I saw an article in the Herald Sun today about how world coffee prices have hit a 10 yr high, and how this price increase is set to hit consumers... it will be interesting to see how this relates to the cost of a cup of coffee here in Melbourne - as traditionally we lag behind the rest of the country in terms of what we charge for a coffee Wonder if the coffee farmers see any profit from the coffee increases? Prob not...
Coffee price rises are cyclic. They have been going up for 10 years and probably have another 5-10 year rise. Then they will start to fall. This is nothing new. Typically the rise and fall of coffee prices affect cheaper beans more than top end beans. Most of my beans have only risen 10c / kilo over the last 5 years, because I am using excellent coffees and ethically produced stuff. Unfortunaly the farmers are not affected too much from the price fluctuation. What happens at the moment is as prices rise, so to does quality. This is because the farmers have have more money to spend on production. The rise in quality drives the price up more as well as allowing smaller farms to become world traders. In the next 5-10 years the market will saturate and there will be less demand for beans. Farmers will drop there prices, and as the price goes down so too will quality. As the quality drops, so to will production from a number of smaller farms. As price drops, so too will demand increase until the cycle bottoms out and starts all over again. What is interesting about this cycle is the following: 1) specialty beans are far less susceptable to the cycle than cheap commercial rubbish. 2) Price fixing schemes like Fair Trade(not starting a seperate debate here) will see less money go to the farmer than should be in a price rising time. That said, coffee prices are all about demand Vs quality. A high quality bean which is sought after will remain high priced at all times. A perfect example of this is the Brazil Daterra. This plantation co-op has proven it is only quality that can position your plantation in the right price bracket. 10 years ago when the last cycle was at its trough they decided to be a major player in the specialty market. The average farmer on these plantations earns 300% the average farming wage in Brazil. They care more, the bean improves, more people want it, it fetches more money. Simple economics of quality.
