How are you today? Here I am in Guarda (Portugal) and it is cold and rainy outside. Been raining all day…but I am not really complaining. There are few things that I enjoy more than savouring a hot coffee while listening to the falling rain.
I find that the whole experience grounds me and makes me feel, somehow, more connected to nature…
The End of Cheap Coffee?
Coffee is the 2nd most traded commodity (by volume) in the world after oil. In the past decade coffee consumption has been on the rise by an average of about 2,1% each year. The profits of the big coffee roasters are booming. Just this year Starbucks increased its already hefty prices by between 10 and 20 cents per cup and customers did not bat an eye.
But all is not well in the coffee industry. Contrast the numbers above with the reality that coffee prices (per pound) have dropped since 2014 from $2.40 to $1 today, a price that means for most of the millions of small coffee producers in the world that they are being forced to sell their crop for less than what it takes to produce.
Tens of thousands of farmers in Latin America, Mexico, Colombia and Africa have already been forced out of business.
This problem has the potential to become epidemic…in Honduras alone some 30% of the population earn their living directly and indirectly thru coffee production.
Today strongly subsidized Brazilian and Vietnamese coffee producers are flooding the global market with more coffee than can presently be consumed, putting yet more downward pressure on the price of the green coffee bean.
Did you know: In a global coffee market valued at $200 billion a year, the coffee growers get to see less than 10% of this.
Government subsidies mean that the Brazilians and Vietnamese have been able to become more efficient farmers, producing more coffee per acre — and often of better quality — than anyone else anywhere in the world.
To get a better idea of what is going on, the top-5 coffee producing nations in the world produce 75% of the global coffee supply, and just 2 of these top-5 countries, Brazil and Vietnam, together account for 85% of this number.
Cheap Coffee is Unsustainable
If the low prices persist, then the traditional growers of coffee, especially in Africa, Latin America, Colombia, Mexico and a few others, will go out of business, leaving the world increasingly dependent on just 2 principal sources: Brazil and Vietnam.
The danger here is that since coffee is very vulnerable to even the slightest weather changes (and the weather is changing EVERYWHERE) a bad year or two could come close to wiping out much of the world’s coffee supply. The result would be VERY expensive coffee.
For this reason alone, there is a growing awareness that it is necessary to start paying coffee farmers a fair and just price for their coffee so that they will remain in business.
Of course, this will require the powerful coffee roasters (Nestle, Jacob, Lavazza and a few others) who maintain a stranglehold on the processed coffee market to willingly redistribute some of their profits back to the coffee farmers.
Below is an informative video that you might want to take a look at as many of these issues are covered: