As you have seen in the three documents on homogenisation, fragmentation and glocalisation,
the effects of globalisation are diverse and point in many different directions. Although
globalisation is not only causing poverty and is not the only factor for poverty, some forms
of poverty are strongly linked to and caused by globalisation, especially in its economic
dimension.
Economic globalisation can contribute to poverty as well in its homogenising than fragmenting
dynamics. It is mainly fragmentation that is associated with poverty as it is provoking
inequalities or lowering solidarity with national or local groups. However, as you have seen
in the three texts downloaded on the previous page, homogenising dynamics can produce
fragmentation.
This is for instance the case with global market prices on agricultural products. Because an
important share of agricultural product is internationally traded, producers are competing
in many countries on a global market. This leads to a decrease of world prices because of a
high supply and a levelling on the cheapest producers prices. As a consequence of the falling
prices, farmers see their livelihoods threatened and get caught into poverty. An example
of this spiral can be seen with the effects of falling coffee prices on Indian farmers.
Falling coffee prices: the Indian example
"Coffee Mantra", "Coffee Day" or "Starbucks" are just a few examples of coffee bars that
can be found in every corner of Indian cities. The consumption of coffee belongs to the
everyday life in India and consequently we could assume that coffee planter’s businesses
thrive. However, decreasing international market prices of coffee led to an agrarian
distress for rural farmers depending directly on coffee as a cash crops resulting in
unexpected low revenues from crop sales.
There was a sharp fall in the domestic prices of coffee since the 1990s, a trend that
was a reflection of a downward spiral in world market prices of coffee
(see figure). The collapse of coffee prices is traumatic for Indian coffee farmers
(80% of coffee produced in India is exported). India couldn't adjust the coffee production
after a worldwide oversupply of coffee mainly due to increase in production in Vietnam and Brazil.
The low world market prices led to high input costs and indebtedness of Indian's coffee farmers,
who are mainly small holders (Neue Zürcher Zeitung 2002).