Coffee Trading – Coffee lovers all. Coffee is one of the most popular beverages in the world and has become an integral part of most people’s lives. But did you know that behind its enjoyment, coffee also has high economic value and plays an important role as one of the main commodities traded in the global market?
Speaking of coffee trade in the global market, which country in the world is not familiar with coffee beans? Almost every country in this part of the world is familiar with coffee beans. So, it is not surprising that coffee is included in the world trade exchange or what is often referred to as coffee trading.
This article will discuss why coffee is considered a commodity and can perch on international trade exchanges. As well as how coffee came to be the second most traded global commodity after petroleum, its basic workings, its functions, its significance in the world economy and some other interesting facts about the coffee industry.
Get to know Coffee Trading
Coffee is the seed of the coffee plant harvested from the coffee tree (Coffea). The coffee beans are then processed through various processes, starting from husking, fermentation, drying, and roasting, before finally being sold as ready-to-use coffee beans. This process produces a variety of flavors and characteristics that are the main attraction of coffee for connoisseurs.
Coffee has been one of the coffee trading commodities for centuries. The origin of this commodity stems from the East African region, particularly Ethiopia, before spreading to different parts of the world through sea trade and exploration. Today, coffee is produced in more than 70 countries, with some of the largest coffee-producing countries including Brazil, Vietnam, Colombia, and Indonesia.
Coffee trading is defined as trading coffee in the international market. Coffee is one of the most economically valuable commodities in the world. Not without reason, coffee products are one of the most sought-after products in the world market. This is because coffee has unique characteristics. As the most widely consumed beverage in the world, coffee has a wide and growing market share.
Coffee can be stored for a long time, lopi has a longer shelf life compared to other agricultural products. This indicates that coffee can be stored and sold in large quantities without fear of damage or spoilage. This factor makes the coffee trading business seen as a promising opportunity, and makes coffee an attractive option for traders around the world, as they can buy and sell it at any time according to market needs.
How Coffee Trading Works
Coffee trade takes place through commodity markets around the world. A commodity exchange is a place where coffee traders and producers meet to buy and sell coffee directly. The basic way coffee trading works is through commodity markets or commodity exchanges. On the commodity exchange, the price of coffee is determined by the following stages.
Production:
Coffee is grown on coffee plantations in various producing countries. The main countries that produce coffee beans include Brazil, Vietnam, Colombia, and Honduras.
Collection and Processing:
After harvesting, the coffee beans are collected and processed through several stages, such as husking, fermentation, drying, and sorting.
Distribution:
Coffee is then distributed to local and international markets through various channels, including exporters, importers, and large coffee companies.
Auctions and Pricing:
Coffee beans are often sold through auctions, where buyers from all over the world compete for the best-priced beans.
Export and Import:
Producing countries export coffee beans to consuming countries, and on the other hand, consuming countries import coffee beans to meet domestic demand.
The function of coffee is not only limited to being a delicious drink, but also has an important role in the world’s economic sector. The majority of coffee-producing countries are developing countries, and coffee exports are one of their main sources of income. Coffee trading also brings some significance to the world economic sector, among others:
Significance of Coffee Trading in the World Economy:
Job Creation:
The coffee industry covers the entire supply chain, from coffee farmers and collectors to traders, exporters, and the coffee roasting industry. Millions of people around the world depend on the coffee industry to make a living and support their families. Therefore, coffee plays an important role in reducing unemployment and poverty in many countries.
Export Revenue:
Coffee is one of the most valuable commodities in international trade. It is even said to be second only to petroleum on the world trade exchange. Coffee-producing countries can earn significant revenue from the export of their coffee beans. Revenues from coffee exports help these countries to finance the import of other goods and services and strengthen their currency exchange rates.
Foreign exchange earning countries:
For some countries, coffee is their main source of foreign exchange. Revenue from coffee exports is used to support infrastructure development, healthcare, education, and various other social programs.
Drivers of Economic Growth:
The coffee industry also drives economic growth through investment in technology and infrastructure, product quality improvement, and new market development. This creates a sustainable loop where economic growth drives more investment in the coffee industry.
Effects on Other Commodity Prices:
Coffee prices have a significant influence on other commodity prices and can also affect global financial markets. Changes in coffee prices can affect the macro and micro economies of coffee producing and consuming countries.
Social and Cultural Influences:
In addition to its economic value, coffee also has a huge social and cultural impact. Coffee is often a symbol of social gatherings, business opportunities, and cultural traditions in various societies around the world.
Coffee is one of the main commodities traded in the global market, being a beverage that not only indulges the palate, but also fuels the economies of many countries through coffee trading. Coffee production, distribution, and trade have a major impact on people and the environment in producing and consuming countries. Hopefully, with increased awareness of the importance of coffee as a commodity, the coffee industry can continue to grow sustainably and provide benefits for all parties involved.
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