In many of the equatorial Third World economies, coffee is a leading crop with the main export markets being in
the First World economies. Consequently, the world's trade in coffee has come under the close attention of people
concerned about fair trade and exploitation issues.
Coffee has become a high volume commodity traded on world markets, comparable to the trade in minerals. Coffee
prices have fluctuated as the balance of supply and demand shifted, as often happens in commodity markets.
Speculation and futures markets trading in the coffee markets can be very sensitive to weather and growing
Prices paid to growers fell after the high levels reached in the late 1990s as production volumes increased,
notably from the large additional contributions of Vietnam to coffee export volumes in recent years. This had an
impact on the viability of coffee growing, and on employment in many coffee-growing regions, causing considerable
hardship over a period of about five years. There has been some price recovery since 2005.
The low returns to Third World growers become a controversial issue in some quarters, with links to debates
about world trade policies and whether they were fair. With the cost of the raw coffee beans being a small part of the cost of the cup of coffee bought in western
countries, the price fluctuations experienced by growers had little impact on end users. This looks one-sided in
One market response from a number of coffee processors was to introduce "fair trade" coffee branding niches in
recent years. These brands have become popular with a sector of western buyers concerned about the effects of
coffee price fluctuations on Third World growers. The idea is that these processors will buy from selected growers
at prices that allow them to be profitable, irrespective of the world coffee market's price fluctuations.
A related coffee branding strategy has been to appeal to the "organic" niche. One concern has been that coffee
growing has become careless of environmental considerations in the quest for increased production volumes.
Purchases for the organic brand niches have been tied to the adoption of organic or more natural growing practices,
including less clear felling of land for coffee plantations and the retention of shade trees to encourage bird
life. "Fair trade organic" branding has linked the issues, and found common ground in its appeal to a sector of
western coffee buyers.
A related and increasingly common practice is also for some coffee processors to buy directly with coffee
growers whose beans offer a premium quality and flavor, rather than have these beans sold through the general
market. These processors gain from being able to offer distinctive premium coffee blends based on the unique
properties of beans from these premium quality plantations. Both processor and grower gain from the long-term
continuity of this trade arrangement.
Differentiating the products of individual growers or regions in these ways is a method for countering the
commoditization of the coffee market.