Here is a familiar tale - sharply falling world coffee prices are causing the terms of trade to drop and threatening the commercial viability of coffee production among many of Indonesia's small scale coffee farmers. Can stronger marketing and investment in processing help these farmers move up the value chain?
The price of coffee in Indonesia has dropped to a third of the price from one year ago, due to an oversupply of it in the world's market. This has caused many coffee farmers in Indonesia to stop growing coffee and switch to other plants, such as oranges.
Questions for discussion:
Why are coffee prices falling?
What does this say about the elasticity of supply of coffee?
Y12 Students should look in their exam packs at related questions. There are several on agricultural produce and some link to this elasticity issue.
Some of you may wish to think of questions yourself and prepare a case study question based con this information.
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