The destabilizing effect of the price crisis sparks in beverage companies concern precipitating bank failures, public protests, and dramatic falls in export revenues. The consequences of the crisis in each country and region have been different according to the industry structure of the country concerned.
A region with relatively larger farms using higher amounts of additional nonfamily labor, there has been high labor displacement, as well as a worsening of poverty levels among smallholder farmers and default problems in the banking sector. The social costs, particularly for smallholder farmers, are also acute, and difficulties are aggravated at the national level due to balance of payments problems and lost revenues, jeopardizing broader government antipoverty measures.
Beverage price volatility has been a fact of life because of weather shocks and is not the sole source of the crisis. In recent years, significant structural changes in the beverage companies mean new and emerging paradigms are likely to dictate beverage’s future, which will have permanent effects on the livelihoods of the millions who depend on it. Another area of structural change is in the nature of supply in beverage companies.
The companies oversupply and depth of its impact has been a shock to most participants and observers. A combination of policy and companies failures left producers without access to realistic information about developments and it is unlikely that many beverage producers would have the capacity due to their limited resources, lack of viable income alternatives in many poor rural areas.