Fair Trade Coffee Ethics - Management Assignment

Discussion

The case has introduced today's coffee industry is facing increasing supply of coffee beans result in price going down. In many developing countries, coffee has been one of the most exports for decades. Green, un-roasted coffee beans are traded on futures markets of London and New York; about 25% of the world's coffee supply is bought by Volcafe and Neumann Gruppe which are large coffee traders. Procter & Gamble (P&G), Kraft, and Nestle are the key suppliers to the grocery industry where the most of coffee is consumed.

Coffee's wholesale price had been dropped dramatically from about $1.40 per pound to 50 cents between 1999 and 2003, however, the cost of producing and processing green coffee beans was 80 to 90 cents per pound. Worldwide consumption only took 105 million bags of coffee as compare with expected 115 million according to the 2001-2002 International Coffee Organization. 25 million Latin American and Africa coffee farmers are influenced badly because of low prices and surplus supply.

To help coffee farmers by providing price support, sponsor training and development programs, a number of different nongovernmental organizations such as the Fairtrade Labeling Organization International (FLO), the United Kingdom's Fairtrade Foundation, TransFair USA, Oxfam (a private charitable organization), etc. have begun to notice the farmers and give them a hand. These organizations are suppose to assist farmers become more knowledgeable about market prices and learn how to reach export markets.

Starbucks has announced to improve their suppliers' working conditions since mid-1990s, but they only purchases coffee about $180 million annually.

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