The New Reality of Coffee Prices

Coffee prices are at an all-time high. Just a year ago, the c-market price for commodity arabica coffee was at about $1.90 per pound - this was the price for essentially the cheapest, lowest quality arabica coffee that one could buy. Today, it is at about $3.70 per pound, but two weeks ago it was at $4.30 per pound. Not only are prices high, but they are volatile.

Now, specialty coffee has always prided itself on paying far more for coffee, for far better quality, but the reality is that specialty prices are and have always been dependent on the commodity coffee price. If they produce(d) commodity coffee, they(’d) get paid the c-market price, and if they produce(d) specialty coffee, they(’d) get paid the c-market price plus a differential. The differential depends on the country of origin, the actual quality (say 83 point coffee versus 87 point coffee), and other factors.

From a consumer standpoint, this isn’t great news, because (skipping to the punch line here) the cost of specialty coffee is going up. Regardless of the differential, if the base price for commodity is up $2/lb, pretty much all specialty coffee is going to be $2+/lb more expensive.

However, this is really an increase that has been needed for a long time. Year after year, young people in coffee-growing countries opt more and more to move to cities and not get into growing coffee. People simply don’t want to grow coffee for a living because it is hard work and not particularly lucrative unless you happen to be one of the few famous farms that can command extremely high prices for all of your lots. Climate change isn’t helping. Drought in Brazil has decreased the global coffee supply (while demand continues to surge). Market speculation compounds all of these issues.

So, the silver lining here is that coffee growing is becoming more lucrative and a more attractive proposition for younger people in producing countries. We absolutely need this for specialty coffee to continue to be a viable industry. We do expect coffee prices to come back down a little bit, but whatever ends up being the new normal is most certainly going to be significantly more expensive than it has been over the past few years.

We’ll continue to do our best to buy from the same farmers, producers, and co-operatives that we’ve always purchased from - this stability is hugely important for them, as many of them actually have to take out loans in order to pay for the labor to harvest cherry, and they don’t get paid until the coffee is actually sold. Knowing that they have a buyer makes taking on that loan feel less scary. We’ll continue to do our best to offer competitive pricing while making sure everyone in the supply chain gets a fair piece of the pie.

Thanks for reading, and thanks for supporting us and specialty coffee as a whole. While the magic of a particularly delicious coffee never gets old, it’s really the people that make specialty coffee special. We’re all just doing our best to adapt to the ever-increasing uncertainty and volatility of just about everything in the world.