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Time For a Coffee Cartel?

As long as developed countries actively impede their developing-country counterparts’ ability to make money from the coffee they produce, exporters in the Global South have little choice but to take matters into their own hands. Tariffs and subsidies, hostile takeovers, and the formation of a coffee cartel should all be on the table.

SEOUL – Coffee prices have soared in recent years, owing to unfavorable weather conditions and supply shortages in major producing countries like Brazil, India, and Vietnam. But even if consumers are paying more for their daily cup, coffee farmers are seeing little of the gain, because they lack sufficient bargaining power.

Since the 1950s, coffee has been among the world’s most-traded commodities – at one point, it ranked second, behind only oil – and many governments regard it as a strategic good. But not all coffee trade is created equal.

Countries in the Global South export low-value-added unprocessed coffee – raw beans and dried and seedless coffee – with Brazil, Columbia, Vietnam, Indonesia, and Ethiopia controlling a combined market share of about 70%. Countries in the Global North dominate exports of higher value-added processed coffee – such as roasted beans and instant coffee – with Switzerland, Germany, Italy, France, and the Netherlands accounting for 70% of the market. Moreover, the coffee sector is dominated by just three developed-country firms – Nestle, Starbucks, and JDE Peet – which together account for 77.7% of the total revenues of the sector’s ten biggest players.