Coffee futures continued their upward trend, reaching over four-decade high levels due to increasing global supply constraints. Arabica beans, the preferred choice for specialty coffee, surged 3.1% on Wednesday, November 27th, marking a roughly 70% increase in 2024.
But what are the causes of this increase in coffee price? Look at this article to find out the factors that cause coffee prices to rise, how to overcome them, and predictions of future price trends!
By understanding this, you will understand how the dynamics of the global coffee market can cause changes in our daily lives.
Table of Contents
What Are the Main Leading Causes of the Increase in Coffee Price?
Coffee prices have increased due to several contributing factors. Here are some of them that you need to be aware of:
1. Climate Change
The extreme climate in the top coffee-producing countries, such as Brazil and Colombia, contributes to the current high coffee prices.
In recent years, various weather conditions, such as drought, heavy rain, and cold temperatures, have reduced the harvest quality. Coffee plants themselves, especially Arabica, are susceptible to changing weather conditions.
For example, Brazil was hit by extreme winter in 2021. This event resulted in decreased production levels. As a result, the amount of coffee sold became less stable, so the price rose.
Also read: Best Climate For Growing Coffee, There are Interesting Facts
2. Increase in Production Costs
Apart from natural factors, there are also production factors that play an essential role. The price of fertilizer, energy, and labor for coffee farmers has increased since the COVID-19 era or other global issues.
They have to pay more for raw materials and coffee-growing equipment. To compensate for this shortfall, the coffee supplied is sold at a higher price!
3. Growing Global Demand
As the culture of daily coffee consumption evolves, it becomes increasingly trendy. This is especially true for the increasingly popular specialty coffee types. As a result, customers are engaging in competition to acquire the best coffee beans in the world.
On the other hand, specialty coffee production tends to be challenging, with limited yields. This combination of factors contributes to the rapid increase in coffee prices.
Also read: Why Indonesian Arabica Coffee is a Must-Try for Coffee Lovers
How to Deal with Rising Coffee Prices
Rising coffee prices have recently become a challenge for various parties, especially for customers and farmers.
For this reason, they must implement practical solutions to minimize the negative impact of rising prices. Let’s consider the following strategies to address this issue wisely!
1. Strategies for Farmers
For farmers, they have to do some meaningful things, such as crop diversification, improving the quality of their products, and collaborating with cooperatives.
- Crop Diversification: First, the unstable economic conditions can be addressed by increasing the variety of crops you grow. This way, you don’t have to rely on coffee commodities alone as your primary source of income. In addition, increasing the variety of crops will also fertilize the surrounding soil.
- Improving Production Quality: By providing a variety of quality coffee beans, farmers can market their products at competitive prices. To achieve this, they need to apply better knowledge and techniques in coffee cultivation.
- Use of Agricultural Technology: In addition to the knowledge and techniques, they must equip themselves with advanced irrigation techniques, organic fertilizers, and reliable pest control tools. This will also help them to adapt to the changing weather.
- Joining a Cooperative: Why should farmers coordinate with cooperatives? These organizations excel at negotiating higher prices for coffee products. Additionally, they often assist farmers in boosting their productivity.
2. Strategy for Entrepreneurs
If you are an entrepreneur, then you need to participate in addressing the high coffee prices. Here are some steps that can be implemented:
- Diversify Supply Sources: Avoid relying on just one type of coffee. Instead, choose a variety of coffee beans to reduce losses due to crop failure.
- Invest in a Coffee Farm: It is better to have your coffee farm or work with local farmers to control the quality and quantity of your coffee supply. Not only that, you can also get more affordable and stable coffee prices.
- Product Price Adjustment: Manage coffee price to keep them affordable for consumers. Be transparent about the causes of coffee price increases so your customers can trust you fully.
- Innovative Product Development: Finally, new coffee products, including exclusive coffee bean blends, will be created to expand market opportunities. With various products, customers will remain loyal to the business even if the price increases.
3. Solutions for Consumers
However, if you are an actual coffee consumer, here are some things you can do:
- Switch to Other Coffee Variants: When Arabica coffee rises, replace this variety with robusta or a more economical blend. Also, consider local options that are more economical and appealing.
- Purchase in Bulk: Buy coffee in bulk. You can also subscribe monthly to your favorite coffee service for even more savings!
- Support Local Farmers: Support the efforts of local farmers by buying their coffee beans directly. By doing this, you are contributing to building the local economy.
- Choosing Local Coffee: With prices that are usually more affordable, the quality of local coffee is also reliable, similar to imported products. This is undoubtedly the wisest choice for consumers!
Also read: 8 Types of Coffee Beans in Indonesia, Unique & You Must Try!
Future Predictions for Coffee Prices
Will this situation last forever? Probably. Here are some of our predictions for coffee prices to increase in the coming years:
1. Continued Price Rise
Coffee prices will always increase, especially as climate change becomes more severe. From warming global temperatures to less regular weather patterns to the natural climate change risk. Not only that, the cost of production is also likely to increase, so the price of coffee will continue to rise.
Although coffee production may be challenging, the products are trusted for their guaranteed high quality. People are willing to pay more for delicious, ethically produced, and environmentally friendly coffee.
2. Price Volatility
The coffee market will face a considerable price increase, especially climate issues in some of the most extensive coffee-producing regions.
In addition, there are also political affairs and changes in trade policies in these countries. This makes the dynamics of the coffee market even more complex.
3. Demand for Specialty Coffee
Although challenging, the demand for specialty coffee is also increasing, marked by third wave coffee. This makes consumers appreciate every level of coffee processing, from picking to serving.
This trend will grow, especially in developed and emerging markets, and the younger generation will dominate the demand itself.
Some producers, such as those in Indonesia, have the opportunity to stand out in the coffee market. Coffees such as Gayo coffee, Toraja coffee, and Bali Kintamani coffee offer unique flavors that set them apart.
However, to cater to the specialty coffee market, farmers must adopt sustainable planting practices, improve post-harvest technology, and strengthen direct relationships with international buyers.
Find Solutions Together for a Sustainable Coffee Future!
With coffee price rising, looking at this issue from all sides – farmers, businesses, and even consumers is essential. Consider the factors influencing this and implement all the best solutions according to your role in this global coffee market.
If you want to support local coffee farmers, especially in Indonesia, get these high-quality coffee bean products at FnB Coffee! From Arabica to Robusta coffee, you can choose one of our coffee products that tastes best on your tongue.
Still, trying to decide which coffee to choose? Contact our staff or check out some of our best-seller coffee selections at the following link. Savor every sip and support FnB Coffee’s sustainability as a leader in Indonesia’s specialty coffee industry!
