Running head: COFFEE MARKET AND ITS CRISIS 1

Coffee Markets and Its Crisis

Name

Institution
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THE COFFEE MARKET AND ITS CRISIS

Coffee production is already a giant industry with exports going worldwide totaling to

billions of profits. It’s one the few international crops that are recently produced by both small

and large-scale farmers. The industry is currently facing some challenges which mainly started

when there was a breakdown of the international coffee agreement leading to oversupply in the

market due to changes in land-use policy and technological development. The impact of the

coffee crisis on social sustainability is always evident as high transactions cost do not facilitate

cooperation, and as seen broadly, social sustainability concerns the development and

maintenance of social capital (Docherty, 2009). Some problems that affect the social viability of

coffee farmers are brought about by a large number of small-scale and peasant farmers producing

the product making it viewed as a primary source of hard currency. These situations bring about

a conclusion that most poor coffee farmers are currently struggling to survive without an

alternative. Also, the recent developments have led to environmental sustainability in the coffee

industry. Due to the high production cost and the rise of technology the firm is facing a severe

challenge in both quality of the coffee and the environment (Jaffee, 2014).

Sustainability issues affecting the firm are brought about by market failure. The cause is

based on some values such as inequitable market power, market instability, inequitable market

power, and the mismatch between supply and demand. Some suggested a solution to the remedy

including product differentiation, promotion strategies to increase coffee sales and price risk and

validity management should be implemented to reduce the coffee crisis. Apart from the specialty

of the coffee farm, some different certified labels differ with the regards of the scope of labeling

(Kolk, 2005). They include shade-grown, bird-friendly, organic, Fairtrade and sustainable coffee.

In conclusion, once sustainability in the coffee sector becomes the standard operating procedure
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and its defined by dominating actors, competition may erode the incentive for regulatory and fear

of some farmers.
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References

Docherty, P., Kira, M., & Shani, A. R. (2009). What the world needs now is sustainable work

systems. In Creating sustainable work systems (pp. 204-215). Routledge.

Jaffee, D. (2014). Brewing justice: Fair trade coffee, sustainability, and survival. Univ of

California Press.

Kolk, A. (2005). Corporate Social Responsibility in the Coffee Sector: The Dynamics of MNC

Responses and Code Development. European Management Journal, 23(2), 228-236.