Coffee prices are at an all-time high - but why?

As a coffee roasting company, we share your deep love for coffee. We know that price increases can be challenging, but there are a number of reasons for the price of coffee increasing to an all-time high. 

But before we dive into these factors, let’s take a closer look at whatC Prices are.

So what is the  "C Price"  for coffee? 

In simple terms, the "C price" is the benchmark price for green (un-roasted) Arabica coffee beans 

The C Price is a green coffee futures contract on the Intercontinental Exchange in New York; a financial tool by a private company that is similar to the stock exchange. 

Coffee traded on the C price must meet a minimum standard, at this point, coffee farmers add a differential or premium to this price based on the cup quality of the final product. This differential is why the cost of quality coffee has always differed and why you would always taste or prefer a coffee from a specialty coffee roaster.

The C price has just reached the highest level ever recorded and has more than doubled in the last 12 months. Paying more for products is never something anyone enjoys but please understand paying more for coffee will make a major difference at a farm level. Paying the farmer more means they will invest more money in planting coffee trees as opposed to other crops, focus on improving quality and most of all, help them to enjoy a higher standard of living.

The flow on effect however is that cafes in Australia will have to increase their prices and this comes at a difficult time after Covid and the ensuing cost of the living crunch. Keep in mind cafes will be passing on small increases that are far beyond anything they can control.

Now, let’s dive into the reasons behind these price increases.

So what’s driving up the prices? 

Severe Weather Conditions

Adverse weather conditions in coffee growing countries such as Vietnam, Brazil and Colombia - such as droughts, extreme heat and dry landscapes - have created significant shortages for both Arabica and Robusta beans. Despite these supply obstacles, global demand for coffee continues to grow. 

Global Supply Chain and Shipping Disruptions

Ongoing geographical and political conflicts, such as tensions in the Middle East and the Ukrainian war, combined with new deforestation laws and logistical challenges, are driving up the cost of coffee production and export.

Currency Exchange and Inflation

As the coffee market operates in USD, fluctuations in the exchange rate have a direct impact on Australian businesses. A weak AUD, combined with inflation, has significantly raised the costs for local roasters and cafes.

Increasing demand 

With supply uncertainties and the potential for new regulations affecting the coffee market, many roasters worldwide are amassing larger quantities of green beans. This increase in demand has driven prices higher, as producers find it increasingly difficult to keep up with this demand. 

So what does this mean for cafes and our customers? 

Here at Axil Coffee, our aim has always been to operate sustainably, whilst continuing to uphold our high standards in quality and service when it comes to a delicious cup of coffee. 

You’ll notice that the price of your coffee will have increased over the last year. 

By paying a little more for your coffee, you’ll play a key role in supporting the farmers and the specialty coffee industry at large. What does this mean? It means the farmers will be able to dedicate more of their farmland to producing a higher quality coffee and future-proofing sustainable coffee production. This will help to ensure that you’ll be receiving the same premium quality and consistency you have grown to know and love. 

The topic of coffee price increases is deeply complex and layered, but we hope this post has provided you with an understanding of the reasons behind this global issue. 

As always, we appreciate your ongoing support.