• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

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

Extracts from this document...

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.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. What are the important elements of International Trade

    High High Demand For �'s �1 = $2 Low Low Demand for �'s If the pound to the dollar is high then there is a high demand for pounds but if the pound to the dollar is low then there is a low demand for pounds.

  2. Sports manufacturers

    sports clothing supplier if consumers develop perceptions of a label that question its credibility as a sports product. It is therefore likely that the focus on sponsorship and endorsements will be maintained. There is also evidence that some brands are intending to evolve into other non-sports markets.

  1. International trade with WTO and AFTA

    In line with industrialization efforts, manufacturing export has increased from 11.9% of total exports in 1970 to 81.2% in 2003.

  2. Is it fair to say that America was "Booming" in the 1920s?

    The basic government policy was laissez-faire - this basically meant that the economy was left to run itself. However, the government did intervene to support businesses with benevolent policies in three main ways: High Tariffs In 1922, the Fordney-McCumber Act was passed, which raised tariffs covering the difference between domestic and foreign production costs.

  1. Industry sector: coffee exporting

    However, it requires hiring employees in the US for them to work with manufacturers and control shipping, and possibly in Ukraine to manage distribution. Hence, some expenses are in Ukrainian currency - hryvnas (UAH). This money is to be spent for paying salaries to Ukrainian employees, for advertisement, office rental,

  2. How Do Dixon's Dominate The Electrical Trade?

    The standard of living is the way in people live, so the state of environment they live in. If the standard of living is low in a country the growth for companies will be almost impossible because the main body of the population can only spend there money on food.

  1. Russia and the World Trade Organization.

    The claim that the Russian agricultural sector will wither once the economy becomes more open is unfounded. Many of the sector's problems will persist regardless of whether Russia joins the WTO. Many of the current problems cannot be called "development-inducing" by any definition-soft budget constraints, vague property rights, opportunistic behavior by managers, and difficulties obtaining credit.

  2. How has the Brazilian economy been affected by the decline in wrld coffee prices?

    A forecast for the country's 1997/98 outturn was at 28 million bags, this was an increase from the previous season's production of 27.5 million. If these figures are compared to those of the Hamburg-based trade firm Bernhard Rothfos, you can see that the expectations for Brazil were pleasing.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work