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Demand and supply of coffee in brazil
Conclusion about brazilian coffee industry
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Brazil is known for having a very large biodiversity and having a huge portion of the Amazonian forest in its land. Yet, because of globalization, this country suffers a great deal environmentally wise and socially also. Both adults and children have to work in order to be able to survive. Many of these workers are exploited and changing this reality is quit hard. It all comes down to profits at the end: exploiting workers is much cheaper than paying them properly. At least, there are some people who are actually putting some effort on solving this problem. This is where the issue involving coffee in Brazil comes in. The actors involved in this product are either greatly benefited or exploited and the working conditions for the farmers are quit terrible. However, there are solutions that were proposed in order to protect the coffee growers such as fair trade. It is then understood that coffee production in Brazil has negative effects on coffee laborers, but to a lesser extent on those who work in the fair trade business.
The Actors
First of all, when it comes down to the actors, we mainly see three: The industries, the government and the farmers. There are many industries that buy their coffee beans from Brazil. It goes from small companies to big corporations like Nestle, Starbucks, Kraft, Sara Lee, Tim Hortons, etc. The big corporations always try to project an image of how nice they are to the producers by showing pictures of happy farmers. They try so hard to seem like they’re doing the right thing, yet, in reality, it’s the complete opposite. A good example of the issue would be to look at Nescafe, which is one of the branches owned by Nestle. According to a website called Forbes, Nescafe r...
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...or them to pay back the debt, they have to pull out money from the coffee farmers’ salary, which means farmers aren’t exactly paid the Fair-trade Minimum Price which is US$126/quintal. Coffee growers end up with US$40-85/quintal depending on how large the debt is. It is then seen that fair-trade is not the perfect solution for these poor people, yet it is better than nothing.
Although Fair trade has been presented as a solution to the exploitation of coffee laborers, it isn’t a perfect solution. Though, it is clear that its advantages outweigh its disadvantages when the suffering of the other farmers is seen. Even after those laborers were freed of slavery, they weren’t exactly treated much differently. If this is what is happening to the laborers of this commodity, what is happening to those forced to work in the industry of sugar, petroleum, tea, etc?
The setting for Stanley J. Stein's book Vassouras takes place in one of the most unique environments in the world. Housing large tracts of virgin rain forest, Vassouras represents the ideal climate for the coffee cultivation that has come to dominate Brazilian agriculture, and during the latter half of the 19th century proved as the foremost region for coffee growing in the world. However, by the beginning of the 20th century, Vassouras had declined as a major coffee producing region, and its decline demonstrates important aspects of Brazilian cultural and economic life. Vassouras ultimately lost its affluence as a coffee producer because of the destructive and ineffective agricultural practices of its farmers and the crumbling of the slave-based society that served as its dominant labor force. The experience of Vassouras also demonstrates larger themes in Latin American economics at the end of the 19th century.
There are many essentials that are fetishized by Americans; one of those things is coffee. It is no secret that there is a big demand for coffee with many specialty coffee shops springing up, such as Starbucks, Peet’s and Coffee Bean. Oftentimes, the consumer loses sight of where things come from and how they are produced. A key component of production is the producer. The consumer does not pay enough attention to the ethical treatment and wages of the producer. This paper discusses Karl Marx’s premise on Fetishism of Commodities and its direct relation to the production of coffee, focusing on the value of the coffee bean as well as how that directly impacts the farmer and his family.
Globalization of goods /services and fair trade has helped in providing developing countries with more output of products, selling and producing techniques that are more ethical, open future investments through funding and technology. While some have benefited, others have lost jobs and resources. Coffee the second valuable traded commodity in the markets, has needed help in this industry with fair trade. These farmers crops usually grown in remote areas, have no access to credit , are indigent and in need of funding and technology. “A labor-intensive crop, coffee grows well on small and steeply slope parcels of land. Small scale producers often with landholding smaller than 3 hectares, constitute the majority of coffee producers in the country and are concentrated in some of the poorest regions.” Case Studies...(2009). The reasons these farmers do not profit well in the markets today, because they have lost their place as the foreign exchange earner allowing other competitors like Vietnam, Cost Rico, Ethiopia, India ,Tanzania and Uganda to emerge. “When the collapse of the ...
