Why the price of coffee is set to skyrocket
Coffee prices are skyrocketing in Australia, but could the same thing happen in New Zealand?
“It’s a perfect storm,” said Joe Stoddart of Wellington’s Havana Coffee Works.
“We have a scenario in which there was a frost in Brazil last year, resulting in the loss of massive amounts of coffee.
Havana’s master roaster stated that it is “difficult to obtain a food-grade container” at the moment.
“Brazil is the world’s largest coffee producer, which means that there is a limit to the amount of high-quality coffee that can be purchased globally. Combine that with the fact that Brazil is emerging from a drought, and you’ve got shipping delays and prices quadrupling in some areas around the world.
“Right now, producers are having difficulty obtaining food-grade containers, let alone booking something that will visit this part of the world.”
Stoddart stated that the situation was not unique to New Zealand and did not revolve solely around shipping delays.
“You have a situation where all costs are increasing as a result of social distancing in developing countries, which are also coffee-producing countries, as well as what we are experiencing in Australia and New Zealand. Diesel prices are increasing.
“Overall, costs are skyrocketing.”
According to Stoddart, the price of high-quality coffee is determined by supply and demand. If there is a global glut of raw coffee, the price will fall; if there is a limit or perceived limit on coffee, the price will increase.
When asked if coffee prices in the United States could reach the sky-high levels of $7 per cup reported in Australia, Stoddart stated that it was possible but also a matter of perception.
“What you must understand is that it is all a perception of rising costs; therefore, in my position, I purchase the majority of my coffee directly from the producers, and thus do not allow middlemen to take a cut of the profit.
Frosts in Brazil, the world’s largest coffee producer, have pushed prices higher.
“I’m in a position where I can earn them more money while also spending less money, which puts me in a quite luxurious position. I’m not buying at a market-determined spot price, but my role here is to act as a conduit between the producer and the customer.
“Some grocers and people selling coffee here will be in that position, but not everyone, because it all depends on how you position your work and how far out you see what is happening.
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Source: Coffee Talk