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Created with Fabric.js 1.4.5 Coffee, Economic Development & Fair Trade Coffee is the worlds second most desired commodity behind oil and is valued at over $173.4 billion worldwide.So why are so many of the countries that produce this bean considered impoverished? Coffee consumption has grown at an annualized rate of 1.9% over the last 50 years. The majority of that consumptionis from traditional markets (US, Europe, Japan, etc.). However, exporting and emerging economies have increased theirconsumption in recent years creating increased demand. Annual Consumption by Market Type Annual Export Volume and Value Despite consumption outpacing the exportation, global prices have not risen as would be expected in a free market. This is because the exporting countries enforced export quotas until 1980 and are prone to severe economic downturns at times given that their economies are heavily dependent upon coffee and other cash crops. World Coffee Prices, Monthly Notice that the value of exports, $22.5 billion in 2012, does not even come close the the $173.4 billion valuation of theoverall coffee market provided in the beginning of this piece. So where does the extra $150.9 billion dollars in added valuecome from? Answer: importing countries, specifically the developed countries that consume the majority of all coffeeproduced. Exporting countries sell GREEN coffee beans to other countries where they are then roasted and resold toretailers. These retailers in developed countries are experiencing tremendous growth. For example, US coffee shops grew atan annualized rate of 7% during 2012 which outpaced all other parts of the restaraunt industry. Also, Starbucks recentlybecame the 3rd largest restaurant chain in the US. So how do we help the developing countries where a majority of the production of coffee beans come from but only retaina fraction of the revenues? Buy fair trade! Fair trade coffee is coffee that is purchased from the 25 million producers of coffeeacross the developing world at fair market value to help lift them out of poverty. Prior to the fair trade movement, smallfarmers were often given much less than their actual crops' worth. However, major corporations have joined the cause suchas McDonald's and Starbucks to help these impoverished farmers retain more revenue and stimulate their local economies butmore is needed! So next time you go shopping buy fair trade products and know that your money is going towards a noble cause.
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