Coffee has played a major role in the lives of many people around the world. “Yet, poetic as its taste may be, coffee’s history is rife with controversy and politics…[becoming a] creator of revolutionary sedition in Arab countries and in Europe” (Pendergrast xvi). After reading Uncommon Grounds, it is apparent that the history of coffee is intertwined with the aspects of the globalization process, the role of Multi-National Corporations, and global economic issues.
Brazil’s economy was extremely dependent upon only one product, in broad contrast with the US, who depended on many different products. Brazil was dependent upon coffee, the sales and exports, for up to 70% of their economy. This was extremely problematic, because if tariffs and sales taxes on imported goods in other countries increased, Brazil was extremely screwed. And those tariffs and sales taxes did increase. They increased enough that in 1931, Brazil was selling their coffee for 8 cents a pound, whereas in 1929 they had been selling it for 22.5 cents a pound. Brazil had hoped that their valorization program would continue to work here. The valorization program was a program where the Brazilian government bought and stored coffee during times when there was no demand. When the demand went back up, the coffee was sold again. This worked well after WWI, but during the Great Depression it failed, mainly due to an almost circular problem. The government bought coffee and stored it when demand was low, they had to borrow money from the US and other countries to raise the funds to buy the coffee from planters, but demand was low and the US stopped approving loans due to not seeing coffee as a safe business opportunity, causing the government to not be able to afford to buy the coffee. This is a huge reason that Brazil fell into the Great Depression. They couldn’t buy things, they couldn’t get loans, and they most certainly could not sell
When it comes to Brazil’s comparative advantage there is a couple of key benefits. first , they have a sufficient amount of water, soil, and sunshine. Leaving production cost low, making them a preeminent player in agricultural products such as beef, coffee, poultry, soybeans, and sugar. Also, in 2011 it started imposing tariffs on shoes, chemicals, textiles, and barbie dolls. This would only generate more money being bought back into brazil’s economy with the imposed extra charge on goods.
Most of the coffee produced by Fair Trade farmers does not sell to Fair Trade buyers. Fair Trade producers sell most of their coffee on the regular market. While this indicates that the global coffee market prices are high, which is good for coffee producers, it also demonstrates a disadvantage for Fair Trade coffee producers. Due to the explicit and implicit costs added to production through Fair Trade compliance, the coffee Fair Trade producers sell in the regular market makes less profit than coffee produced with lower operating costs. When market prices are above the price floor, profit-maximizing firms would benefit to avoid the costs of Fair Trade certification and compliance. Why then do producers voluntarily opt into Fair Trade? A more likely explanation is that producers use the Fair Trade certification to reduce the risks associated with the boom-and-bust nature of coffee production, rather than to benefit from a market that will increase their productive capacity and lift them from poverty. Dragusanu et al (2014) support Fair Trade use, but Claar and Haight (2015) criticize their paper for glossing over the costs of Fair Trade, arguing that it misrepresents the significance of the costs in the production of
Brazil has the 7th largest economy by nominal GDP in the world and also 7th largest by purchasing power parity. It is moderately open to free markets and is one of the fastest growing economies in the world with an annual GDP growth rate of 5%. Brazil is closing the competitiveness gap with India and China among the BRIC economies. The major components of GDP of Brazil are: service sector (68.1% of GDP), industrial sector (26.5 % of GDP) and agriculture (5.5% of GDP). Various industries include textiles, shoes, chemicals, lumber, iron ore, tin, steel, machinery and equipments. Coffee is the major product of agriculture; other agricultural produce include soybeans, wheat, rice, corn, sugarcane, cocoa, etc. Touris...
Starbucks achieved the first principle by purchasing “coffee from small farmers in 29 different countries … [and buying] coffee at a higher than market price and guarantees future purchases” (Alter). With this, Starbucks has greatly impacted these small-scale farmer’s lives by insuring they have good long-term stability and financial security, farmers who aren’t otherwise noticed in the conventional market options. And “globally, Starbucks contributed over $3.5 million in Fairtrade premiums for coffee-growing communities” (Alter).
