Coffee Corruption ?!

a)Multinational companies are business organizations that operate in multiple nations. Coffee businesses are described as multinational companies because the countries that produce the raw ingredients, usually developing countries, often sell those goods to be produced and sold to factories and shops in mostly developed countries.

b)In fact, the top 10 coffee producers were in 2007: Brazil, Vietnam, Columbia, Indonesia, India, Ethiopia, Mexico, Guatemala, Honduras, and Cote d'Ivoire. All of these countries are developing countries. In contrast, the top coffee importers were: Japan, Italy, France, Spain, USA, Britian, Netherlands, and Germany (over 70% of imports). These are all developed countries. Right away you can see that the coffee business must work in several countries in order to make a profit. The companies must produce in a developing country and sell in a developed country. This process is mainly in order to make a profit. The company can get cheap workers and land (often leading to unfair conditions and exploitation of workers) in developing countries where there is land and less money. Then they can sell the coffee to the more wealthy populous in developed countries where coffee has become a necessity of daily life. This situation causes a 26% profit margin for companies like Nestle and the only people who aren't happy with the situation are the farmers that are getting paid 1/190 of the price. (based on Ugandan pounds in April 2004).

c)The increase in globalisation of this market is the fact that societies in developed countries have begun to rely on an item that used to be considered a luxury - coffee. Now, because of this, profit-seeking companies have begun to use to their benefit the fact that countries with ideal growing conditions for coffee beans, like those in South America, have a suffering economy and therefore are willing to mass produce for a much lower price. The governments most likely also reduce taxes due to the fact that the business from coffee companies has boosted their economy. Take Vietnam for instance, because of the coffee production, it's economic growth was 7% in 2000. When prices lower though, the economy will collapse. The coffee companies hold a lot of power over the countries they do business in, especially those that rely on the profits from their business. That puts those companies to an advantage and that encourages globalization. Not to mention, those in developed countries are willing to buy coffee which would normally be too expensive to be a daily drink in most developing countries. Therefore, they can get a bigger profit from the customers in those countries. It follows the business idea of produce cheap, sell for more.

d)Globalization has caused many changes in the coffee businesses. First of all, there has been a monopolization of large companies over the coffee production business. The main five are Kraft, Nestle, Procter & Gamble, Sara Lee and Tchibo. Nestle itself has over 57% of the global share on instant coffee. The problems about this are the fact that smaller companies have no chance of starting because there is little room for competition. In fact, there also is an inequality of power. Those companies completely control the global price of coffee and therefore can control the wages for 25 million coffee farmers worldwide. This inequality of power is the main factor caused by globalization. This is causing a breach in human rights and is forcing farmers to mass produce products that can only be sold to major companies and not used for themselves, as well as settle for low prices that the companies dictates because they have no better options.

e)The country only recieves wealth from the taxes and money of the companies but because most of the farmers are producing cash crops, there is not enough goods to sell as foodstuff, and therefore those countries continue to struggle and the people living there are in an endless cycle where all they can do is comply in order to survive. People in the developed countries are buying this coffee (in most cases without knowledge of the suffering in 3rd World Countries) as a daily necessity which only makes things worse because in order to keep up with demand, supply must also raise. And because so many countries are involved in this process, the numbers of supply and demand are huge. This just makes the issue more pronounced and contributes to globalization.