Instability of coffee trade
Nature
Coffee has experienced wide price fluctuations. There is excess production capacity which tends to reduce prices progressively to the special disadvantage of the many countries highly dependent on coffee trade for their export earnings. Such countries have attempted to group together at various times to introduce a country-by-country export quotas and to restrict the total amount of coffee traded and maintain higher prices. Such agreements are often by-passed by black market trading as a result of pressure from importers. The situation is complicated by the influence of the related market for soluble coffee which may or may not be manufactured in the producing country prior to export.
Incidence
Over 20 million people in 41 producing countries derive their income from the growing, processing, transportation and export of coffee. 15 developing countries earn from 30 to 80% of their foreign exchange from the export of coffee.
Counter-claim
As a result of falling prices and ecological impacts, in the mid-1960s the Brazilian government launched a major campaign for coffee eradication, resulting in uprooting 1.2 billion trees. Later in response to increased world prices, the Government stimulated new plantings, dictating credit terms that required contour planting, restricting credit to areas considered agro-ecologically suited for growing coffee, and providing subsidies for increased use of industrial inputs. New planting from this period demonstrate reduced soil losses.
Reduced by
Value(s)
Type
(E) Emanations of other problems