Mauricio Font, a sociologist, depicts in his novel a detailed study of São Paulo’s coffee plantations in the 1920s, in an attempt to evaluate the impacts of coffee on Brazilian society. Part one, subsection 4, “Coffee and Industrialization,” was relevant to my research because this section of his novel is where he explicitly rejects previous scholar’s theories that coffee caused underdevelopment in Brazil. Instead, he agrees that “internal factors in São Paulo’s export system helped to form a dynamic process of social and economic diversification, which resulted in a more capitalist competitive market.” He cites how coffee estates were not fully capitalist programs early on, however, planters were able to establish contracts with immigrant
...d Dub Hay, Starbucks’ head of coffee procurement confirmed it, when Simon met him in his office at the company headquarters. He said, “No, we didn’t pay anymore” (Simon, 216). Turns out, Starbucks purchased most of its Rwandan green beans from large estate holders and from middlemen who bought the coffee from individual small farmers, not as Starbucks publicly claimed that it came directly from Rwandan farmers. I share his ideal because I think Americans need to wake up from their fantasized world of “global peace,” so Starbucks cannot manipulate us. A company exists solely to make money, not for the improvement of the world. If a company does something “selfless,” then it is done for publicity and it is a fake image because of the dirty secrets involved behind the scene. Therefore, don’t let Starbucks take away our environment, our culture, and even our politics!
In efforts to encourage the cultivation of coffee, FNC has been giving the farmers subsidies in response to changes in the international coffee markets. More so, FNC provides the farmers social services and other infrastructure in areas where coffee is grown in large scale. These services are provided after the farmers are taxed proportionally upon the international prices reaching the ceiling. There are about 600,000 coffee farms across Colombia, and they play significant role rural development because Colombia is regarded as the second largest coffee producing country across the globe. Through coffee production, the road, rail, and ports, along with other infrastructure have been developed. These have contributed to economic development because of increased mobility of factors of production. Foreign exchanged earned from coffee exports is back rolled to fund the building of hospitals, rural clinics, referral hospitals, and dispensaries (Thurston, Morris & Steiman, 2013). More so, the revenue is used in the development of other industries. Unlike other Latin America economies where there is coffee, sugarcane, and banana plantation farming, small-scale farmers mainly practice coffee farming in Colombia (Skidmore, Smith & Green, 2014). Socio-cultural development is evident through the foundation of numerous cooperative societies where farmers form unions to enhance their bargaining
An article in the Seattle Post, describes the alliance that Starbucks is making to ensure that a sustainable supply of high quality of coffee is produce in Latin America. "Starbucks President and CEO Orin Smith said the alliance is partly his company's effort to pass on the "high price" of a cup of coffee to farmers." (Lee, 2004). He states that the high price enables them to pay the highest price to the farmers. Though the high prices to suppliers can demonstrate that money get to farmers with being diverted. Starbucks overall goal with this alliance is to buy 60 percent of its coffee under the standards agreed upon by 2007. "The agreement reflects the growing power of the premium coffee market and efforts to exploit it for the benefit of small farmers" (Lee, 2004).
Brazil’s economy is very diverse in a number of industries and is supported by its export of agricultural products, natural resources, manufacturing, and a multitude of services. The diversification of its exports reduces risk from unexpected and unanticipated market shocks, which provides strength and stability for investment. Brazil also has a trade surplus from its exporting, which provides a great deal of optimism for the country. According to A to Z Business World (2014), “Brazil is regarded as the World’s number one producer and exporter of several agricultural commodities including coffee, sugar cane, tropical fruits, and most recently soybeans.” The agricultural business accounts for approximately 23 percent of Brazil’s economy (IB Times, 2014). Brazil is also considered one of the world’s top food suppliers. With all the global food shortages, Brazil has become reliant on trading its agricultural commodities. The agricultural commodities are also a contributing factor to Brazil’s trade surplus. Brazil is renowned as the world leader in agricul...
The country of Brazil is comprised of 159 million people (1997). There are estimated to be around 150,000 indigenous people that live in the Amazon jungle. One third of the population works in agriculture and tends to have lower incomes and worse living conditions than the rest of the population. Mining is also a large industry and Brazil is the leading producer of iron ore. Many of these colonies are run by foreign companies who employ both workers from their own countries and native people. The unemployment rate runs about 7.5% and the literacy rate runs about 70%. However, it is a known fact that many of these numbers are made up by the Brazilian government. The real literacy rate runs around 30-50% and the unemployment rate is certainly higher.