Coffee prices explained, sort of
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Confused by skyrocketing coffee prices? Climate change, commodity speculation, crop failures, among other factors are all impacting the conventional and fair trade coffee market. Across the board, producers are faced with increased fuel costs, inflation and an overall rise in their basic food basket. For a great piece pulling together , check out Just Coffee’s Julia Baumgartner post,? “Coffee Prices on the Rise: What this Means for Producers.” Together, these factors are creating a perfect storm of high costs and prices.

Fairtrade International has responded to the crisis with new coffee premiums, minimum prices and standards. Committed fair trade roasters and importers continue to support producers for the long run.? Taking the long view, the recent spike in coffee prices may merely represent a “natural correction” in the market. Coffee prices may have been artificially low and the market is simply catching-up.

While this issue is far too complex to distill into a handful of simple variables, it might be useful to look at two clear culprits in the coffee market roller coaster.

Climate change

The climate is changing and having disastrous impacts on farmers. While the world debates Cap and Trade and Kyoto, farmers around the globe have consistently raised voiced their concern for over? ten years. ? Coffee producers in particular have been hammered by increasing erratic? weather conditions. Recent reports from Mexico and Brazil to Uganda and Colombia have laid bare the crisis situation in the coffee lands.

Speculation

Speculation in the commodities market, including coffee, has contributed increased instability in the market. Even Starbucks is apparently feeling the crunch. Big investment banks are essentially betting on the price of food, from corn to coffee, leading to increases in food prices and threatening food security across the globe. The Maryknoll Office for Global Concerns, among others, has done a solid job on analyzing the cause and effect of commodity speculation.

Go further

For a good overview of the situation, take a listen Equal Exchange’s Todd Caspersen’s video below.

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