Coffee market Assignment Example | Topics and Well Written Essays - 1000 words

Coffee market - Assignment Example For instance, in 1980s, many of the major producers of coffee had poor technological infrastructures. Therefore, cartels took this opportunity to deceive the farmers concerning the real prices of coffee in the markets. Therefore, they dictated the amount of coffee to reach the market, an aspect that affected the supply of the commodity in the market. As a result, they create an artificial demand, thereby causing an increase in the prices of the commodity. However, on the other side, they maintain a constant amount of money they purchase the coffee from the farmers. Consequently, they make huge sums of money in the expense of poor farmers. The demand in the market determines the amount of the product that producers are willing to supply. Higher prices motivate the producers to increase the amount of products to be produced. However, cartels take all the benefits emanating from higher prices of the products in the market. Therefore, many producers end up being frustrated, an aspect that affects their levels of production. This explains why rising prices of coffee since 2005 have not acted as incentives to farmers. In reaction, majority of the farmers have uprooted coffee bushes and planted fast growing crops such as fruits which are earning higher prices in the global market. Cartels are illegal in many countries because they affect the independence of the market. This is through preventing the forces of demand and supply to dictate the prices of the commodities in the market. For instance, instead of farmers benefiting from high demand in the market, these benefits end up in the pockets of few individual who does not contribute even a single cent towards the production of the commodities. These are people who distort the movement of the goods along the value chain but their presence does not benefit the producers or even the consumers. As a result, they affect the growth of the production sector in the country. In