- The Coffee Bean
- Grounds for agreement: the political economy of the coffee commodity chain
- Freely available
- The world behind the world coffee market
The Coffee Bean
It follows the typical consumer dollar spent on coffee in the developed world and shows how this dollar is divided up among the coffee growers, processors, states, and transnational corporations involved in the chain. By tracing how this division of the coffee dollar has changed over time, it demonstrates that the politically regulated world market that prevailed from the s through the s was fairer for coffee growers than is the current, globalized market controlled by the corporations.
Grounds for Agreement explains why fair trade and organic coffees, by themselves, are not adequate to insure fairness for all coffee growers, and argues that a return to a politically regulated market is the best way to solve the current crisis among coffee growers and producers. Toon meer Toon minder. Recensie s John Talbot's account of the relations of the world coffee industry is a model of analytical lucidity.
While the story line concerns coffee, it is also an important study of the politics and ecology of the world market, revealing its contending institutional forces, cycles of regulation, and the social implications of its crises for the producing regions. Most intriguing is the way Talbot explores struggles over control of the coffee chain to chart the rise of specialty coffees, extending to organic and fair-trade coffees, as solutions to contention and crisis.
More than commodity chain analysis, this is an in-depth examination of the social and power relations of the global circuits of coffee.
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His historically deep analysis supports the claims of the movement for globalization from below? Highly recommended. Talbot accomplishes an exceptional feat in his new book.
Grounds for agreement: the political economy of the coffee commodity chain
This work should serve as a model for other critical studies of the dynamics of actually existing global capitalism. In a world where the economic fate of most poor countries depends increasingly on commodity exports, understanding how markets and institutions shape the economic opportunities and potential benefits embodied in such exports is essential.
Talbot's rich, careful analysis of the world's most important agricultural export should be required reading for anyone who wants to understand globalization. Betrokkenen Auteur John M. Reviews Schrijf een review. Kies je bindwijze. Verkoop door bol. In winkelwagen Op verlanglijstje. Gratis verzending 30 dagen bedenktijd en gratis retourneren Kies zelf het bezorgmoment Dag en nacht klantenservice. Anderen bekeken ook. The only difference was that the speculators now came less from outside, but more from commodity investment funds.
This seems negative, but on the other hand, their actions can also work in favour of coffee growers. In fact, it is necessary on futures markets that there are parties who take opposite positions, because otherwise no contracts can be concluded. Their functioning thus fits in the wider discussion on the positive or negative role that speculation plays in markets. Surely futures markets may be strongly and erratically affected by expectations and it is not clear if parties concerned could affect them continuously in a systematic way. It functioned as an ordinary dealer, only bigger and over a longer period.
Losses occurred because the accumulation of stocks was not followed by shortages and the Commodity Futures Trading Commission in the US changed their rules of the game. Brazil closed the initiative in exchange for the willingness of large importing countries to negotiate the fourth International Coffee Agreement. However, the big international trading houses have lost ground to roasters and retailers, who dominate the governance structure of the coffee chains. Their relationship with international traders tends to be that of unstable bilateral oligopolies.
The impact of futures markets on spot prices makes things more complicated, as financial speculators from other sectors have strongly increased participation. This makes market fundamentals less relevant for determination of spot prices. Country behaviour based calculi were and are not adequate to reach international market balances, since only private companies can be chain actors and market parties.
Buyers on these markets are a much smaller number of middlemen or intermediaries and processors. Large estates are scarce since internal economies of scale are limited and land tenancy is traditionally fragmented for this crop.
They may provide arguments for public, NGO and other interventions in domestic markets. Coffee shrubs become productive only after three to five years; response to price movements is therefore slow and price supply elasticities are low. Most supply reactions are considerably less than proportional and in the first year not higher than 0. For periods up to eight years the maximum estimated elasticity is 0. The lack of smallholders' access to inputs and external services may also cause low elasticities. Credits are restricted for small export commodity growers in liberalized countries.
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Their role is often subject to much debate: do they abuse market power as is assumed by followers of the different Fair Trade campaigns, or is their behaviour competitive, especially if the risk and transactions costs are calculated of the services they provide to smallholders? These include the first collection of the harvested berries, credit, transport and storage. Intervention by government agencies or parastatal monopolies as in Ethiopia, Ghana, Uganda until and Vietnam had not always been favourable to growers. Therefore, minimum producer prices established by marketing boards or other institutions could be advantageous to small and less efficient growers.
The growers often bear the risk of fluctuating world market prices. In a very productive country such as Costa Rica the impact of price fluctuations may have enhanced efficiency, probably due to smallholders' good access to inputs, credit and services [Cardenas ]. Other important reasons are the cultivation on high altitudes and adequate first processing facilities, which results in very good quality Other Milds coffee for this country.
