The Supply of Coffee
The supply of coffee is essential for the billions of people who depend on it for refreshment. The significance of coffee extends to the people who work in the industry and also the farmers who produce the coffee berries. The issue of immediate concern which surrounds the industry is the problem of consumer behavior, organic pest, and climate change. The other volatile market factors come to light, but these are not the only issues which threaten the steady supply of coffee globally. These have occurred repeatedly in the past hence indicating the revolving nature of consumption and production thus forming a complex and evolving global market (Luttinger, "Dicum, 2006).
The International Coffee Organization
The international coffee organization which formed in collaboration with the united nations, and which is 51 years old is the body which is responsible for overseeing the international coffee agreement which represents all of the world coffee producing countries, and also the coffee consuming countries. Up to the year 1989, the coffee market had regulation from a series of international coffee agreements whose intentions were to manage supply and maintain stable market prices. This system had collapsed by 1990, and since then the coffee market has been subject to the free market forces of demand and supply (Talbot, 1997).
The Production of Coffee
The production of coffee has risen gradually in all coffee producing regions, and this has doubled the output of Robusta coffee since the regulated market years to the free years. The production of Robusta coffee is most significant in Vietnam which is the leading market producer. The output of Arabica coffee has also experienced a steep rise in production from 57.5 million bags in a year during the market regulation period to 73.4 million containers per year since 1990. Africa was primarily affected by the market DE regularization and has experienced negative growth over the past 50 years of coffee production. Asia and Oceania have increased Robusta coffee production significantly over the past 20 years (Luttinger, "Dicum, 2006).
Coffee Production in Mexico and Central America
The production of coffee in Mexico and Central America has increased production since 1990 although the market share of its product has reduced. South America on the other handled by Brazil has for the past 50 years led the global production scale, with 47% of the total global production coming from the region.
The Market Structures of Coffee
The factors which determine the entry of coffee in a market and the competition within the market first marked by the ease of entry of the product in a specific country. The listing of coffee in the large coffee markets of the world, is symbolized by the importation of very high-quality products which are used to fill the market deficit, and for blending with local coffee to raise the overall quality of the product consumed in the country. This policy has an effect of locking out low or medium quality coffee from other countries from trading in those markets.
Coffee Market Demand and Alternatives
The other factor that influences the coffee demand is the different types of available related products like tea in the market. Some markets prefer more of tea than coffee hence denying coffee the market share that is available in the beverage sector. Other alternatives to coffee are cocoa and soy which run in the same market with coffee seeking to satisfy similar wants. The ability to influence price in the market is a significant factor in determining the market structure of coffee in a market. Some countries practice internal market control hence reducing the chances of a product fetching better prices and thus cut attraction to the market. The control over sales in a market affects the coffee market structure with more preference going to already established brands which have a more extended period of existence in the market and has perfected the marketing strategy of reaching the end consumer hence gaining a large share of the market (Talbot, 1997).
The Participants in the Coffee Market
The market structure of coffee involves farmers, domestic traders, processors, retailers, and consumers. The most significant power of market forces and decisions concentrated on the trading, retail and processing units of the structure. The global coffee market is 55% under the control of large coffee traders who are. Neumann and Volcafe of Germany who has a 30% control stake among them. Cargill of the United States of America, Decotrade of Switzerland and Taloca owned by Philip Morris of Switzerland (Luttinger, "Dicum, 2006).
Major Players in the Coffee Market
The other market participants and who are essential companies are Kraft which has a 10.9% of market share with its major brands including Maxwell House and General Foods. Starbucks comes in with a 15.6% stake in the global market of coffee, and the next goes to Nestle which holds 16.2% of the share with brands which include Nescafe, Tasters Choice, and Coffee-Mate. J.M. Smucker Co holds 21% of the global market share with its major brands including Millstone, Café Bustelo, and Green Mountain. The other large company in the coffee market involved in roasting is the Green Mountain Coffee Roasters, and they hold 22% of the global market with brands including Keurig, Tully's, and Diedrich coffee. It is clear that the global coffee market is dominated by a few players who are the roasting firms from countries that provide the most significant consumer bases in the world.
Who Should Our Coffee Dollars Go to?
The revenue derived from the coffee market mostly benefits government and large corporations involved in the sector. Majority of coffee farmers live in poverty as the payment is meager prices for their products. The workers in the coffee plantations live in dilapidating conditions with the labor-intensive duty of coffee picking being their only source of income. The coffee roasting companies make supernormal profits since raw coffee berry cannot access the market and hence are the single link between the farmers and the consumer, the lack of control on the prices with which these companies buy coffee from farmers is the primary cause of the imbalance of revenue seen in the coffee industry. The policymakers should focus more on how the coffee revenues should reach the farmers who are the real producers of the product.
References
Luttinger, N. " Dicum, G. (2006). The Coffee Book New Press (2nd ed.)
Talbot, J. M. (1997). Where does your coffee dollar go?: The division of income and surplus along the coffee commodity chain. Studies in comparative international development, 32(1), 56-91.
