Remedies for the Injustices Faced by Coffee Stakeholders - Case Study Example

REMEDIES FOR THE INJUSTICES FACED BY COFFEE STAKEHOLDERS By (Name) Course Professor’s name University name City, State Date of submission Introduction It is no doubt that coffee is one of the leading commodity exports. It is produced by over fifty developing countries across the world. Its production plays a significant role in economic development. Notably, over 90% of world’s coffee is produced by 20 million small scale farmers making it an important source of income and employment. The coffee agribusiness has been faced with a lot of challenges that have greatly affected its stakeholders including farmers and the shareholders. For instance, the crisis that befell the coffee industry across the world that occurs between 2000 and 2004 saw its prices fall to the lowest levels and producers saw their export earning reduce by half. This crisis was detrimental to the coffee industry and had negative economic, political and social consequences for the leading coffee producing countries (Giovannucci & Koekoek, 2003). It resulted in some coffee farms being abandoned which led to increased poverty in developing countries such as Asia and Africa. This essay seeks to discuss the remedies for the injustices faced by coffee stakeholders. Some of the problems experienced in the coffee industry are as a result of the injustices that its stakeholders undergo through. An injustice can be defined as an unfair treatment that results in underserved outcomes. The injustices facing the coffee stakeholders can be categorized into the Macro, Meso and Micro contextual levels. The micro contextual level involves the challenges that face the internal environment of a coffee firm. The most prevalent injustices to coffee farmers at this level mainly involve limited capital to establish a coffee farm. Shareholders at this stage mainly experience delayed and underpayments and expensive farm inputs. Consumers are overcharged by the retailers whereas the sellers face a shortage of coffee beans, fluctuating prices and manipulation of terminal markets in nations like the United States of America. The Meso contextual level mainly encompasses the market forces. The injustices that the stakeholders the experience at this level involves stiff competition from other coffee producing countries. At the Macro level, the stakeholders experience injustices such as limited access to credit facilities. A country’s demographics, technological developments, economic developments, and politics affect coffee stakeholders. The collapse of the coffee industry will have negative consequences on the economy. Therefore, there is a need for the coffee stakeholders to come up with effective solutions to combat the injustices. Some of the possible solutions to these injustices include; States to protect farmers from exploiters, provide subsidies on farm inputs and train more coffee and agricultural advisors to facilitate mass production of quality coffee beans(Biswas-Tortajada, 2015). Stakeholders such as consumers, producers, and manufacturers should form unions to represent their interest and fight for their rights. Adoption of solutions to the challenges and injustices that face the industry will result in protection of humans’ rights, increased production, reduced the cost of operation, and maximize revenue. Remedies for the Injustices faced by coffee stakeholders The injustices experienced by coffee stakeholders can be corrected by implementing effective strategies. The Ruggie’s framework provides an effective outline on how the injustices can be prevented and fully addressed (Adeyeye, 2012). The framework provides a global standard for addressing the risks of injustices to business stakeholders. It is mainly pegged on three main principles; protect, respect and remedy. Protection entails the state’s role to protect the stakeholder’s rights through effective regulation, policies, and adjudication. Respect involves the corporate responsibility to act diligently in respecting the rights of its stakeholders to avoid harboring the rights of others while remedy involves the role of the business and the state in providing greater access by stakeholders to appropriate remedy (Adeyeye, 2012). The discussion will also base its arguments on the theory of utilitarianism and theory of consequentialism. Theory of Utilitarianism primarily stresses on the idea of happiness and how it can be attained. The theory of consequentialism aims at a desirable ending. It is based on the fact that a good act will result in a good outcome. Some of the injustices and possible remedies to the coffee injustices include; Farmers Adverse climatic conditions: this affects the production of quality and pure coffee beans. The state can help coffee stakeholders overcome this challenge by helping resolve weather conditions. For instance to control extreme hotness the government can construct a greenhouse that enables growers to control temperatures. Greenhouses are advantageous as they provide maximum shade that enhances the growth and development of quality coffee beans. Consequently, the state can offer protection against this injustice by offering subsidized inorganic and organic fertilizers to coffee farmers (Linton, 2005). It will not only contribute to improving the quality