Despite Skyrocketing Coffee Prices, Farmers Are Not Seeing The Benefits – CoffeeTalk

Coffee farmers are facing a “deepening crisis” despite soaring prices, as climate change and input costs threaten the sector’s resilience. Independent coffee supplier Matthew Algie warns that producers have been unable to reap the benefits of increased coffee prices as climate shocks, rising costs, and financial pressures mount, leaving the sector’s future under threat. Soaring arabica prices, peaking at 425 cents per pound this year after more than doubling from last year, should “in theory boost farm income”, but instead they are failing to deliver real benefits for smallholder farmers, who faced a “perfect storm” of challenges that prevented them from reinvesting or planning for the future.

Extreme price volatility, supply chain disruptions, speculative trading, and droughts in major producers Brazil and Vietnam are all destabilizing global coffee markets. Market speculation has driven up price volatility, as rapid movements in the coffee futures market attract short-term investors, creating further uncertainty for traders and exporters attempting to manage long-term contracts. Estelle MacGilp, head of coffee sourcing at Matthew Algie, said that the coffee industry is facing a perfect storm of pressures, driving prices to near-unprecedented levels.

Both arabica and robusta bean prices have skyrocketed over the past year, as Brazil and Vietnam, the world’s largest coffee producers, have experienced long dry periods that have shrunk their output. Geopolitical tensions, including the ongoing conflict in Ukraine and instability in the Middle East, have lengthened shipping routes, pushing up costs and further disrupting supply chains. Container displacement and poor port infrastructure have compounded the challenges.

The challenges faced by the coffee industry are having ripple effects across the board, with most major coffee suppliers being forced to push those rising costs down the supply chain. To-go coffee drinks maker Emmi UK has also seen a sharp rise in coffee prices in 2024, as well as rising procurement costs in general, including sugar.

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