6 reasons driving high coffee prices

Coffee takes about 3 – 5 years to grow. It then has to go through the stages of harvesting, selecting, processing, roasting and packaging. This process requires certain costs such as fertilizers, seeds, machinery, labor, insurance, energy,… as well as management, warranty and farm development costs. Their prices are all increasing due to inflation and economic and political events. Rising input costs lead to higher coffee prices.

Coffee is a product that requires a lot of labor and effort to produce and bring to market. Although, nowadays machines and technology are developing. But in reality, planting, fertilizing, weeding and harvesting coffee beans all require and depend mainly on manual labor. For example, coffee cherries ripen at different levels, requiring pickers to have certain experience and qualifications to be selective and ensure performance. Skilled workers often have quite high salaries, causing labor costs to increase.

Additionally, most coffee growing takes place in the tropics, including developing regions such as East Africa, Central America, South America, and Asia. Coffee farmers and cooperatives in these countries often do not receive government subsidies. They shoulder the majority of coffee costs, including labor to ensure sustainability standards, leading to higher costs.

Today, the demand for high-quality coffee is increasing, so manufacturers are investing in improvements in farms and specialty coffee production processes. They need to spend a large amount of financial and human resources as well as a long time to complete and meet the standards of the international market. Workers must also be trained on how to cultivate and harvest high-quality coffee and techniques to limit environmental impact. The quality of coffee is getting higher and higher, the flavor is more unique, the cost and effort are also increasing. This means that the price of these coffee lots cannot be small. For example, specialty coffee can cost up to $600/pound.

According to coffee expert Genevieve Kappler, climate change is an important factor in the coffee industry. Rising temperatures, changes in rainfall, and pests and diseases can all reduce yields. Climate change leads to an increase in natural disasters such as storms or floods that can completely wipe out crops and cause damage to coffee farmers. This reduces global coffee production and disrupts the supply chain, leading to a spike in coffee prices. Bad weather also affects the process of growing, harvesting and processing coffee. Manufacturers are forced to find costly solutions such as using mechanical dryers instead of relying on natural outdoor drying methods, which increases costs.

Coffee expert Genevieve Kappler said most of the increase in coffee prices is due to economics and growing demand for high-quality coffee. The trend of favoring specialty coffee is spreading around the world, creating a healthy competition for access to the best coffee. Furthermore, producing specialty coffee is quite difficult. Rare coffee yields are often very small, causing their prices to increase rapidly.

The coffee journey from farm to store is very long. After harvesting, coffee beans go through several processes, including washing, drying, quality selection, packaging and transportation. Green coffee must be cleared at checkpoints, customs, on  cargo ships or planes to reach the buyer’s warehouse. The logistics, labor, energy (gasoline, oil) and coffee transportation costs of this journey may be high or very high, and may change due to market influences. Furthermore, when crossing multiple borders, suppliers must comply with the rules and tariffs that govern international trade. These amounts are mandatory and not low, so the price of imported coffee is often very high and tends to fluctuate.

Each change in environmental, labor, and supply chain factors can affect productivity and create unpredictable fluctuations in coffee prices. Changes such as increased demand for high-quality coffee can push the industry to innovate quality improvement methods, contributing to industry development. However, negative changes in climate change, or increased costs due to inflation, if not controlled, will affect the sustainability of the supply chain. Therefore, we need to understand the basic causes of coffee price increases to take appropriate measures, adjust and promote more sustainable coffee business activities.

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