Why Coffee Prices Are on the Rise

Have you noticed that the cost of your morning cup has gone up? We explore the reasons behind this price increase and its impact on the market.

You’ve no doubt heard it in the news. Coffee prices are on the rise. Last year the price of coffee beans doubled. So what is going on? Why is coffee becoming so expensive? 

The reality is that all food prices have gone up over the last year. According to the UN’s Food and Agriculture Organization, food prices are at a 10-year high, and coffee is at the top of the list

We’ll get into the factors that have caused a rise in cost, but first, let’s understand coffee beans and where they are grown.

What coffee beans are impacted?

Odds are the bean that you are using for your morning flat white is an Arabica bean. It is known for its high-quality and lighter-tasting bean. Brazil is the top producer of Arabica beans.

If you go for more of a jolt in the morning, you are probably drinking a cup that features Robusta beans. They are more bitter-tasting but are highly caffeinated. The largest producer of Robusta beans is Vietnam.

It is what is happening within Brazil and Vietnam that have caused the rising prices for the whole industry.

Though we do not purchase beans from Vietnam and buy a small percentage from Brazil, the crunch felt in these countries has caused prices to rise across the globe, including at cafes and grocery stores. Large coffee roasters will start looking to other nations, and that will drive prices up for everyone.

What’s Causing Coffee Prices to Increase?

Your first instinct may be to think that a worker shortage has caused a decrease in production. But, unlike many other industries, production has largely been unaffected by COVID.

Here are the main factors contributing to this sharp increase in coffee prices.

1. Weather in Brazil

The primary factor in the rising cost of coffee is the weather in Brazil. Because they are the largest producer of the Arabica bean, the dry weather and frost that hit the country have caused massive ripple effects across the globe.

2021 yields were dramatically lower than a typical down year. At the outset of the growing season, a severe drought combined with a late-season frost caused damage and a lower yield. Experts are watching for a La Niña weather pattern this year to see how long drought conditions in Brazil will continue. Rain will mean a recovery.

2. Shipping Crunch

Vietnam is another major player in global coffee supply, accounting for about 17%. COVID restrictions in Vietnam have caused shipping delays throughout the country. These port delays have left coffee beans sitting on the docks. The same issue is occurring in Colombia too.

On top of this, the limited availability of shipping containers has reduced coffee exports from Vietnam.

3. Rising COVID-Related Costs

So much more goes into the cup than a bean. Expenses like the packaging materials, filters, labour costs, and the energy involved in shipping and roasting coffee have all seen increases.

On top of all of this, soaring fertilizer prices have impacted coffee farmers. Add all of these costs up, and it means that the price of your morning cup has likely gone up.