World Coffee Market

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World Coffee Market Dorina Chivu REI 913 __________________________________________________ Each day nearly 2.5 billion cups of coffee are consumed. It is one of the most traded agricultural commodities in the world and the second most valuable commodity exported by developing countries, and millions of people depend directly or indirectly on the production and sale of coffee for their livelihoods. Providing livelihoods to farmers in developing countries is a crucial challenge for reducing world poverty, when fairly priced, export crops, such as coffee or cocoa, can help millions of farmers and their families to lift themselves out of poverty. The livelihoods of millions of rural workers involved in coffee picking on big plantations and coffee processing factories also directly depend on coffee. When prices decline, rural workers involved in coffee harvesting and processing find themselves unemployed or see their wages decline as farmers attempt to reduce production costs. In the case of coffee, 70% of the world’s supply is provided by smallholders cultivating less than 10 hectares in 80 countries in Africa, Asia and Latin America. However, the extreme volatility and longterm decline in coffee prices on international markets endangers the livelihoods of the 10 million small coffee farmers dependent on coffee for their primary source of income. The World Bank estimates that out of the total 141 developing countries, 95 depend on exports of commodities for at least 50 percent of their total export earnings. Coffee is a very good example of such “commodity-dependency” representing, for example, 75% of the total exports of Burundi and 54% in Uganda, and about 22% in the case of Honduras. Globally, coffee sales each year exceed $70 billion, but coffee producing countries only capture $5 billion of this value, with the bulk of revenues from the coffee

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