Coffee Crisis Article Paper

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Monique Webster Capella University December 18, 2011 Introduction to Microeconomics Unit 4 - Assignment 1 Case Study 1 The Coffee Crisis "The Coffee Crisis" Case Summary In the commercial coffee industry, there are two important coffee species - arabica and canephora, more commonly called robusta. Coffee arabica is descended from the original coffee trees discovered in Ethiopia. These trees produce a fine, mild, aromatic coffee and represent approximately 70 percent of the world's coffee production. On the world market, arabica coffees bring the highest prices. The better arabicas are high grown coffees generally grown between 2,000 to 6,000 feet above sea level though optimal altitude varies with proximity to the equator. The robusta tree is heartier, more disease and parasite resistant, which makes it easier and cheaper to cultivate. It also has the advantage of being able to withstand warmer climates, preferring constant temperatures between 75 and 85 degrees, which enable it to grow at far lower altitudes than arabica. Compared with arabica, robusta beans produce a coffee which has a distinctive taste and about 50-60% more caffeine. Robusta is primarily used in blends and for instant coffees. Coffee is one of the key traded commodities for developing countries. Coffee is known to be grown in frost-free economical areas and the production of coffee is crucial to non-arid countries in the tropics. Coffee is the vital source of foreign exchange, main source of cash income for about 25 million farmers, mainly small land holders in Latin America, Africa, and Asia. Although the coffee business is progressing in consuming developed countries, the current fallen rock prices have been causing an immense hardship to countries where coffee is the key economic activity and the farmers who produce it. Coffee prices have been at historically low
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