THE VALUE OF COFFEE
Let's set it straight- coffees price are based on the C-Market. No it’s not Coffee, not Commodity, but Central Market. Yes that C on the C-market stands for Centrals. The Central Market is initially established in Central America in the late 1960’s differentiating the coffee prices vs other coffees but mostly from Brazilian coffees. The C-Market is a global exchange where the world’s arabica coffees are are being traded similar to that of a stock exchange, standardizing the trading regulations.
Coffee is a commodity that accounts for one of the most globally traded agricultural product. In Coffee, the current C Market is regulated by the Inter-Continental Exchange (ICE). Where the Coffee Futures (C-Futures) is now the worlds benchmark of Arabica Coffee trading. The contract prices physical delivery of exchange-grade green beans, from one of 20 countries of origin in a licensed warehouse to one of several ports in the U. S. and Europe, with stated premiums/discounts for ports and growths.
Look up here for more information about the ICE, and the current and futures C-Price:
https://www.ice.com/products/15/Coffee-C-Futures
The coffees prices are also driven by the availability of supply vs the demands, the rarity of the product, and also the quality being assessed and graded through specialty coffee standards. Aside from this, an external factors such as weather and climatic effects for main producing countries affects the supply forecasts, driving the volatility of prices even higher. Logistics issues are also taking part where there’s a lot of shortage of available containers, port congestions, and shipping vessels being affected of piracy in some trading routes.
The unprecedented coffee prices are driving into a different path and reshaping the entire industry. Regulations are shifting also and required certifications were being pushed to be applied, creating more pressure in producing countries and the producers.
Currently, coffee prices (at the time of this writing) were already 2-3 times higher compared to the last 2-years. Traders, roasters, and cafes are now navigating into this very challenging events in coffee industry.
So, do we really think that coffee is really that expensive?
On the other hand- we thought that coffees especially specialty grade should have priced higher even from a long time ago. Considering the production costs, and challenging ways on how arabica coffees are being cultivated, Producers still receives less profit than they should be receiving. While most of the profits are actually going to the Traders, Roasters, and Retailers, Producers should have more voice to demand what is right and create a living and more sustainable cultivation of coffees- before we ran out of fine coffees to enjoy when producers stops cultivating and taking care to achieve higher quality that we all enjoy in a coffee that is labelled “specialty”.