When you buy a cup of coffee at Starbucks, what are you actually paying for? Unfortunately, the most expensive commodity in a cup of coffee is the cup itself. Large franchise businesses make their profits through commercial promotions, and branding rather than products they sell. (1) Currently the rate of coffee is lower than it should be because of the overproduction of coffee across the globe. The overproduction of this commodity has a devastating effect on the producers. This paper will discuss the reasons for minimal cost of coffee that occur because farmers are underpaid for their goods and how they are manipulated by large corporations and the government. In addition, we need to examine the how these actions come at an expense
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First of all, this business makes its profits by seducing their customers with the relaxing experience that they could have in their café. Rather than promoting the taste or effect of their coffee. (10) Hence, the franchise businesses buy coffee at a low price and sell their speciality drinks at a higher price. This leads to an unequal distribution of profits that is not sustainable for the farmers. Secondly, once the rosters have bought coffee from the producers, they sell their roasted beans at a rate of $3.60 per pound while the farmers receive a small fraction of their profits. In addition, small farmers rely on the rates that “middlemen” tell them. (9) Often these middlemen manipulate the farmers into selling their coffee at a low rate, in order to increase their own profit. (9) Therefore, much cost of coffee is cut down by manipulating the farmers and forcing them into a lower standard of living.
In about 1960, International Coffee Agreement (ICA) had created a quota system and controlled coffee production around the world. This system ensured that coffee farmers as well as the consumers received a fair price for their good’s. However when the ICA expired in 1989 small producers lost most of their authority and negotiating power in international trade. After this