June 2024 Worldwide Coffee Prices

I love sharing information with my customers. Good or bad, it doesn't matter. My goal in providing information is so you can make better shopping decisions while understanding why our business operates the way it does. We're small and small changes impact us just as they impact you. This topic talks about why coffee is getting so expensive. 

We all know that the prices of food (and EVERYTHING else) have increased significantly over the past few years. The coffee industry has been greatly impacted by these increases. Due to the nature of the industry, it's sometimes difficult to find reliable information on how changes in the economy impact the industry and the end user. We want to know where the price increases are being added in the "farm-to-cup" process? 

Farm Level Costs

Prices have increased from the farm all the way to the actual retail bags I use to package coffee in our store. For example, the price of our empty one-pound coffee bags has seen an 81% increase in the past 3 years. Not only is the price increased but sometimes, our supplier is out of stock. Another example, the cost of construction for wash-plants and dry mills in coffee growing countries has increased, specifically steel costs. In 2021, the steel market saw a massive cost increase of almost 300%. While this has started to decrease, the steel cost is still high due to demand, supply chain fumbles and inflationary costs. Just these few costs have led to farmers having to charge more money just to process the coffee and get it to the dock at port. Add in the increased costs of lumber, labor, fuel, concrete, asphalt, plastic and electrical wiring. You can see where I am going with this.

Another more important figure is the change in green coffee prices. Again, we need a reliable source for this information, not just one farm saying prices have increased.  The Specialty Coffee Transaction Guide has given us that exact information we’ve been looking for. This guide is a put together by the Emory University Business School and a large group of coffee experts (cooperatives, exporters, importers and roasters) from around the world. The data here is only related to specialty grade coffee and not the C-Market prices. Here are some key takeaways from the 2023 Transaction Guide. 

• Between 2021 and 2023 we saw FOB prices of coffee grades we buy increased by 24%. These are paid for coffees that are delivered and placed onto the ship at the port. It does not include the actual shipping cost to get it to the final destination. This is a combination of over-land transport and money going back to the farms that grow these amazing products. 
• Between 2021 and 2023 the number of coffee contracts and poundage per contract decreased each year. A decrease in contracts means less coffee was sold. It’s unclear if this was related to COVID era farm closures or loss of farming staff to harvest ripe coffee but very likely a combination. Just because COVID is under control in the US doesn’t mean it’s controlled in places like Africa and South America. 
• The cost of high-end coffee (86+ points) small-lot coffees (under 1000 pounds) jumped by $2.85 per pound between 2021 and 2023. This is significant. 

Shipping Costs

Freight

A number of factors have impacted the cost of shipping over the last 3 years.  A few of those can lead to huge increases that we have to pay for. The lack of shipping containers, ports being shuttered, fuel prices, lumber prices to make shipping pallets and increased insurance due to pirates off the coast of Africa. My costs have increased from around $110/pallet in 2020 to $245/pallet just this week. I average 5 bags of coffee per pallet which is an increase of 122% or $27 per bag. That makes each bag cost around $50 to ship. 

Package Rates

I love getting free shipping when I order something online. The reality of free shipping is that it is made up somewhere else, mostly in the product cost you pay. If you shop online with us we give free shipping on roasted coffee orders over $100. I still pay for the shipping cost but my margin on those orders is much smaller meaning I don’t make as much money on those orders. We’re a small business and can’t absorb larger costs like shipping. We still have to pay for it. 

Climate Impacts

I have talked about this in length in the past but this will never be a topic that stops being impactful to the coffee industry. Two topics in climate continue to come up year over year. The first is the increase of disease, specifically Coffee Leaf Rust fungus. This disease is spread more easily as temperature and moisture increase. Leaf Rust kills the coffee leaves quickly causing them to fall off the plant. With no leaves, the plant can’t photosynthesize making food. Another issue is the change in weather patterns. If coffee has an extensive dry season, berries will not form and the season is lost. The same happens if there is too much rain and not enough sun. We’re seeing a lot of this in places like Africa and Central America. Brazil had a cold spell a few seasons back where a significant portion of the crops were damaged. 

Summary

So, what’s this all mean for you in the end? We know prices change all the time in this industry. We know we want to continue seeing high-quality coffees from small lot farmers. When does the price become too high to make a return? We’re a business and need to make a profit to stay open. If we saw prices increase like this on all coffees, the market would tank and no one would be growing coffee. Your final price may increase in the coming year but you may also see us carry fewer options on the shelf. The massive selection we have is only possible because we hustle to find these small lots, as long as the small lots still exist. Sure, we could stop sourcing those stellar findings just to make more money…but what’s the fun in that? Coffee should be fun. Coffee should be delicious with every sip. That’s what we’ll keep doing until we can’t. Enjoy every cup you have!