After years of hovering around $1.00, the price of coffee on the commodity market has recently been rebounding. Arabica, for example, hasn’t fallen below $2.00 a pound since mid-March. Yesterday, the price peaked at $2.55the highest since 2011. Meanwhile, in London, the price of Robusta reached a record high on Tuesday, $4,844 per tonabout $2.19 a pound.
As is often the case, the reason for the price boost is not entirely good: shortages of both species — often caused by weather events related to climate change — are keeping prices so high, and there is no sign of this trend stopping.
As reported Financial TimesRobusta production is one of the main drivers. Robusta-producing countries such as Vietnam and Indonesia have seen production shortfalls this year, according to Lavazza Group CEO Giuseppe Lavazza. And weather forecasts for the next harvest in Vietnam indicate that the crop will not be able to make up for the weakening supply. This in turn is driving up the price of not only Robusta but also Arabica, as buyers have to switch to more steep varieties to meet demand, according to Moo.
And the price is likely to rise even more. “Coffee prices will not fall, [they’re] will remain very high,” Lavazza said, “on the sidelines of the Wimbledon tennis tournament.” Which is really the chef’s kiss for the dichotomy of the situation. Sitting courtside during a polite, proper, and sophisticated tennis tournament, a prosperous guy announces why they just have to charge you more for coffee — even though the price never seemed to drop when they were getting coffee in the basement for under $1. (That’s definitely not greedflation. Please don’t write in the newspaper that it’s greedflation.)
The Financial Times says the problem could get worse in Europe, as well-meaning but problematic novel EU rules require coffee producers to prove their product does not contribute to deforestation. Lavazza says only 20% of global farmers can meet that standard, further limiting potential supply.
Still, while it will ultimately be passed on directly to the consumer, the higher price, despite reduced production, will hopefully mean more money for the producers, people who have had less money up until now (and still do). The people at Lavazza will simply have to live on a net income of just €68 million a year. They can just watch Wimbledon on TV like the rest of us.
