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Coffee prices hit a record 14-year high this month, and it's only a matter of time before coffee lovers will have to pay more in stores and coffee
Section A: The Market for Coffee
Read the following four extracts and answer the questions below
Extract 1: Coffee prices on the rise
Coffee prices hit a record 14-year high this month, and it's only a matter of time before coffee lovers will have to pay more in stores and coffee shops. A series of bad news has affected the market for coffee bad weather in South America is threatening crops; Brazil and Vietnam are talking about hoarding their stocks; and US stockpiles are reportedly at 10-year lows. Moreover, the current behavior of prices reflects uncertainties concerning short-term coffee supplies. As uncertainties persist, investors are placing significant bets on where prices are headed.
Extract 2: Colombian government extends subsidies to the coffee sector
In South America, despite a budget deficit, the Colombian government announced a subsidy package in November 2008, aimed at controlling the escalating price of coffee. The subsidy package includes assistance to farmers by extending discounts of up to 50% on fertilizer to farmers and provision of cash
credits to farmers for the replacement of old and poor-yielding coffee trees with newer and higher yielding varieties
Extract 3: Venezuela maintains strict price regimes on basic foods
Since 2003, the Venezuelan President has maintained a strict price regime on some basic foods like coffee, beans, sugar and powdered milk. But this measure designed to curb inflation has alienated Venezuela's coffee importers who say their profit margins have been reduced to nothing.
For at least a week, there has been no roasted coffee available on the shelves of Venezuelan supermarkets, as wholesalers and coffee importers have been withholding their coffee from sale. The situation is so bad that authorities have successfully stepped in to seize coffee, which is deliberately being withheld from sale.
Yet several food stores in Venezuela's capital city Caracas say the coffee raids are not addressing the fact that shops are also running low on sugar, maize, powdered milk and beans. Store managers insist they are not being supplied with new stock from wholesalers and importers.
Three days ago, street sellers working in the country's black market were still able to provide the roasted coffee that the supermarkets were not stocking. However, even they have since admitted defeat.