Economics Coursework about Coffee price, year 2002

ECONOMICS COURSEWORK I


As we all know, coffee is an essential and favourite drink of many people in the world. However, the global coffee market has been facing a difficulty when the coffee price falls steeply in the recent years.

According to the article, the low price of coffee is caused by the global coffee glut. There is an imbalance between supply and demand: too much supply and less demand. Basically, the market is oversupplied, particularly with the robusta variety beans. Vietnam's rise to be the world's second-largest coffee exporter is one of the reasons there is a glut of coffee. Besides, we are aware that many other countries like Brazil-the biggest coffee producer, India, Ivory Coast, etc. are producing and exporting more and more coffee. Brazil expanded its farming area, increasing the number of bags exported to close to 50 million from about 30 million. The diagram below will help explaining how the coffee glut affects this product’s price.

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