The desperation and job loss caused by the coffee crisis has had a negative impact on the economy of many developing countries. In Nicaragua alone, over 122,000 jobs have been lost due to farmers having to abandon their coffee groves.
All the while, both the World Bank and the International Monetary Fund (IMF) have encouraged poor countries to produce export commodities such as coffee. The result has been a market flooded with often low-grade and unprocessed products. There are so many countries that are now exporting coffee that the market price has dropped to an all-time low. The drop in prices due to the flooded market has caused a monetary crisis in many developing countries.
Major coffee companies continue to make good profits on the sale of coffee, but the coffee farmers are not making enough money to support their families or their land. Many farmers are turning to the production of coca and marijuana in order to make a living.
National economies are also being affected by the coffee glut. Both the World Bank and the IMF are demanding that developing countries cut back on government spending. This means that governments don't have money for proper education, health care and infrastructure facilities. Coffee farmers receive no government aid to market their coffee and have difficulty getting information about market prices.
Mennonite Mutual Aid Praxis Shareholder Advocacy for Fair Trade
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