Essay Example on Coffee Industry: A Global Source of Foreign Exchange and Vulnerability

Introduction

While the coffee industry has been a primary foreign exchange source earnings for many worldwide nations, its fortunes are often dwindling continuously since the late 20th century in most nations, exposing whole economies as well as farmers to different vulnerabilities, stresses, and shocks. The showcased vulnerabilities come from global processes such as the introduction of structural programs of adjustment and specific context problems such as mismanagement at the local production units as well as marketing. In some parts of America, coffee farmers undergo the complexity of challenges in the marketing and production of their crops. The net impact is, thus, coffee fall from the coveted lead export position earner as well as the impoverishment of small-scale farmers who rely on the crop as their livelihood source. Therefore, the possible alternatives to coffee farming as depicted in the case study include:

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Possible Alternatives

As depicted in the case study, most circumstances of coffee farmers often vary from the consequences of coffee drinkers or consumers. The growers mostly practice small-scale farming and reside in tropical rural communities where they struggle to live. When the prices of coffee dip or the growers are afflicted by extreme weather or pests, most of the farmers experience extreme hunger and poverty. Thus, the possible alternative to the showcased challenge might be the government or other private agencies involved in the coffee production offering insurance options to the coffee farmers, which will cater to most of their medical and educational expenses (Varangis, Siegel, Giovannucci, & Lewin, 2013). The farmers, thus, will only be required to look for ways of feeding themselves and their families. Also, houses for strictly coffee farmers should be constructed close to each other to monitor their health and statuses easily and occasionally.

According to market power from the case study, when the commodity of coffee prices increases and stay high, in most cases, roasted often pass the raised price along to the consumer. However, when there is good market power and the prices decrease, the costs projected to the consumers fall gradually or sometimes remain the same leading to inflation. The action, thus, makes producing nations have difficulties to compete effectively with other consuming nation roasters as coffee must be roasted near its consumption. Also, when there is a strongly held brand, breaking into it might need large amounts of capital. The possible alternative to the challenge might be being open and truthful to both producers and consumers. If consumers complain about the coffee prices, their purchase rate might reduce or they might opt for other options (Avelino et al., 2015). Also, it is the consumers who determine the income of producers from their demands, therefore, if the industry fails to be open or prefers unnecessary price increment (inflation), it might lose many customers (Varangis et al., 2013).

The income generated from coffee farming in most cases is always inadequate for farmers as their needs are more than their income. The action forces most small-scale farmers to engage in other activities that will give them additional earning such as off-farm wage tasks, selling food crops, husbandry, to mention but a few. Thus, when low income becomes extreme, they will give coffee less attention and focus more on their side businesses which generate them more and instant income (Toensmeier, 2016). The possible alternative to the problem might be selling high-quality fertilizers that will result in high and fast yields, thus, generating more income and making the farmers focus more on their coffee farms. Also, farmers should make covenants with the coffee industries where they sell their coffee pods, to pay them according to the market prices as well as the quantity of their harvested coffee pods (Toensmeier, 2016).

Recommended Action Plan

When the small-scale farmers living in tropical rural communities experience hunger and poverty due to changes in climate, one might recommend them to become more educated on other ways of survival. They need to be financed and upskilled to be equipped to handle the hostile origin of coffee growing conditions (Avelino et al., 2015). For instance, certification bodies might assist the farmers to acquire relevant funds to progress their farms or opt for other farming methods.

As depicted in the case study, when the prices of green beans fluctuate frequently and become extremely volatile, when they are averaged out, the coffee traders will be seen not to be improving. Inflation will only occur to the traders and consumers while the pay of farmers will always remain the same. Therefore, the recommended action plan might be openly rising the prices to ascertain that the extra raised income is directed to the farmers at origin and not any other place in the coffee chain (Avelino et al., 2015). The action will, thus, create the need for certifications and requirements functioning in the coffee industry which is necessary in the current world climate.

From the showcased low income of farmers, it might be recommended for coffee farmers to make their farms financially healthy such that the involved youths are educated in ways of running successful businesses, not just practicing coffee farming. The action will save too much struggle for income to meet family needs as more income will be generated both on side businesses and coffee farming (Toensmeier, 2016). Also, when the challenges of an aging coffee farmer become extreme, educational institutions might change or create new educational programs to alleviate the challenge.

References

Avelino, J., Cristancho, M., Georgiou, S., Imbach, P., Aguilar, L., Bornemann, G., ... & Morales, C. (2015). The coffee rust crises in Colombia and Central America (2008-2013): impacts, plausible causes, and proposed solutions. Food Security, 7(2), 303-321. Retrieved from https://link.springer.com/article/10.1007/s12571-015-0446-9

Toensmeier, E. (2016). The carbon farming solution: a global toolkit of perennial crops and regenerative agriculture practices for climate change mitigation and food security. Chelsea Green Publishing. ISBN:978-1-603585-729

Varangis, P., Siegel, P., Giovannucci, D., & Lewin, B. (2013). Dealing with the coffee crisis in Central America: Impacts and strategies. The World Bank. Doi: 10.1596/1813-9450-2993