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Global Trade& Developing Countries The Case of Coffee Coffea robusta – C. arabiga

Global Trade& Developing Countries The Case of Coffee Coffea robusta – C. arabiga. Dan Badulescu dbadulesc@interchange.ubc.ca. Global Trade & Developing Countries - Coffee. Coffee grown in over 50 countries 2 types C robusta (instant) C arabiga (fine) Geography – Equator to tropics

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Global Trade& Developing Countries The Case of Coffee Coffea robusta – C. arabiga

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  1. Global Trade& Developing Countries The Case of CoffeeCoffea robusta – C. arabiga Dan Badulescu dbadulesc@interchange.ubc.ca

  2. Global Trade & Developing Countries - Coffee • Coffee grown in over 50 countries • 2 types C robusta (instant) C arabiga (fine) • Geography – Equator to tropics • Most valuable commodity after oil • Exports close to US$ 9 billion in year 2000 • 20 million farmers (over 100 million people) depend on coffee • It is estimated that the beans changes hands around 120 times between farmer and consumer

  3. Global Trade & Developing Countries - Coffee • Of US$ 1.80/cup at consumer level, farmer gets around US$ 0.05 (1/36th of value) • Trade is worth over US$ 60 billion, twice as in 1980, developing countries retain 10% only • Price slumps Coffea robusta to 90% collapse: US$1.80 to 0.18/LB

  4. Global Trade & Developing Countries - Coffee • Coffee is not just big in global terms; it represents a huge proportion of their total income. • Burundi, for example, earns 80% of its foreign exchange from coffee alone, Ethiopia, Uganda 50%. It is a major earner for Rwanda, Nicaragua, El Salvador, Honduras, where it accounts for around 25% of earnings • For some countries, coffee on the world market is central to their development

  5. Global Trade & Developing Countries - Coffee • The value of coffee exports by producer-members of the International Coffee Organization (ICO) fell from US$12.9bn in 97 to US$4.8bn in 2001. • Between 1994 and 2001, producer countries lost some US$32bn. • During this period, Colombia lost the equivalent of three years’ export income, Uganda two and a half years’

  6. Global Trade & Developing Countries - Coffee • Price and stability (or lack of it) arises from weather, yields, speculation, political -- Fair Trade • Roasters and traders insulate themselves through exchanges and “futures” • Farmers are not able to do the same • What does it mean for developing countries? • How to offset these price fluctuations?

  7. Global Trade & Developing Countries - Coffee • Price and stability ?

  8. Global Trade & Developing Countries - Coffee • Consumers & marketers - developed countries

  9. Global Trade & Developing Countries - Coffee Price and income insecurity • What impact to rural communities, how to cushion / correct ? • How to shift balance of power from top of chain to bottom? • Which are sustainable solutions to maintain development momentum? Task: describe in not more than one page, 2 alternative solutions and why they could work

  10. Global Trade & Developing Countries - Coffee References and recommended readings: Spilling the Beans on the Coffee Trade www.fairtrade.org.uk/downloads/pdf/spilling.pdf De Graaf. 1986, The Economics of Coffee. Netherlands, Pudoc Wageningen Sen, Amartya. 1999. Development as Freedom.USA. Anchor Books

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