The world price of coffee has fallen to 67.7 cents per pound, the lowest level since November 1993. Brazil and Columbia, the two biggest producers, are behind the plan. Previous attempts since 1993 to manipulate the market have failed. Suppliers are fragmented and are generally small and poor. There is chronic overproduction.
Coffee costs a lot to store in warehouses.
There is a significant incentive to cheat. Include the demand and marginal revenue curves, and the average total and marginal cost curves. Show what happens to the equilibrium price and output of coffee when the cartel is effective compared to when the market operates freely. Source Chris Kraul, 'Cartel may withhold coffee beans to hike price,' The Tampa Tribune , April 21, 2000.