Coffee Industry and Todays Economics Demands Term Paper

Coffee Industry and Todays Economics Demands - Term Paper Example This essay stresses that economists posit that increased supply control, price regulation and fair trade initiatives could help solve the current coffee crisis. Fair trade guarantees farmers a fixed minimum price for their coffee, which can equal nearly two or three times the unsubsidized market price. Fair trade also eliminates the middlemen exporters involved in the coffee trade, who often pay farmers below market rates and then sell at the rates set by the New York Coffee Exchange, pocketing the excess money for themselves. This paper declares that the decline of the coffee prices is the worst news for the farmers but it is not as bad news in United States of America as in any other part of the world because they are the largest consumers of coffee. The world trade organization also plays a key role in determining the price of coffee. The policies of the world trade organization supports free trade which benefits both exporters and importers but at the end who is benefited largely depends on the price of the coffee. Because of the fall in demand the price of coffee has also fallen, which is quite natural considering the demand and supply function of the microeconomics. If there is less demand, the price of that particular commodity takes a toll and the price automatically falls. The price of coffee has taken a toll because of the decrease in demand, the only way out for the farmers and for all other people who want coffee to generate much more profit is to promote coffee and make sure that more and more people across the globe drink coffee.