Coffee-related Notes for Teachers
Coffee Resources
These resources were developed as a useful starting point for students preparing for the Nuffield Economics and Business Studies (9128) Unit 4 examinations in January and June 2003.
Students undertaking investigations into the coffee market for Unit 4 should direct their attention towards the following tasks:
- Identify the market structure which exists between
- growers and
- processors.
- Examine the impact that market structure has upon pricing and production decisions
- Critically examine the strategies open to producers in order to raise prices.
- Identify the strategies which growers might employ in order to limit production. Critically assess the effectiveness of these strategies.
- Investigate ways that producers can add value and gain a competitive advantage.
- What can governments and NGO's do in order to raise incomes in coffee producing countries? Assess the likely impact of these strategies on coffee production.
- Evaluate the suggestion that Fairtrade schemes can solve the problems faced by growers.
The materials do have a wider use and links can be made to the Options which A2 students study. Candidates preparing coursework for Option 1, What is the global future and Option 3, Competition and Conflict or consensus may find the coffee market a suitable focus for teacher-led and independent investigation.
Option 1: What is the Global Future?
What is globalisation?
The resources provide a useful insight into the realities of a global market and the implications for various stakeholder groups.
What is the role of business?
An investigation of corporate websites is a good way of investigating this issue. Try looking at the Starbucks, Nestlé and Cafédirect websites for an 'answer' to this question. This is a useful group activity, particularly if the groups are allocated different companies to investigate and then have the opportunity to debrief together.
What is the impact on people?
Students can apply the stakeholder concept to the coffee industry in order to consider how the employees of the coffee houses (Starbucks), coffee roasters (Nestlé), growers, consumers and the economies of less developed countries.
Is globalisation ethical?
The resources provide an opportunity for students to consider the trading relationship which exists between growers, intermediaries, roasters and coffee houses. Students need to weigh up the evidence in order to consider whether the retailers have a social responsibility towards producers and whether they are fulfilling those responsibilities. If students reach the conclusion that firms are not behaving in an ethical way then they need to consider the reasons behind firms decisions to act in the way they do (e.g. profit maximisation, cost minimisation and accountability to shareholders).
The role of pressure groups and consumers in ensuring that firms do behave in an ethical way can also be considered.
Deregulation or control?
In the case of the coffee industry attempts have been made to regulate the market by intergovernmental agreements. The benefits of a coffee cartel can be considered and it is perhaps useful to consider comparisons between the coffee market and the market for oil.
The adoption of a strategy to regulate supply raises a number of questions:
- What is wrong with a free and unregulated market for coffee?
- What conditions would need to be in place for a cartel to function effectively?
- How would it work?
- Is such a scheme likely to achieve its objectives?
The vulnerability of developing countries to swings in commodity prices has been a concern since J.M. Keynes first suggested a stabilisation system at the Bretton Woods conference in 1944. It was foiled by commodity importers - mainly rich western countries. Andrew Smith, head of the Global Economy Programme at the New Economics Foundation said,
I can't see any other way that you can help the development of the world's poorest countries.
Evidence B. Pre-issued case study material Unit 4 (6364) Nuffield Economics and Business
Option 3: Competition, conflict or consensus?
Enquiries
Does the market motivate?
Examine whether the market mechanism is an effective way of ensuring that consumer demand is satisfied.
Who makes relationships?
How can producers and firms in the supply chain work co-operatively? What synergistic benefits can be gained from greater co-operation? Why might some firms be unwilling to co-operate?
What do accounts reveal?
An examination of the published accounts of the leading coffee roasters and coffee houses should reveal significant trends in the market. It will also provide a useful opportunity for students test growers clams that roasters coffee houses have been profiteering by not passing on price cuts to consumers.
Whose responsibility?
The coffee market provides a useful insight into the debate about whose responsibility it is to ensure that social and responsibilities are discharged and that businesses are accountable for the externalities associated with production.
