2.2.6. Commercialization of
coffee
Coffee is bought and sold by roasters, investors and price
speculators as a tradable commodity in commodity markets. Coffee futures
contracts for Grade 3 washed arabicasare traded on the New York Mercantile
Exchange under ticker symbol KC, with contract deliveries
occurring every year in March, May, July, September, and December.Coffee is an
example of a product that has been susceptible to significant commodity futures
price variations.
Higher and lower grade Arabica coffees are sold through other
channels. Futures contracts for Robusta coffee are traded on the London
International Financial Futures and Options Exchange and, since 2007, on the
New York Intercontinental Exchange. Coffee has been described by many,
including historian Mark Pendergrast, as the world's "second most legally
traded commodity (Pendergrast M, 2009:38-41).
The coffee industry currently has a commodity chain that
involves producers, middlemen exporters, importers, roasters, and retailers
before reaching the consumer. Middlemen exporters, often referred to as coffee
"coyotes," purchase coffee directly from small farmers. Large coffee estates
and plantations often export their own harvests or have direct arrangements
with a transnational coffee processing or distributing company. Under either
arrangement, large producers can sell at prices set by the New York Coffee
Exchange.
Green coffee is then purchased by importers from exporters or
large plantation owners. Importers hold inventory of large container loads,
which they sell gradually through numerous small orders. They have capital
resources to obtain quality coffee from around the world, capital normal
roasters do not have. Roasters' heavy reliance on importers gives the importers
great influence over the types of coffee that are sold to consumers
(www.globalexchange.org).
According FAO (2003), behind petroleum, coffee is the second
most traded product in the world. Worldwide, 6.7 million metric tons of coffees
were produced annually in 1998-2000, and the forecast is a rise to seven
million metric tons annually by 2010.
2.2.7. Faire trade
coffee
According to the World Fair Trade Organization and the other
three major Fair Trade organizations (Fair-tradeLabelling Organizations
International, Network of European World shops and European Fair Trade
Association), the definition of fair trade is "a trading partnership, based on
dialogue, transparency and respect, that seeks greater equity in international
trade". The stated goal is to offer better trading conditions to marginalized
producers and workers. Fair trade organizations, along with the backing of
consumers, campaign for change in the rules and practice of conventional
international trade. However, not all coffee producers are happy with the
methods or results.
Fair Trade organizations promote a trade environment in which
the coffee importer has a direct relationship with the coffee producer,
excluding the middlemen. Coffee importers provide credit to certified farmers
to help them stay out of debt with coffee traders so they can develop
long-lasting trade relationships. Producer organizations are paid a floor price
(Fair-trade Minimum Price) of US$ 125 cents per pound for Fair-trade certified
washed Arabica and US$ 120 cents for unwashed Arabica, or the market price, if
higher. The free trade price of coffee rose above this minimum in September
2007, but due to recent economic events, the free trade price dropped back
below this minimum in October 2008. The fair trade price for (conventional
natural Robusta) coffee has been $1.01 since June 2008. The price of
conventional commodity coffee was also over $1 in 2008, but about $0.70 in 2009
(www.fairtrade.net)
Coffee was incorporated into the fair-trade movement in 1988,
when the Max Havelaar mark was introduced in the Netherlands. The very first
fair-trade coffee was an effort to import a Guatemalan coffee into Europe as
"Indio Solidarity Coffee".(Rice R.A., 2001:39-66)
Since the founding of organizations such as the European Fair
Trade Association (1987), the production and consumption of fair trade coffee
has grown as some local and national coffee chains started to offer fair trade
alternatives.For example, in April 2000, after a year-long campaign by the
human rights organization Global Exchange, Starbucks decided to carry
fair-trade coffee in its stores.Since September 2009 all Starbucks Espresso
beverages in UK and Ireland are made with Fair-trade and Shared Planet
certified coffee (DePelsmacker and all, 2005:363-385).
A 2005 study done in Belgium concluded that consumers' buying
behavior is not consistent with their positive attitude toward ethical
products. On average 46% of European consumers claimed to be willing to pay
substantially more for ethical products, including fair-trade products such as
coffee. The study found that the majority of respondents were unwilling to pay
the actual price premium of 27% for fair trade coffee (Idem).
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