Global Coffee Trade and Market Volatility
The global economy is tied to trade, allowing countries to obtain any resource they need anywhere. Coffee is one of the high-profile agricultural products traded in the world. It is well known to be a bust-and-boom commodity. Its production varies yearly depending on factors, resulting in an intrinsically unstable market characterized by wide price fluctuations. Hence, it can make it difficult for farmers to predict their incomes and budget for their farming and household needs.
Factors Affecting Coffee Production and Supply
The unpredictability of the final coffee product has a considerable effect on the people who depend on it for their livelihood. The supply chain of coffee is complex since it passes through growers, traders, processors, exporters, roasters, retailers, and then to consumers (Grabs & Ponte, 2019). Some farmers need an idea of what value their product sells for. Economic factors, including trade agreements, currency exchange rates, technologies, and climate change, influence the production of this commodity (Vegro & de Almeida, 2020). These issues significantly impact the entire industry, thus affecting demand and supply for the product.
Distribution, Customs, and Trade Considerations
When distributing coffee, one can consider licensed customs clearance offices to assist in the safe arrival and inspections of the product before transporting it to the factory for manufacturing. It eases the process of marketing and distribution as well as pricing. Many market consumers use a commodity with a transparent supply chain. For instance, coffee traders enjoy tax-free imports in the United States of America (Bager & Lambin, 2020).
Most of the bean imports of coffee are duty-free, and no customs are paid at the clearance points. However, other fees, such as processing, maintenance, and harbor charges, are payable at the port. Each country has rules and regulations to follow when purchasing coffee overseas, and shipping the commodity in bulk saves the trader money and time to meet their customers’ deadlines.
References
Bager, S. L., & Lambin, E. F. (2020). Sustainability strategies by companies in the global coffee sector. Business Strategy and the Environment, 29(8), 3555-3570. Web.
Grabs, J., & Ponte, S. (2019). The evolution of power in the global coffee value chain and production network. Journal of Economic Geography, 19(4), 803-828. Web.
Vegro, C. L. R., & de Almeida, L. F. (2020). Global coffee market: Socio-economic and cultural dynamics. In L. F. de Almeida & E. Spers (Eds.), Coffee consumption and industry strategies in Brazil (pp. 3-19). Woodhead Publishing. Web.