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

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Presentation on theme: "Global Trade& Developing Countries The Case of Coffee Coffea robusta – C. arabiga Dan Badulescu"— Presentation transcript:

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

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 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 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 pdf De Graaf. 1986, The Economics of Coffee. Netherlands, Pudoc Wageningen Sen, Amartya Development as Freedom.USA. Anchor Books


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