Coffee Prices About to Rise
Care about the Price of Your Coffee? I am sorry to announce that the price of your coffee, no matter where you’re buying it, is about to rise. As of today, the price of coffee on the commodities market has risen 112% since this time a year ago. Since coffee is purchased in futures, the consumer has yet to really feel the impact of this rise.
So, why the sudden rise in price? Most are saying it is a combination of several factors:
Bad weather the past few years in certain countries and low inventories among large coffee importers, which equals less coffee supply world-wide.
Speculators pumping money into the commodities market as they seek to find a safe place for their investment dollars.
Weakening dollar / impending inflation looming.
These are the factors I’ve mostly seen tossed around.
Roasters from Starbucks to P&G (Folgers) are scrambling to figure out how to adjust to and pass on the rising costs to the consumer without losing business. Some will trust that their brand is well enough established with their customer base to ride out the increase. Others will try to find ways to substitute lower grade coffee to help make up the difference. Still others will just not be able to survive and will go out of business.
Unfortunately, I am not immune to what is taking place. My position is that I refuse to buy a lower grade coffee than I presently am roasting. So, while I regret to tell you that my price (which I think is already fair for this quality of coffee) will eventually have to rise, I am at least encouraged to know that the majority of the profit we make is going into charitable works, and not the Carabello’s pocketbook.
So, what’s a coffee lover to do?
First of all, brace yourself. Coffee is a luxury item, even though I’m sure a lot of us feel like it’s a necessity at times. It’s not going away, but you do need to be prepared for the price jump. Secondly, decide what’s most important to you and head that direction. If you’re a bottom line person when it comes to your coffee, then get ready to head to Sam’s Club until the price comes back down. Likewise, if you care about quality and paying farmers fair prices, stick with your conscience and maybe cut back a little to make up the difference. Or, maybe give up the frou-frou skinny lattes and buy really good whole bean coffee and brew it at home – or invest in your own espresso maker ($400) and make the lattes at home. At $4+ per drink, you’ll recoup that cost in one year!
Here’s the Silver Lining
Rising prices means farmers in the third world are finally getting the kind of prices their stellar coffee truly deserves. Last June I stood on the side of a mountain with my Salvadorian coffee farming friend Rodolfo and some of the men who work his family’s farm. In 2010, they sold their coffee to a German broker for the highest price they ever received: $1.65lb. Today the c-market price for coffee is closing at around $2.80 for that same pound. Guess who is LOVING this? And, to be honest, I’m kinda loving it for his sake tooJ
So, there you have it! One man’s loss is another man’s gain. If this means that the Rodolfos of the world finally get their due (even if it’s at my expense) I can live with that. Maybe we’ve pushed our Capitalistic Epic Consumerism Weight around long enough? Who knows, maybe now Rodolfo will finally be able to afford a Starbucks latte!
Coffee Prices About to Rise