Answer to Question #211977 in Management for bongi

Question #211977

how did the fixing minimum price, coffee bean buyers must also pay a fixed premium. What should this premium be used for?


1
Expert's answer
2021-06-30T15:11:01-0400

The Coffee Minimum Price

The coffee industry is famous for being an imperfect market, facing significant social, economic, and environmental challenges. Given the wide range of sustainable challenges in the industry, the various initiatives, programs, and systems developed to address specific parts of the sustainability puzzle are not surprising (Vogt, 2019). More surprisingly, little attention has been paid to the role of contracts in determining sustainable production and trade conditions.

The contract could be anticipated as a beneficial instrument to support sustainability as the ultimate determinant of social and economic relations between the parties throughout the supply chain in the economic and market power. Economic relations are the major drivers for sustainable producer development opportunities (Samper & Quiñones-Ruiz, 2017). The discussion provides an overview of this option, mainly how minimum price may be used as instruments and specific contractual characteristics to encourage sustainable growth in the coffee sector.

The premium is used to reimburse families who had sent their minors to collect coffee beans to send their kids to school. Coffee is amongst the most significant commodities of value sold in all the developing nations internationally for rural households. In addition to the estimated 25 million small-scale farmers relying directly on coffee as their primary income (Vogt, 2019), coffee is an essential contributor to foreign exchange revenue and a significant contributor in identifying employment possibilities and infrastructure development in fifty developing nations.

The broad and intimate connection between coffee producers and several supply chain intermediary organizations offers the industry a crucial relevance to environmental sustainability at the local, regional, and global levels. The viability of the coffee industry is jeopardized in every pillar of sustainable development. The premium is used as a one-time contribution to a Community Fund to enhance workers' and farmers' social, economic, and environmental conditions (Samper & Quiñones-Ruiz, 2017). Researchers have stated that premiums are used as follows: farmers must use the premium to a specific goal, such as investment in environmental sustainability and significant production of a certain percentage of their resources.

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Samper, L. F., & Quiñones-Ruiz, X. F. (2017). Towards a balanced sustainability vision for the

coffee industry. Resources6(2), 17. <span style="font-size:12.0pt;line-height:200%;font-family:&quot;Times New Roman&quot;,serif; background:white">https://www.mdpi.com/2079-9276/6/2/17</span>

Vogt, M. (2019). Variance in Approach Toward a ‘Sustainable’Coffee Industry in Costa Rica:

Perspectives from Within; Lessons and Insights (p. 244). Ubiquity Press. <span style="font-size:12.0pt;line-height:200%;font-family:&quot;Times New Roman&quot;,serif; background:white">https://library.oapen.org/bitstream/handle/20.500.12657/22989/variance-in-approach-toward-a-sustainable-coffee-industry-in-costa-rica.pdf?sequence=1</span>


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