The Changing Price of
SUNDAY, 17 AUGUST 2022
AUTHOR: MAXWELL COLONNA-DASHWOOD
READ TIME: APPROX. 4 MINUTES
Prices of pretty much everything are going up for a plethora of reasons, with coffee having some soaring costs that are unique to the industry.
There are the cost increases that affect most industries, the rise of shipping costs directly affect coffee as it makes its way around the world on container ships, as does the increased cost of cardboard, packaging and energy bills.
However the big economic story in coffee over the past year is how much the C price for coffee has changed. The C price is a commodities-market that benchmarks value in coffee at any given time, based on supply and demand around the world. As well as the C price there is a differential per country. For example, a typical washed Colombian coffee has a higher value than many other origins. Specialty coffee has always sat above the C price, with the higher-priced micro lots and Gesha being quite far removed from this value.
What happened last year however, does show that the C price significantly influences specialty coffee.
Brazil is the world’s largest producer of coffee. Not only this, but its terrain is also flat enough to be the most automated and mechanised producing country. Together, this means that Brazil has the biggest impact on global coffee pricing, as it is able to produce a given quality (within reason) at a lower price. Last year there was a severe frost in Brazil that affected roughly 20% of coffee farms. Coffee plants don't like frost, and the key issue of concern was how much it would affect the following harvest. This created the most volatile changes in the C price for a decade.
There was speculation abound as to how long the price changes would last. These prices are still holding and combined with high differentials it means certain coffees are close to twice as much to purchase, compared to just over a year ago. The increased prices are of course beneficial for those that produce the coffee and this is always good to see.
Specialty has always paid a premium but most of the world’s coffee producers don’t see that benefit. At the same time farmers and producers have seen their own costs soaring with the Ukraine/Russia war more directly affecting fertiliser costs, and labour prices increasing directly alongside energy and raw-material prices.
Prices don’t look to be settling back down either. Most observers predict that although the prices will soften again, they aren’t likely to go back to where they were.
We are committed to focusing on the same level of quality as we always have, continuing to push and explore the boundaries of great coffee.
Our prices have moved a little and will continue to be reviewed, however we aren’t passing all these raw-ingredient and energy charges on. We are working hard to bridge the gap by focusing on every detail of our internal operations to create a better, more efficient roastery.