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Fair Trade promotes socially and environmentally sustainable techniques and long-term relationships between producers, traders and consumers

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Introduction

Fair Trade promotes socially and environmentally sustainable techniques and long-term relationships between producers, traders and consumers The world coffee industry is in crisis. A flood of cheap, lower-quality coffee beans have pushed world market prices down to a 30-year low. Many now earn less for their crop than it cost them to grow. Many coffee farmers around the world receive market payments that are lower than the costs of production, forcing them into a cycle of poverty and debt Without urgent action, 25 million coffee growers' face ruin. The knock-on effects for national economies are just as catastrophic. 30 years ago, LEDCs received around 30% of the total value of international coffee sales. Today, this has slumped to just 10%. As export earnings from coffee shrink, national economies fail and the first casualties are government education and health budgets. Coffee is a multi-million dollar industry, but the profits don't go to the people who actually work so hard to grow the coffee beans, and carry all the risks of failing crops or falling prices. Most of the profits go to the shippers, roasters and retailers Coffee grows only in the tropics. ...read more.

Middle

Just nine countries in the North import over 70% of the coffee on the world market. The weather can destroy coffee crops. The chart shows how world coffee prices suddenly rose as a result of serious damage to the Brazilian coffee crops (20% of the world's coffee) in 1975 (frost), 1984 (drought), and 1994 (frost). When prices are high, small farmers often plant more coffee bushes, in the hope of making a little more money. However, if a lot of farmers plant more coffee, there is a problem when the plants start to produce coffee beans about three year later. Suddenly, there is far too much coffee on the world market, and so the price falls sharply again. Some coffee farmers have to leave their farms and try to find other work, so that in the following years there is a shortage of coffee again. The small farmers are powerless in the face of disasters and low prices, but the retailers and manufacturers are protected because they are big enough and rich enough to get through the 'bad' times. ...read more.

Conclusion

But at the other end of the supply chain, the large multinational coffee roasters, who typically use their market power to low prices and unfair terms on coffee farmers, have been attaining record profits Fair Trade Farmers in Ethiopia Today coffee remains one of the most important sources of export income for the East African nations of Uganda, Ethiopia, Kenya, and Tanzania. Ethiopia, Africa's largest coffee exporter and the birthplace of coffee, has been hard hit by the recent price slump. Coffee accounts for more than 60 percent of Ethiopia's exports, generating vital income for its population of 65 million, more than half of whom live on less than a dollar a day. Ethiopia's coffee income has dropped by US$110 million, severely affecting the one million families who depend on coffee for their income. While still selling to consumers in Western countries for around US$10 per pound, the world market price for coffee is less than US$0.50 per pound, of which farmers only receive half. Just five years ago, the farmers would receive at least five times that amount. As a result of this massive slump in coffee price, the Ethiopian coffee farmers are facing a sharp increase in poverty and hunger. Ashwinikumar 11 B 1 ...read more.

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