Rising Coffee Price

Last year, Brazil has experienced the worst drought in 90 years. Soon after, temperatures dropped to unusual low values and snow fell in places, where a lot of people don't even know what it feels like when it's snowing. The cold temperatures led to frost. Both the drought and the cold temperatures resp. the frost have damaged a lot of coffee plants and the crop yield was reduced massively because of these circumstances.

There are other countries that have suffered from severe weather conditions in the last few years, which also destroyed big parts of the harvest. What differentiates this specific case in Brazil from those is the fact that Brazil produces roughly a third  of the world's coffee. It is thereby the biggest coffee producing country by far. For this reason, the damage has led to a worldwide shortage of coffee and has thus increased the prices.

The coffee price at the stock exchange («c price») is a complex topic in itself. On average, this price has been roughly the same for the last couple of decades. This is rather absurd, considering that we pay a lot more for other food items or commodities than 40 years ago. This is one of the reasons why we don't use the c price as a guideline for the prices we pay and why we pay a lot more. Yet, it has a certain impact on all coffee prices. A distinctly lower supply of green coffee has not only led to an increase of the c price, but basically all prices for coffee – the demand for each harvested kilogram of green coffee has grown due to the shortage.

Higher prices sound like a good thing at first, given that the coffee price is often much too low in order for the producers to make a decent living. Unfortunately, it is usually not the producers who benefit from this rise of the c price, but other companies involved.

In addition to the aforementioned reasons, there's also the pandemic. Shortage of staff for the harvest and for coffee processing due to illness and isolation have led to further delays and partial harvest losses. But staff shortage has also been a big issue for the transportation of coffee, especially so at pretty much all freight harbors. This, in combination with a low availability of freight containers, generated massive delays in worldwide shipping of not just coffee but pretty much everything that is shipped by boat. The costs for shipping a container have been drastically higher, in many cases up to ten times the price of two years ago or even more.

The rising green coffee prices initially hardly had an impact on you as a consumer. The higher costs were covered by the involved parties from the producer to the roaster. We, too, have experienced higher costs for green coffee and freight services. Since our prices are not directly linked to the c price, you are not affected by the increases in price too much.

Our prices have risen slightly over the last years for another reason, however, which is quality. We have always put an emphasis on high quality. In the last two years, we have been able to further increase the quality of the green coffees purchased. Buying higher-quality coffees naturally costs more and in this case, it is actually true that the coffee producers are being paid more for their higher-quality coffee.

Even if the weather in Brazil in the next few years is going to be perfect for growing coffee, the country's producers will have to cope with the consequences of last year's weather conditions for quite some time to come. Countless coffee plants have been partially or fully destroyed and will not yield any coffee for some time. New plants need to be planted and they will need a few years before their coffee can be harvested. We can expect the c price to fall back to roughly the value it was on before this, once Brazil is producing at full capacity again.