This means that growers are generally price takers with a productive behaviour of either adaptive expectations 19 or rational expectations. An example is given by the emergence of vertically integrated exporters in Tanzania as subsidiaries of multinational companies, which became the owners of all private processing mills in the country [Temu et al. But also in this case a sufficient number of competitors and institutional improvements may restrict oligopsonistic behaviour. The creation of producers' cooperatives, increasing competition by domestic buyers, falling supply and large-scale smuggling, as in Ethiopia, Uganda, and Bolivia, may also strengthen the market position of growers.
Governments can also affect the outcomes by providing processing facilities, setting minimum producer prices, or applying other rules. However, lack of access to inputs and price uncertainty require institutional improvements to foster investment and a competitive market structure [Akiyama ; Temu et al. These improvements accounted for two thirds of the explanation of growers' behaviour.
Since institutional change needs time, the higher long run price elasticities become relevant and in this way persisting price decreases may have enduring negative effects on production capacity. The figures for Brazil and Indonesia are eloquent and clearly differ according to variety. World market prices play an important role and possibly cultivators income is what is left after deductions of fixed processing, transport and trade margins.
In the s Robusta growers' income per pound increased continuously, while Arabica dropped in the first one or two years, to assume increases later. These differences also appear for the two varieties within the same country, while generally the Robusta-Arabica growers' income gap tends to reduce in time. The coffee can be processed in both dry and wet ways.
In the dry system the first drying is done by the grower, to be delivered or stored as parchment coffee until the time is suitable to sell. This occurs frequently for the Robusta variety in for example Uganda, Vietnam and India.
The world behind the world coffee market
A great deal of Arabica in Ethiopia and Nicaragua is still processed by the dry method, which is simple and cheap when sun drying is used. In Brazil most of the natural Arabica is also sun-dried. Under the wet method as applied in for instance Central America, farmers deliver the fresh berries to a processing plant within twenty-four hours of picking, which reduces their market power.
The berries are then transformed; first into parchment and later into exportable green coffee. In Colombia decentralized wet processing is in most cases integrated on the farm. Wet processing is more capital-intensive than the dry one, but if centralized it is also much more controllable and often applied to obtain homogenous high quality Arabica.
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However, there is a trade-off between this kind of quality increasing modernization and the environmentally friendlier dry method production, which can also be rewarding if sold as certified Organic coffee. Processors and exporters could also be vertically integrated as in Haiti, the vertically integrated multinational exporters in Tanzania and the cooperative mills in Costa Rica. Other exporters may be domestic private companies or subsidiaries of foreign traders or governments agencies. In India and Tanzania auctions are playing an important efficiency-enhancing role as market mechanisms for exports [Akiyama ; Temu et al.
These countries and others like Uganda and Togo have shown a decreasing spread between growers and export prices, as a consequence of liberalization and improved access of new actors to the local green coffee market. Export taxing had mostly been discontinued because of outward oriented strategies and the international coffee crisis of the s. Processors usually sell lower quality green coffee to local roasters who generally manufacture single variety ground coffee using outdated technology of a dull and uneven roasting.
Consumption per capita is still low in most producing countries, varying between 2. Low income per capita in the first place, tea-drinking habits and capacity shortage of roasting factories have negative effects. An interesting development has taken place in Costa Rica where falling world market prices at the end of the s and the booming tourist sector have created higher domestic demand 4.
It is to be expected that high quality and product differentiation preferences from developed consumer markets will blow over to upper class markets in producing countries. Brazil with 5. For smallholders, domestic consumption with lower quantity and quality requirements may offer interesting alternatives to exports.
Price elasticities of demand negative are estimated as 0. Supply elasticities are small in the short run because of the specific nature and technology of the product, difficult access to inputs and credit and scarcity of available land. Middlemen, traders and processing mills are more concentrated, making it a buyers market, sometimes an unstable oligopsony. The elimination of state intervention in berries and green coffee markets may have delivered better prices to growers in some cases, but has never automatically improved the institutions needed for sustainability.
An international comparison of growers' income in the s indicates that differences are variety and less country-specific. Robusta income per pound has been growing continuously, while Arabica is still on top, but differences are decreasing. The domestic chain segments after processing are either vertically integrated or of a bilateral oligopoly nature. Consumer markets in producing countries are still underdeveloped in terms of quantity and quality, and are only for Brazil and Costa Rica in the emerging growth stage.
Nevertheless, more attention should be paid to developing markets as they have the real potential to grow in the medium term and to become a feasible destination for smallholder production. There are key actors or leading forces who control and organize the strategic parts of the chain. This is done for rent creation and appropriation, with price and non-pricing behaviour based on market power and coordination. Therefore we could not endorse the opinion of R. Fitter and R.