Oskar Wallin Comm 101

In a blog written by another comm 101 student a few interesting points were explained. Farmers in Brazil have started producing their own high quality coffee rather than just selling coffee beans. This is due to the price elasticity of coffee beans. They found that the price of high quality coffee was more price inelastic. In theory this should be a safer alternative as the market price would fluctuate as much. (Wallin, Gustav)

http://www.goldacrecarmobrokers.co.uk/coffee.php

However, I do not agree that this is a safer option. The coffee industry is a huge market. Therefor we should expect an increase in competition given that Brazil  exports by far the most coffee in the world. This high quality coffee market is relatively easy to enter and coffee is produced in high quantities in many countries around the world (Vietnam, Indonesia, Columbia etc) (Leading Coffee Producers Worldwide 2013 | Statistic). Competition is likely to increase which would make the price elasticity more elastic over time. Also, you have to be aware that costumer preferences could change over time. Relying solely on high end coffee is risky as costumer preferences could change and a growing number of competitors could make things difficult going forward. Given the amount of people who are dependent on coffee exporting in Brazil, this type of specialisation would not be viable for a lot of them due to the size of that market. I would say that exporting coffee beans is a safer option for farmers in Brazil.

Bibliography:

“Leading Coffee Producers Worldwide 2013 | Statistic.” Statista. N.p., n.d. Web. 04 Oct. 2015. <http://www.statista.com/statistics/268227/top-coffee-producers-worldwide/>.

Wallin, Gustav. “Gustav Wallin | Just Another UBC Blogs Site.” Gustav Wallin. N.p., n.d. Web. 04 Oct. 2015. <https://blogs.ubc.ca/gustavwallin/>.