Coffee Through the Ages
Many of us can’t function in the morning until we’ve had that first cup of coffee. And then a second.
And then a third. And just as much as coffee impacts our individual lives, it has a major impact on the
US economy.
Coffee is the most commonly consumed beverage in the US, even more so than tap water. The total
revenue brought in from the coffee industry in 2015 was $225.2 billion, and coffee-related economic
activity makes up of about 1.6% of the US GDP. In addition, the coffee industry is responsible for over
1.5 million jobs in the US as well as generates almost $28 billion in taxes.
But as much as the consumption of coffee impacts the US economy, the economy in Ethiopia is
coffee. “The economy of the community is based on coffee production– nothing else,” said
Alemayehu Abrahim, a school principal in Oromia, Ethiopia. Coffee trade is vital to the politics,
survival, and economies of many developing countries and yet the industry’s future is decided by the
economists and politicians on the top stories of skyscrapers in some of the world’s wealthiest cities.
Yemen used to have a world monopoly on coffee in the early 1500s. Considered to be the place where
coffee originated, they closely guarded their commodity refusing to sell live coffee plants and seeds.
Merchants from all over Europe and Asia would go to Mocha, Yemen to buy coffee. However, the
secrecy of the coffee bean didn’t last long. In the 18th century, live coffee plants were stolen by
Dutch merchants and taken back to Europe, and within 40 years coffee plantations sprung up all
around the world. Since nobody needed to travel all the way to Yemen for coffee anymore,
production heavily declined and the entire city of Mocha started to fade. Yemen was even shut out of
the International Coffee Trade Agreement of 1962. This was the earliest example of coffee and its
momentous effect on a country’s economy.
Coffee is the biggest export from tropical countries and it represents the amount of economic and
agricultural issues many developing countries face today. Coffee prices are rapidly dropping which is
in turn affecting over 25 million households in coffee-producing countries. The economic stability of
these countries is largely dependent upon the coffee economy in developed countries, and so along
with the dropping of coffee comes economic instability in Latin America, Asia, and Africa.
Some factors that can be blamed for the declining coffee prices are the dismantling of the
International Coffee Agreements’ price regulation, a fluctuating market, and the rapid supplier
growth without enough demand. In the 90s, Vietnam entered the market and increased coffee
production by 1400% at the expense of smaller coffee producers in other countries.
Poor African countries such as Burundi, Uganda, and Ethiopia derive over half of their earnings from
coffee alone. Small-scale family farmers produce 65% of the world’s coffee supply at a barely or not
at all livable wages.
In 1995, the free trade policies imposed by the World Trade Organization also had a significant
impact on the price of coffee. These policies almost always benefited the wealthier countries who at
this point have an immense amount of control over the economies of these poorer countries. Since
foreign investment lacked the proper amount of regulation, more developed countries would impose
price restrictions on the products forcing the developing countries to cut wages in order to stay in
business and attempt to keep their economy afloat.
It’s amazing how just one product, if it’s the right product, can have such a huge impact on the world
markets. Coffee is so high in demand that the developed countries that consume it single handedly
control the economies of those that produce it, which as we can see has resulted in the downfall of
many of these economies.
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Great post! It's also interesting to look at the more scientific side of coffee and its physical impact on the human body. For some people, they are completely dependent on the stimulant. Caffeine is a neurotransmitter and sometimes when we don't get it, we suffer some some mild symptoms such as headaches. This "caffeine addiction" could easily be taken advantage of by the coffee industry. Having coffee conveniently available at any time tempts the consumer. Not to mention, companies such as Starbucks are constantly changing and spicing up their drinks in an attempt to attract consumers consistently. At some point, you could argue that the coffee industry is not even purely coffee anymore.
ReplyDeleteNice!! I had no idea of the scope of the effects of coffee consumption on the economies of other countries. From this blog post and other articles, it's been evident that coffee production has been on the decline. From another article, I have learned that Cameroons may be the future of coffee. In fact, exporters from African and European countries are taking part in a two day Cameroonian festival which seeks to bolster the interest of Cameroonians and hopefully increase its production.
ReplyDeleteNice post. I found it interesting to see the history of coffee. I definitely feel that the addiction people get from coffee raises the demand for it. It is kinda scary to see that the coffee market nowadays is high demanded as caffeine addiction can be very bad for one health.
ReplyDeleteAwesome! What's interesting to me is the way coffee is marketed to the public. I actually saw a commercial about coffee recently in Thailand where the marketers took a different outlook on coffee. It was targeting a societal standard to be skinny and represented the coffee as a product that would allow one to "get skinny" through the drinking coffee. I believe this type of marketing is both beneficial and detrimental. For producers, this reels in a ton of consumers because it is targeting social standards that are super prevalent. But for consumers, this may be harmful when people lack the knowledge and truth behind marketing.
ReplyDelete