Coffee Production on the International Markets Term Paper

Coffee Production on the International Markets - Term Paper Example Unfortunately, FLO has faced a number of challenges in rolling out its â€Å"sustainability criteria.† This has especially been attributed to overreliance on supply chain relations in the administration and management of this endeavour (Jaffee 12). While Fairtrade has sought to offer solutions for economic sustainability at the producer level, it fails to provide a solution to macroeconomic variations which dictate price and credit behaviour. This has triggered massive campaigns within the consumer markets in favour of fair-trade labelled coffees. The global supply of coffee is approximated to have been 8 percent above the demand as per 2003 world’s depressed prices. This, in turn, led to world’s coffee prices hitting its all-time lowest in 30 years, has declined by about 50 percent in a span of three years. Governments eager to boost their export earnings contributed heavily to this scenario as they encouraged their farmers to grow more coffee. All this was done oblivious of the catastrophic impact on the world market. East African countries such as Uganda, Ethiopia, and Kenya are among the coffee producers that were heavily hit by this price slump. The low coffee prices in the global market had rippling effect as small farmers who contribute significantly to the total production started feeling exploited. Fairtrade was thus adopted to restore some sanity in within the coffee industry. The specific objective was to protect small farmers in the developing world from exploitation by the developed world. Fairtrade thus guarantees $1.26/pound (a living wage) in addition to access to credit facilities from cooperatives (Ruben, Ruerd, and Simone 23). The creation and consequent demand for Fair-trade labelled coffee has forced the likes of Starbucks and Dunkin Donuts to rise up to the occasion and address social responsibilities as demanded by the developing countries.