The COVID-19 pandemic has caused major issues in virtually all facets of modern society and the coffee supply chain is no exception. Along with many food products, coffee is getting more expensive with each passing day.
Is coffee cheap?
For much of modern history, the price of coffee has been kept artificially cheap by large corporations with billions of dollars to subsidize the price for consumers. This artificial moat has major consequences for both producers who subsist on dollars a day and consumers who expect cheap products in perpetuity.
Coffee should not be cheap – it is a labor intensive crop that demands an immense amount of resources to produce. In 2021, the price of coffee rose the most out of all other commodity goods including gas yet many consumers still expect coffee to remain cheap.
Why is Coffee Getting more Expensive?
Within the current supply chain, there is an ever growing demand for coffee around the world which is only exacerbated by an ostensible shortage of supply. For instance, in 2021 Brazil saw a major disruption to its coffee supply due to frosts that decimated much of the yields around the country. Brazil is the leading producer of coffee in the world and without its supply, much of the supply chain suffers– prices for coffee rise, prices for imports and export rise, and competition worsens.
To make matters worse, the ongoing pandemic has created labor shortages around the world from coffee growers to logistics and beyond. Less people are working to grow coffee and fewer freight ships and cargo containers are available for transport of coffee. The price of shipping has quadrupled yet wages and final prices have stagnated for the sake of the consumer. Many small businesses face the threat of ceasing operations because they simply cannot afford to keep going or they cannot continue to absorb the growing costs it takes to operate within a supply chain bubble on the precipice of bursting.
How much Does Coffee Cost?
If one were to do the math, a 12 oz bag of specialty coffee priced at $17 costs about 62¢ for each cup, which is still relatively affordable for a high quality product. Many consumers are willing to pay a premium to have coffee from a coffee shop or choose to brew the cheapest available options at home– there exists a gap in how coffee is priced all around.
Ultimately, the price of coffee is going up for all types of coffee whether instant, specialty, brewed at home, or served at a cafe– even huge companies are beginning to deal with the shifts in supply chain and pricing. However, until there is a shift in perception around coffee pricing as an everyday item, true change remains to be seen and big companies will continue to prosper while limiting the livelihoods of producers.
While this may spell out challenges for the coffee industry, these changes in price are only indicative of the inevitable. Good coffee should not be cheap and people should be willing to spend a little more on something that not only takes so much to produce, but that is also consumed so widely as an essential part of everyday life.
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