Small farmers are often encouraged to grow more coffee by governments eager to boost their exports earnings. These governments are sometimes encouraged by the International Monetary Fund and the World Bank to produce more. Seen in isolation, it is probably good advice. But if many countries and many farmers are advised to produce more when coffee prices are high, the end result is slump in world coffee prices caused by a dramatic oversupply of coffee on the world market. Coffee traders in the financial markets are also often blamed for causing the world coffee price to fluctuate by placing speculative and sometimes market-moving bets on tomorrow's prices in the financial futures market.
Many countries rely heavily on their coffee exports as a source of foreign currency.
Coffee can make up about three-quarters of some countries' exports earnings. Between seven and ten million farmers make a living from growing coffee. Many of them are working on small farms which are unable to cope with downturns and to weak to take advantage of the good times. Fair Trade World Coffee Conference, May 2001 International Coffee Organisation Cafe Direct Department for International Development. BT sells up in Malaysia Links to more Business stories are at the foot of the page.