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Coffee Magazine: The Rise and Rise of Green Coffee – Understanding the increasing price of coffee

Friday, 8 July, 2022

THE RISE AND RISE OF GREEN COFFEE

Coffee has gone up and it’s unlikely to fall in the foreseeable future, Coffee Magazine asked expert coffee consultant Charles Denison for some insight into just what is going on with our favourite beverage.

Click here for the full article on CoffeeMagazine.co.za


Large scale Brazilian coffee plantation. ©Paulo Vilela

Words by Charles Denison

In case you missed the big news at the end of 2021, arabica coffee futures (the green coffee price) rose by 76% in 2021, making it the largest price rise of any major commodity!  The current high prices are a complex result of weather (frosts and droughts in Brazil and droughts in Vietnam), supply-chains global shipping crisis, and a spike in demand (mostly due to large importers over-purchasing in order to guarantee supply).  To put this into perspective for the South African coffee community, it’s important to look at what this means for local roasters, consumers, retailers, and of course what it means for the coffee farmers at origin.

The increase in the coffee price this past year is the largest in more than a decade, but even more impactful is the actual rand price once the exchange rate has been taken into consideration. While the market price rose significantly, the rand weakened against the dollar as well, giving us a relative increase of over 120%.  As an example, in rand terms per kilogram:

 

1998-2008    –  Avg. price R14,57/kg  |   High price R 27,99/kg

2009-2020 – Avg. price R32,22/kg  |   High price R54,25/kg

2021 – Avg. price R51,14/kg  |   High price R89.24/kg

2022 – Current price averaging around R80/kg (Feb/March 2022)

*It’s important to remember these are prices from the coffee exchange, not actual prices South African roasters pay for their green coffee.

For more information on how the market works, click through to the full article.

 

WHAT I RECOMMEND TO ROASTERS

Ensure green stock security and keep open channels with your importers on the latest holdings and their current logistical situation.  Blend flexibility is going to be key going forward, with the number of origins available being extremely limited.  This is where communicating with your customers ensuring that they understand the crisis we are in, and are empathetic, whether it be wholesale or retail customers, with regard to both prices and blend changes.  And most importantly, cup your green samples before buying, as, in order to limit price increases, some importers may sacrifice cup quality or bean size.  With all the above-mentioned industry troubles, I don’t see the price returning to the 100-150usc/lb in the near or distant future, and would advise getting used to higher prices.

 

WHAT WE RECOMMEND TO CONSUMERS

Coffee prices have increased, are increasing, and will continue to increase – while this may be unsettling, it is important that you as a coffee consumer, and as part of the coffee, culture are aware of the reasons why – and try to support your local coffee roastery, baristas and small businesses that rely on coffee, during this time. Try to be open-minded about the blend you’re drinking – it may taste slightly different to what you’ve been used to – this is due to what green coffee is available, but rest assured your roaster is just as skilled and probably more determined than ever to give you a great blend  – even if the origins change slightly. Try and see it as a new flavour experience!  Try to buy a few bags of different single origins instead of your go-to house blend. Give your roaster feedback and share the flavour notes or your taste experience with other regulars  – you might find something new and exciting that you’ve never tasted before.

 

Ethiopian warehousing operation. ©Michael Turner

 

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