Economic lessons in your morning mug
Religion & Liberty Online

Economic lessons in your morning mug

A NYT editorial informs us today that retail prices for coffee products are rising (HT: Icarus Fallen). We are assured, however, that the price rise has been “relatively modest” and that an important factor is “changes in supply and demand in a global economy.”

No kidding.

The bad news in the editorial, at least for the fair trade crowd, is that these same forces of suppy and demand are raising the price for the commodity itself.

According to the International Coffee Organization, the composite price of coffee rose over 36 percent from the beginning of 2005 to the end of 2006. The organization predicts a down year for the Brazilian coffee crop, which could lead to a supply shortfall and even higher prices this year. While world demand has grown at annual rates of 1.5 to 1.8 percent over the last five years, it has been rising at a much faster clip of roughly 15 percent for smaller players like Russia and China. As more people enter the global middle class, the demand for coffee rises, putting upward pressure on the price.

I have argued previously that the very low price of coffee internationally was a pointer to the fact that we had a global glut in the bean supply.

That trend seems to be reversing and the rising commodity price for coffee is thus undermining the long-term viability, relevance, and credibility of fair trade coffee.

For an opposing perspective, check out Black Gold, a new movie on the fair trade coffee movement, which I have not yet seen (HT: The Advocate).

Jordan J. Ballor

Jordan J. Ballor (Dr. theol., University of Zurich; Ph.D., Calvin Theological Seminary) is director of research at the Center for Religion, Culture & Democracy, an initiative of the First Liberty Institute. He has previously held research positions at the Acton Institute and Vrije Universiteit Amsterdam, and has authored multiple books, including a forthcoming introduction to the public theology of Abraham Kuyper. Working with Lexham Press, he served as a general editor for the 12 volume Abraham Kuyper Collected Works in Public Theology series, and his research can be found in publications including Journal of Markets & Morality, Journal of Religion, Scottish Journal of Theology, Reformation & Renaissance Review, Journal of the History of Economic Thought, Faith & Economics, and Calvin Theological Journal. He is also associate director of the Junius Institute for Digital Reformation Research at Calvin Theological Seminary and the Henry Institute for the Study of Christianity & Politics at Calvin University.