Price of Coffee sees Spike

Coffee is one of the most popular and recognisable drinks throughout the globe. We probably all come into contact with it during our lives, whether you are offered a cup in a meeting, you buy it from a local coffee shop, or you have one of the many Bean to Cup Coffee Machines sitting in your office. People on every continent look to invest in and consume the drink, leading to it being the second most actively traded commodity in today’s world market.

In 2006 coffee was traded at 60 cents per lb, which was an all time low in the coffee industry at that time. Fast-forward nearly 6 years and no one could have predicted how steep the hike in price would be, with the price of raw beans doubling in the last 12 months alone. Coffee is now being traded at just over $3 per lb, an all-time high. Not only that but industry experts predict future rises to take it as high as $3.70 per lb, but it remains to be seen if this will come to fruition. So what are the reasons behind this hike and how can we get numbers down to what they used to be?

One of the main factors contributing towards this increase is the fact that harvesters are starting to turn into mass consumers of their own coffee. This means there is less supply available to be exported to other parts of the world where demand is huge such as North America. It’s known for example that although Brazil is the biggest supplier of coffee, they are also one of the biggest consumers.

Another factor contributing to the decrease in supply is the adverse weather conditions that many coffee producing countries are experiencing. Brazil has had real weather problems in recent months, including drought, which has meant the amount of coffee being produced in recent times has hit an all time low. The problem has become so big that farmers are now looking into the possibility of planting different crops which they believe to be more profitable.

Heavy rainfall in other areas has damaged many crops, and consequently has had a detrimental effect on the quality of coffee beans. This has meant the quality and quantity of coffee will fluctuate each year, making coffee harvesting a risky business. Despite this, coffee farmers are still able to sell their product at an extremely high price to the market, simply because of the sheer increase in demand.

The price hike will also have a damaging effect on local coffee shops throughout the world, who will struggle to sell their coffee at a high enough price, when they are not considered a premium brand. Until now, most independent coffee shops have tried to bare the brunt of the fluctuating price so that they do not deter regular customers, but now that coffee is reaching such peaks and with forecasts that the price is still expected to rise, these local stores will have to re-think their strategy.

Industry experts are also warning coffee lovers to be aware that some coffee shops may look to exploit customers by charging a substantially high price for coffee in order to maintain large profits.

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