It’s no secret that coffee prices have shot up in the last six months. You might have noticed a heftier price tag on the last bag of beans you bought or your daily takeaway coffee.
So - what’s the real story behind the rising coffee prices?
To give a little bit of background, here are some numbers from the coffee world over the last 12 months:
These statistics are just a few of innumerable variables contributing to the price of coffee. Ultimately, the reality is that supply chain challenges are pushing inflation higher all over the world.
If we subtract the nuances, the formula is as simple as this: when coffee production drops and plenty of people still want their coffee fixes, prices go up.
In this blog, we’ll walk through the supply chain changes that have caused a rise in the cost of coffee.
Ibatia, ES, Brazil. Image by Dhan Sugui via Unsplash
For over a century, Brazil has been the world’s largest exporter of coffee, contributing to about a third of the world’s total bean production.
However, for the first time in decades, Brazil’s coffee industry has experienced a once-in-a-lifetime climate crisis that impacted its yearly production quite drastically. Entire harvests were completely wiped out by frosts which literally froze coffee trees to death. It is expected that in the next three years, between 2-5 million bags will be lost and production might not return to normal capacity until at least 2025.
Cold wave affecting the South of Brazil. Image by The Rio Times
Being the top coffee producing country in the world, it's important to recognise the impact this will have on the rest of the industry. The frosts in Brazil occurred during a period when the supply of higher quality Arabica coffees (i.e. the stuff we buy) had already been experiencing a desperate shortfall.
The frosts, along with other issues such as fertiliser and labour shortages have only served to exacerbate tanked production and creeping coffee prices. This is why we’ve seen an increase in the prices of raw, green coffee.
The coffee industry was, and still is, affected by the global supply chain issues caused by COVID-19.
In Australia, we rely on at least 95% of our coffee to be imported from other coffee-growing countries. It can take anywhere between several weeks to several months for coffee to be transported from the farm to the consumer.
The duration of the coffee’s journey depends on the organisation of hundreds of people within many shipping and logistics companies. Complications such as constant lockdowns means that even if coffee is harvested, processed, and ready to go, coffee beans can remain stuck at shipping ports for months at a time.
The knock-on effects of COVID-19 lead to staff shortages, reduced space at shipping docks, and you guessed it, elevated coffee prices.
These shipping complications have led to logistics companies including a freight levy of up to 12% - again increasing the import cost of coffee.
Like many coffee roasters, we are doing our best to navigate through the challenges of the current coffee market. We will remain open and honest about the supply chain issues we’re experiencing, and about how we adapt to these changes.
We’re in constant contact with our green bean suppliers, and are making sustainable decisions for our staff and our company, as well as the producers and farmers that we work with.
As a specialty coffee roaster, we are also committed to delivering our customers the very best coffee the world has to offer. This means that we will always ensure our single-origin, blend components and pod coffee are specialty grade, even if it means paying a little more.
Padre Coffee acknowledges the Traditional Custodians of Country throughout Australia and their continued connections to land, sea and community.
We pay our respect to Elders past, present and future, and extend that respect to all Aboriginal and Torres Strait Islander Peoples.