of coffee farmers produce but also motivates growers to engage in farming activities since the operational cost will be low. At the corporate level, the authorities can help farmers acquire appropriate tools and machinery to help them in their production. Based on the utilitarian theory, embracing mechanization is the best practice since the coffee stakeholders can derive maximum profits from its use. This remedy is also in line with the theory of Consequentialism. According to the theory, the end justifies the mean. The outcome of this solution is desired as using automated machines will help farmers in harvesting. This will save their operational costs since they do not require employing expensive laborers. Similarly, states can provide better irrigation methods to help farmers save water and survive during drought periods. This practice facilitates the production of coffee beans throughout the year that results in extra revenue for government and farmers. These strategies have been successfully implemented in Brazil and have resulted in increased sales as well as a reduction in the overall cost of production (Fridell, 2007). The success of this remedy depends on the willingness of the state by providing subsidized farm inputs such as fertilizers and machinery. This remedy will provide an immediate outcome, for instance using automated harvesters results to reaping coffee the right way and will also reduce the operational expenses. The remedy impacts the entire stakeholder in the coffee production; farmers will reap increased harvests and the consumers, and the government will gain quality coffee beans at a relatively cheaper price. Difficulty in loan acquisition: in the recent years farmers have felt that banks charge exaggerated interest. They are unable to acquire loans that make them result in producing low-quality coffee. One of the main primary goals of the International Coffee Organization (ICO) is to help its members produce quality coffee at a cheaper cost to its member countries. One of the avenues through which farmers can get acquire capital is through bank loans. However, banks overexploit coffee farmers by charging high-interest rates that discourage farmers (Fridell, 2007). This injustice can be resolved both by the state and through coffee corporations. The state can help by providing grants to the farmers as well as cheap offer loan to the coffee farmers. By offering cheap loans, farmers will be able to be financially stable and be able to purchase fertilizers and coffee seedlings. Similarly, they will be able to purchase appropriate machinery. In return, they will be able to produce high-quality coffee. This will be in line with the Consequentialism theory since the desired quality coffee will have been obtained. This will also be congruent with the objectives of the International Coffee Organization. On the same note, the state can liaise with ICO to offer cheap loan to its coffee farmers. At the corporate level, farmers can form merge and work in partnerships or form SACCOs, which can help them acquire credit and increase their capital base. The success of this remedy lies in the willingness of financial institutions to offer affordable loans to coffee farmers. The impact of this remedy is long term since access to finance helps motivate, maintain and enhance the production by the coffee farmers. In the long run, coffee stakeholders especially the farmers will be happy that their ultimate goal has been fulfilled; this is by the theory of utilitarianism. Farmers are underpaid by other stakeholders like the retailers and dealers. Other vendors offer late payments that come after six months. Underpayment and delayed payment have adverse effects on the industry (Fridell, 2007). The state can protect farmers from the problems of underpayment and delayed payments by liaising with major stakeholders in the industry to solve these injustices. These injustices can also be can be remedied at the corporate level. Coffee farmers should form trade unions with vocal leaders to fight for their rights. Trade unions will represent their interest to brokers and fight for timely payment for their product. Additionally, they will demand fair compensation for coffee growers since it is their right to receive better pay and treatment from other stakeholders. Formation of trade unions helps to protect farmers’ right to fair pay. Coffee Dealers Coffee dealers face injustice in the markets: Currently, most retailers and wholesalers face the problem of terminal market manipulation that affects their role and returns on investment. This problem can be resolved at the corporate level through the formation of a legal union or organization. Famers can resolve to join the International Coffee Organization. The union can formulate rule and regulations to guide the behaviors of sellers and take legal actions against intruders in the coffee market. Linton, (2005) states that the law mandates legal unions to come up with strict rules that restrict entry of foreigners into the markets. The recommendations protect the roles of sellers in the industry and ensure most of them realize maximum returns on their investment. Similarly, the state to address the needs of coffee sellers can formulate policies based on utilitarianism theory to control terminal markets and put strict measures to