Coffee is an integral part of lives of millions of people. It is loved for its taste, aroma, and stimulating effect. Today, people cannot imagine their lives without coffee. However, this crop was not always known. It first appeared about 1,000 years ago in Ethiopia; however, there are different versions of its origin. According to one of the theories, Ethiopians discovered coffee berries and took them to Yemen in 500 AD (Pohlan & Janssens, 2012, p. 3). Since that time, coffee became a favorite commodity of the citizens of many countries. The history of this beverage commodification is long and complicated. One of the essential periods of its development is its labeling as a fair trade product, which means that its “floor price is the equivalent of a minimum wage, and is intended to provide farmers with sufficient income to cover their costs of production and provide for their families” (Warrier, 2011, p. 158). Since coffee is one of the most valuable global commodities and its production increases annually, the International Coffee Agreement was created to maintain its high price and the stability of market (Warrier, 2011, p. 158). From 1962 to 1989, the coffee price was stable, and the countries-manufacturers could not change it (Milford, 2004, p. 6). After the Agreement failure, Fairtrade Foundation was founded. This period became a crucial point in a global commodification of coffee, which is illustrated in the following paper.
Although coffee appeared in Arabian countries, it quickly spread in Europe and America, and people living in these continents became addicted to this beverage. First, coffee beans were affordable for the elite only. However, its mass production and global export made its price lower. Nevertheless, to understand how the price for the commodity is fixed, it is necessary to understand who is involved in the process. The coffee price cannot be low since the commodity chain is long, and the price has to cover all expenses. This chain begins with the producer who cultivates coffea trees and gathers the berries. It can be a single person who owns the field and employs the workers to look after the crops or an organization, which develops mass production. The next link of the chain is a private intermediary who buys the coffee berries and turns them to the processing plant. The coffee beans are treated there and, later, the local exporter buys them. At this stage, the producing country earns its profit and begins the process again. Coffee beans travel to the consuming state, where the international trader purchases them, directs to the roasting company and to the retailer, who sells the final product to the consumer. This commodity chain consists of many other linkages, and every part of it must gain its profit. Therefore, the International Coffee Organization was created to protect its members from losses and regulate the prices. It maintained the world price for coffee on the level between 1 and 1.50 USD (Warrier, 2011, p. 158).
Interestingly, people quickly became addicted to coffee, and more and more individuals consumed it. Although this beverage has no nutritional values and cannot satisfy hunger, people like it for its special taste and stimulating effect. As a result, in the 1970s, first coffee houses appeared, where the consumers could buy freshly roasted coffee beans and different devices for cooking the drink (Hemler, 2009). Birth of Starbucks in Seattle changed Americans’ perception of coffee.
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First, coffee houses were aimed to sell coffee beans and equipment for making the beverage. However, when Howard Schulz bought this business in the 1980s, he changed the whole conception of the coffee houses in the USA (Hemler, 2009). After his visit to Italy, where coffee was more popular, he began to sell espresso drinks in his firm’s locations. The citizens of Seattle, and later New York, got the opportunity to enjoy freshly brewed beverage in the company of their friends. Today, Starbucks is a favorite place not only of Americans but also of many other people in different countries. However, if for the typical consumers coffee is just a drink, for its producers it is a means of subsistence. In 1989, when the International Coffee Agreement collapsed, the price of the commodity lowered almost trice (Milford, 2004, p. 6). Such changes had a great impact on the coffee producers all around the world. With the appearance of coffee houses, the consumption of the beverage increased, and its manufacturers began to overproduce this crop. Consequently, many small farmers could not sell their coffee beans. Today, in the era of globalization, many manufacturers suffer from market competition. Therefore, Fairtrade was implemented to satisfy the demands of both the producers and consumers.
The process of globalization influenced every sphere of commerce, including coffee production. Main producers of the commodity are Brazil, Vietnam, Columbia, and Indonesia (Fairtrade Foundation, 2012, p. 3). The largest importers of coffee are the USA, Germany, Japan, Italy, and France (Fairtrade Foundation, 2012, p. 4). It is a very important crop for the world economy. However, after the collapse of the International Coffee Agreement, the speculators began to change the prices, the production of coffee increased, and many families of those farmers who cultivated coffea trees got stuck in poverty. Few global organizations, such as Nestle, Kraft, Sara Lee, Procter and Gamble, and Tchibo, own almost the half of the global coffee market, and it has a negative impact on many rural farmers who earn their leaving by selling coffee beans (Warrier, 2011, p. 159). Thus, Fairtrade became the best way out of such situation.
Fairtrade protects coffee producers and importers from great losses of their profits. It helps the latter to avoid mediators or speculators and purchase the commodity directly from farmers (Hudson, Hudson, & Fridell, 2013, p. 40). Besides, the producers are more secure against the global financial crisis and its influence on their businesses. Thus, in 1997, Fairtrade International was set up in Europe and North America to control the global standards and support the manufacturers of coffee (Fairtrade Foundation, 2012, p. 13). The Fairtrade guarantees that small producer organizations will get at least the minimum price for their product. The former, in turn, must control taste and quality characteristics of coffee and improve it if needed. The Fairtrade International became a crucial period for coffee industry in the developing countries since it improved the quality of the commodity and increased incomes of many independent farmers in Africa, Asia, and Latin America (Fairtrade Foundation, 2012, p. 17). As a result, coffee sales have grown “by 12.3% since 1997” (Milford, 2004, p. 10). Fairtrade labeling system improved the condition of small producers of the commodity and protected them from global market instability.
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Although coffee is not an essential product for a living, its global commodification history proves that people cannot live without it. In spite of all difficulties and changes the producers of the commodity have endured, the consumers continue to buy this product. The alterations in coffee business were tangible by the farmers, importers and exporters. The coffee crisis after the International Coffee Agreement failure made hundreds of farmers suffer from poverty. However, common citizens of the world did not feel great changes; they just experienced instability of coffee price. The foundation of Fairtrade labeling system was a significant moment in the process of coffee commodification. It allows small producer organizations to purchase their products on the same level with the premium manufacturers who own the major part of the market. Besides, Fairtrade improved the living and working conditions of the farmers of Latin America, Africa, and Asia. These countries were the first to suffer from globalization because they could not compete with the huge coffee corporations. Fairtrade became a crucial point for the developing states since it helped them to survive in the international market.