profits by selling to consumers which goes to developed countries
 Coffee farmers are small-scale with little land and depend on selling coffee so are unable to
dictate prices, whereas, TNCs have a lot of control as 4 companies, including ECOM, Louis
Dreyfus, Neumann and VOLCAFE, control 40% of global coffee exports
 TNCs select where to buy their coffee from so developing countries compete to cut wages,
labour regulations and environmental protection to attract TNCs- ‘race to the bottom’. This can
cause farmers to go out of business or land to be farmed intensively and damaged due to a
monoculture so biodiversity is lost.
 ECOM provide sustainable management services to farmers who sell them their coffee. ECOM
works with NGOs to improve conditions for farmers. Work in 29 coffee-producing countries.
Coffee Industry
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They promote sustainability from their suppliers with sustainable sales growing 38% in last 5
years.
Louis Dreyfus account for 85% of global coffee production, working in 11 countries. Purchase
from sustainable farmers by working with 2 2000 small coffee farms to produce 2.5 million bags
per year. Teach farmers how to be sustainable
+: Can encourage sustainability, invest and create jobs in less developed countries, ECOM works
with NGOs to improve QOL
-: Repatriation of profits, ‘race to the bottom’, monoculture harms environment, can be poor
working conditions
Fairtrade
 Fairtrade Foundation created in 1992 to promote brands that support coffee farmers
 Work with producer organisations (groups that controlled by farmers)
 Aims include setting Fairtrade Minimum Price to prevent farmers from going out of business or
falling into poverty
 Work with farmers to maintain environmental standards and prohibit forced and child labour
 Number of Fairtrade producer organisations grew from 175 in 2002 to 329 in 2011. Global sales
of Fairtrade coffee grew from 15000 tonnes to over 80000 tonnes per year in the same time
period
 Fairtrade pays additional money into a communal fund for local communities to help them
develop- called the Fairtrade Premium so they can invest in computers, machinery and schools
 In 2017, farmers earned £80 million in Fairtrade Premiums to invest in community projects
 Fairtrade works with 795,000 coffee farmers, however, this is still only a small proportion. They
produce 541,250 tonnes of coffee per year
 Farmers must use at least 25% of premium to enhance productivity and quality
 +: fair pay to keep farmers in business, maintains environmental and labour regulations, invest
back into community and machinery to improve QOL, provide more opportunities and improve
productivity
 -: Only affects 795,000 farmers out of 25 million, its success depends on consumer choice with
some TNCs like Kenco aren’t Fairtrade. Fees associated with becoming a registered Fairtrade
farm as they need a license