curb manipulation. Control of terminal markets would result in huge profits as opposed to when they are free to all. In the long run, the outcome will be beneficial to all coffee stakeholders thus in line with the theory of Consequentialism. The outcome will be long term and the success will be pegged on the willingness and ability of coffee stakeholders to come together, form a union that will help them resolve the injustices in the market. Consumers Consumers face injustices from stakeholders such as wholesalers and retailers. Typically, exploiting consumers is unethical, and sellers should desist from it. This is an injustice that can be resolved by the state and at the corporate level. Despite the International Coffee Association championing for fair prices to coffee farmers and consumers, there are still some retailers who exploit consumers. It is morally upright for sellers to appreciate the efforts of the producers and compromise on their profits and compensate producers fairly as well as charge consumers fairly. The state can resolve this problem by establishing stringent rules and regulation that govern coffee market prices. According to World Coffee Information Center, (2006) tough penalties should be inflicted to sellers who are overcharging consumers. Furthermore, consumers can formulate a body to fight for their rights. The body should advocate for fair treatment of clients through the correct pricing of coffee products. As well, they should demand that growers and manufacturers produce high-quality coffee that meets expectations. Fair prices will make all coffee stakeholders happy and feel rewarded for their efforts. This will result in a desiring result that is accordance with the theory of consequentialism as well as the theory of utilitarianism. Both sellers and producers Free entry market: the liberation of the coffee markets has negatively impacted coffee sellers and producers. Free entry has resulted in overproduction of coffee which has negatively impacted coffee prices. Greedy farmers resort to mass production of coffee beans to maximize revenue and profits. Excessive production hurt their returns and leads to losses. Similarly, free entry into international coffee markets enables mass entry of wealthy businesspeople that disrupt the profitable coffee industry. This injustice can be addressed through the reinstatement of International Coffee Agreement (ICA) which can save the sector from unfair treatment from the selfish manufacturers. ICA can prevent free entry of a person in the industry through strict and demanding policies. The body can ensure the acquisition of raw coffee beans at the right value through regulation of prices. Further, ICA can negotiate prices for either sellers or manufacturers to ensure each party is treated fairly during transactions (Raffaelli, 2005). The activities of ICA will save the role of dealers since will no longer be allowed to see directly to manufacturers at low prices. Not only will ICA protect sellers, but also consumers who experience price exploitation. The reinstatement of ICA will ensure each stakeholder makes right profits that reflect their participation in the coffee industry (United States, 2003). In conclusion, it is evident that coffee stakeholders are faced with a lot of injustices. Adopting effective remedies to the injustices promises massive growth and development in the coffee industry. Coming up with regulation and policies that govern the coffee market will prevent selfish intruders into the market. Provision of grants and loans to coffee farmers will help improve the production of high-quality coffee. Furthermore, stakeholder such as consumers, producers or manufacturers can form unions to fight for their rights. Such unions play a role in price regulation and facilitate production and sale of high-quality coffee beans. The issue of fluctuating prices in the industry can be resolved when stakeholders such as manufacturers and dealers agree on relevant policies and implement it. By implementing this solution, order will be regained in the coffee industry. Bibliography ADEYEYE, A. (2012). Corporate social responsibility of multinational corporations in developing countries: perspectives on anti-corruption. Cambridge, Cambridge University Press. Biswas-Tortajada, A., and Biswas, A. K. 2015.Sustainability in Coffee Production: Creating Shared Value Chains in Colombia. London, England: Routledge. FRIDELL, G. (2007). Fair trade coffee: the prospects and pitfalls of market-driven social justice. Toronto, University of Toronto Press. Giovannucci, D., and Koekoek, F. J. 2003. The state of sustainable coffee: A study of twelve major markets. The State Of Sustainable Coffee: A Study Of Twelve Major Markets, IISD, UNCTAD, ICO. Linton, A. 2005.Partnering for Sustainability: business–NGO alliances in the coffee industry. Development in Practice, 15(3-4), pp. 600-614. RAFFAELLI, M. (2005). Rise and demise of commodity agreements: an investigation into the breakdown of international commodity agreements. Cambridge, Woodhead. UNITED STATES.(1963). International coffee agreement, 1962. Washington, U.S., Govt. Print. Off. WORLD COFFEE INFORMATION CENTER. (2006). Economic impact of coffee; how the International coffee agreement contributes to the progress of the developing countries and the United States. Read More