CGP The Global Coffee Trade- Case Study

• Coffee

  An important global product
• Coffee is grown in warm countries around the equator
• Coffee production

  • Dominated by countries in South America, the Caribbean, Asia and Africa
  • Biggest coffee producers are Brazil, Vietnam, Colombia, Indonesia and Ethiopia
• Types of coffee bean

  • Arabica and robusta
  • Arabica is normally higher quality but more expensive to produce than robusta
  • Arabica is mainly grown in South America and eastern Africa, while robusta is mainly grown in western Africa and Asia
• Coffee plants

  • Grown in nurseries, then moved to farms where they produce the beans used to make coffee
  • Most coffee is grown on smallholdings rather than large plantations
• Challenges for coffee farmers

  • Susceptible to diseases like bacterial blight, coffee leaf rust, and coffee berry disease
  • Insects and pests like the Black Twig Borer
  • Weather conditions can increase outbreaks of disease and pests
  • Fertilisers and pesticides are often imported and expensive
• Coffee is mainly produced by less developed countries and consumed by developed countries
• Brazil


  • Largest coffee producer, exporting around 20% of the world's coffee in 2015
  • Has around 300,000 coffee farms and produces around 2.5 million tonnes per year
• USA


  • Largest importer of coffee, importing around 20% of the world's coffee in 2015
• Coffee price

  • Fluctuates depending on supply and demand
  • If demand increases and supply remains the same, price will increase
  • If supply increases and demand remains the same, price will decrease
• Low coffee prices can cause coffee farmers to go out of business
• Transnational Corporations (TNCs)


  • Receive the majority of profits from the coffee trade by processing and selling the coffee to consumers
  • Have a lot of control over the global coffee market, with just four companies controlling around 40% of global coffee exports
• Coffee-producing countries compete to attract TNCs

  By cutting wages, labour regulations and environmental protection - this is known as a 'race to the bottom'
• Fairtrade Foundation


  • Set up in 1992 to promote brands that support coffee farmers
  • Works with producer organisations controlled by coffee farmers
  • Sets a Fairtrade Minimum Price to cover farmers' costs
  • Works with farmers to maintain environmental standards and prohibit forced/child labour
• Impact of Fairtrade

  • Number of Fairtrade producer organisations grew from 175 in 2002 to 329 in 2011
  • Global sales of Fairtrade coffee grew from around 15,000 tonnes to over 80,000 tonnes per year
  • Fairtrade Premium has allowed farming communities to invest in computers, farm machinery and schools
• The Fairtrade approach is viewed as more ethical than traditional trade, particularly in the treatment of coffee producers
• Largest coffee exporting countries

  • Brazil
  • Vietnam
  • Colombia
  • Indonesia
  • Ethiopia
• Race to the bottom


  Coffee-producing countries competing to cut wages, labour regulations and environmental protection to attract TNCs
• Ways Fairtrade supports coffee farmers

  • Sets Fairtrade Minimum Price
  • Works with farmers to maintain environmental standards and prohibit forced/child labour
  • Pays additional Fairtrade Premium to help develop local communities