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Micro and macro economics Coffee supply chain Coffee chain supply of coffee comprises of six distinctive phases ly agricultural, roasted production, additional processing, transport and distribution, consumption, waste management phases. Agricultural phase entails farming of green coffee with diverse treatments like soil management, pest treatment, fertilization and harvesting. The different types of treatments to coffee mainly depend on the cultivation practice either organic or conventional.

Harvesting can either be manual or mechanized. Production phase comprises of coffee processing and package of the coffee. In processing, cleaning, storing, roasting, cooling, weighing, grinding and blending takes place. The only waste product in this phase is the parchment that will still be covering the bean. Additional processing phase takes the coffee powder to manufacture product varieties. The package then takes place in cans made of aluminum or paper filters. Transportation and distribution phase includes transportation of coffee raw material, wastes and by- products depending on the production capacity and the location.

Distribution of coffee takes place to the market either local, international level or national wide. The consumption phase includes the consumption depending on the tastes and the brands. The waste management phase includes the procedure of treating the wastes like chaff and coffee grounds. Supply is the amount of coffee or any other product that producers are able and willing to sell at a given price all factors are held constant. Determinants of coffee supply The price of coffee: the supply curve has a positive slope to the price meaning that the higher the price, the increase the supply.

Conversely, the lower the price, the decrease in the supply of coffee will be. Conditions of production: the improvement of technology reduces the production cost and high production of coffee hence increases the supply. Price in the inputs: increase in the factors of production such as raw material, labor and land will cause the supply curve to move leftwards hence decrease in the supply of coffee. Expectations: if the sellers anticipate an increase in price of coffee in future, the supply will increase production anticipating price increase hence increase in supply.

Demand is the quantity of coffee or any other product that a buyer is willing to buy at a given price all other factors remaining constant. Factors affecting the demand Income of the consumer: in this case, the higher the income that the consumer has, the increase in demand for coffee will be. Conversely, the lower the income the consumer posses, the decrease in the demand for coffee will be. Price of coffee: the higher the price of coffee, the lower the demand for it. On the other hand, the lower the price of the coffee, the higher the demand of the coffee product will be.

Prices of related goods: a rise in price of a substitute good like tea will increase the demand of coffee while the decrease in price of the tea will decrease the demand of coffee. Tastes and preferences of the consumers: a favorable taste and preference increases the demand of coffee while the unfavorable taste and preference decreases the demand. Figure 1 global price from 2008 to 2013From the analysis the equilibrium price is that price where by the demand for coffee and the supply is equal in the market.

It is the price which neither the buyer nor the seller complains. The equilibrium price is $200. From the analysis, the current price of coffee is selling at $230 the price which is higher than the equilibrium price. This makes the supply of coffee to be more than the demand. Conversely the demand is low as consumers have a low income which is a constrain to their budgets.