Who benefits from rising coffee prices?
The media is buzzing: coffee prices are at a 14-year high. This is great news, but for whom?
A number of factors contribute to the rising coffee prices. Some key coffee-growing countries, such as Brazil, are expected to produce less coffee this year. Yet coffee consumption is up, even in countries that are traditionally tea drinking, such as China and Russia.
The National Coffee Association of Guatemala speculates that coffee production in nine Latin American countries will drop 28 percent in the first months of this year’s growing season. Coffee production in Colombia is already at a 33-year low. So while production may be down, demand has never been better.
We can find higher prices in Starbucks, grocery store chains and independent coffee houses. But what does this mean for the farmer?
Buyers search out long-term relationships with coffee farmers. Farmers, though, often need to meet immediate expenses. When they realize that they can sell their coffee outside of the fair trade agreement to coyotes or in-country brokers for significantly more, many farmers choose to break their contracts. This results in a difficult scenario for the buyer and will bring new challenges to the farmer when coffee prices go back down.
This is precisely why alternative sources of income are so important to long-term sustainability. It is, after all, supplemental income that will make it possible for the farmer to weather a changeable coffee market while maintaining long-term relationships with reliable buyers.
