Global commodification is the conversion of goods, knowledge, and tradable products. Coffee, a beverage originated from Ethiopia at around the 11th century, gains its popularity on the global market. It requires high altitudes ranging from 1800 to 3600ft, 15-25mm rainfall, and 18ºC-30ºC temperatures. It is intercropped with legumes to provide shading and nitrogen to promote soil productivity. This paper discusses the commoditization of coffee in the world’s market.
Coffee is widely used beverage in the world either as a refreshment or for medicinal purposes. Commercialization of coffee entails a chain commodification. Its production demands active participation of the farmers and its pickers on a daily basis. However, during its entry into the global market, coffee trade is regulated by middlemen who add product costs between the producer’s price and the end consumer (Magnere, 2015). These agents modulate the price value of the commodity in the demand and supply chain between farmers, manufacturers, and exporters. The farmer gains the lowest returns from the product being on the down sideline of the supply chain. Nevertheless, coffee prices highly depend on the quality of the produce. The finished coffee products are also raised by the advertising, branding, and packaging costs (Enz, 2010).
Coffee farmers are the greatest losers in the global agricultural trade. This fact is contrary to the traditional perception of coffee trade as a black gold commodification (Rivoli, 2009). Coffee producers gain low income as compared to their production costs which include farm cultivation, pruning, weeding, picking of berries, and transportation. Due to the many constraints faced by coffee producers especially in the developing countries, the government of the world emerged with a coffee price regulating body — equal exchange fair trade (Enz, 2010). Fair trade encourages sustainability of the industry mainly directed towards the farmers. It also educates the latter on empowerment so as to compete fully at the global market level and for the betterment of the coffee production (Seabrooke, 2011). Consequently, farmers receive incentives and loans enabling them to meet their liability and capital costs boosting the coffee productivity. Fair trade institutions also set coffee price limits for farmers and the sustainability of the coffee trade value in the global market scene (Enz, 2010).
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Moreover, coffee production has recently been advocated by fair trade to be practiced under suitable shades particularly banana stocks or leguminous trees (Rivoli, 2014). These trees also provide homage to many animals and insects. Hence, they provide organic farming of environmental benefits (Locke, Reavis, & Cameron, 2010). The use of traditional methods of farming like intercropping, crop rotation, mulching, and pruning lead to environmental conservation. Recently there has been a development of agriculture such as a discouraging use of synthetic chemicals, pesticides, and fertilizers. It has resulted in improvement of the environment, climate, and biodiversity of the inhabitants reducing coffee production costs and humanitarian risks (Enz, 2010).
In the modern world, the forces of demand and supply of coffee have created alterations of prices affecting the performance of this commodity success and failure in the global trade. Consequently, it has lowered capital investments among leading market dictators (Magnere, 2015). The traditional attitudes to coffee on the global level and turnover values have deteriorated market forces. Therefore, the world governments’ previous reliance on economic growth has been challenged by the recent constraints facing the global coffee market (Chakravartty & Zhao, 2008).
Economically, the commodification of coffee is affected by the unpredictable fluctuating currency in the market value. Consequently, it has led to lowered per capita value of the end price value of the commodity (Lynn, 2001). Therefore, it has resulted in prices increase: in the developing world, they are higher than in their developed counterparts. The coffee commodification logistics have dictated the success on the supply and demand of the beverage (Cronon, 1992). Coffee trade scrums stiff competition from other world-leading beverages like tea and cocoa due to the global commodification challenges it faces and also the wide customer preferred range.
Different organizational forums have been launched in the recent years under the fair trade umbrella to help solve most of the constraints facing coffee business in the global market. These organizations have been formed to help address oppressions, delayed finance disbursements, and degradation that exist in the trading sector (Lynn, 2001). They have helped in the regulation of practices and prices of the commodity. Various levels of traders can vote and set rules and standards geared towards the success and profitability of coffee trade (Cronon, 1992).
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In the global commodification of coffee, small-scale holders are highly disadvantaged by the “black gold” negative effects. Therefore, it is the reason for the urgent need of representative organizations to secure the small-scale holders interests (Cronon, 1992). As the representative groups aim and advocate fair commodity prices and equal market accessibility, the trade exercisers are still faced with many difficulties towards the achievement of their objective. On the other hand, fair trade accredited members enjoy fixed commodity prices that hinder any price increments. Increasing input and production prices lead to massive losses especially to the small-scale farmers who lack adequate financial backing in their endeavors. Fair trade regulations have emphasized the quality of coffee productions. Therefore, the commodification of coffee in the global market has to diversify into the back-door trade denying off the majority of the government revenues fetched through coffee trade (Chakravartty & Zhao, 2008).
Direct contact between traders and coffee producer has overwhelmingly boosted collaboration, productivity, and profitability of the direct trade benefits (Seabrook, 2011). It has also created lasting cooperation between practitioners through diversification of information and knowledge improvement. Consequently, active participation in the direct contact commodification has upgraded the exposure of the previously inexperienced small scale participants. Thus, it shed light on existence, sustainability, and upgrade of coffee in the global market (Rivoli, 2014). Over the years, a coffee commodity has played a significant role in its popularization in the world market creating relations between nations. The popularity has not only taken root in the marketing of coffee but also in its consumption as a beverage (Enz, 2010). With the passage of time, coffee has gained the medicinal value among different communities and also as a social drink. It received positive prospect on the socio-economic worthiness from various societal ladders and economic benefits that it provides. Commodification offers sustainable market-oriented solutions to common ills this popular product faces among societies. Governments are also fetching high-profit margins on the increased neoliberal on coffee marketing strategies (Locke, Reavis, & Cameron, 2010).
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Conclusively, the global commodification of coffee has greatly improved both importer and exporter after the recent collapse world prices. It has helped succumb the current foreign currency fluctuation to survive the global crisis in the future prediction of the trade status. Different coffee welfare organizations have come up with quality upgrading programs to help in setting goals and objectives for members’ high-quality coffee export and import. As a result, this success story has registered advancement in the balance of coffee price mechanism. The achievement is made easy through the formation of standard worth markets that allows severe competition and accreditation in the international market.