Saturday, May 2, 2009

According to legend, Ethiopian goatherd first discovered coffee. It started as food and drinks for African tribesman. Now, it evolved into a worldwide drink and highly valuable in trade. It is a major source of income for many exporting countries. Many people depend on it for their livelihood and drink a lot of it. In 1975, a killing frost damaged nearly half of the coffee trees which changed the prices terribly. Frost hit Brazil again in 1979. Every tree lost means the loss of income for three to five years. The loss 15 million trees cause a huge income loss. Brazil had to stop all shipments. Importers fearing a shortage bought it in large quantities and farmers planted more when prices rose. This resulted in overproduction and prices fell. Farmers replaced their plants for other crops. Producers and consumers decided to limit output to what the market can absorb, have a reserve and sell at an acceptable price.

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