In the case of coffee, prices are plummeting for farmers, but not for the cup: coffee in the bar costs more and more for the consumer.
Apparently collapsed coffee pricebut not the one of cup. What has actually decreased is the price paid farmers for the coffee. On the other hand, however, the one with the cup at the bar or even the one at Starbucks is constantly and steadily increasing. In fact, in August, Arabica coffee futures traded on the exchange at $2.43 a pound (each pound is a little less than half a kilogram), while now the price has fallen to $1.59, a 35% drop.
Why has the price of coffee at the producer plummeted?
According to experts, the decline in the price of coffee to the producer has various reasons. First, the Brazil weather conditions have improved compared to the last two years (but not those in Uganda: here the drought has led to a 14% drop in exports). The autumn rains indicate that the land will have a good harvest, ensuring sustenance. A good? From a certain point of view yes, but the more products there are the more the prices tend to fall.
Second, we must consider the strength of the US dollar. When the dollar goes up, anything measured in dollars, like the price of coffee, tends to go down.
But if producer prices fall, cup prices don’t. Really: the one coffee is becoming increasingly expensive for consumers. At the end of October, coffee prices rose 14.8%, according to data from the Bureau of Labor Statistics. Or even more: European data suggests that a cup of coffee in October cost 16.9% more than in the same period last year.
Mashed potatoes Starbucks just announced that it has raised the prices of its coffee by 6% this year. And the problems for the company did not end there: in more than 100 offices the shadow of the strike to boycott Red Cup Day looms.
But if producers are paid less for coffee, why doesn’t the cup go down? Simple: it’s true, the raw material costs less, but other costs have been added such as labor and distribution which proportionally has increased much more. Whatever happens, if you see a price drop, it will be very marginal.
And if coffee price with related increases it worries you, think that for various reasons it can also be less good from a taste point of view. Here we explain why.