For those of you coffee lovers with your heads in the sand, please take it from me that the cost of raw coffees is going up like the proverbial rocket. This increase has been happening, in fits and starts, this past few years but it has really taken off these past 12-months or so. Why is this happening? There are several reasons – some that might surprise you.
1. The eastern economies (China comes to mind straight away) with their billions of increasingly flush people are turning into consumers of all things exotic. BMW’s, wine and of course coffee. From a very low base coffee has started to make inroads. And these inroads need not be of a very great percentage to translate into thousands of extra tonnes of raw.

2. Civil unrest and outright war in some producing countries has had its effect on production. Given that a coffee tree will take from 3 – 5 years from seed before it produces its 1st fruit it doesn’t take much to throw the supply/demand balance out, and for more that the current year’s crop too. Remember the genocide in Rwanda? What was it, 20 years ago? From a producer of not-too-bad quality Arabica it went nearly overnight to a zero exporter. It’s only in recent years that their coffee industry has begun to recover.

3. Crops get “tired” and coffee farms need to be ploughed up and reseeded on a periodic basis. This has happened more recently in Colombia which has gone from a bulk producer of quality, fine Arabicas to a country now struggling to reclaim its place on the world coffee stage. They will in time.

4. None of the above however explains the quite vicious increases of late. It is no coincidence that the late 1980’s was the last period of high prices. Then as now the world economies suffered a recession and to my mind it is not inconceivable that the equity (stock markets) markets, being currently stagnant have fallen out of favour with the speculators. Those fine people of the managed funds need to make profits somewhere and where better than the commodities markets? Cocoa, orange juice, sugar, coffee, etc, have all taken hits but be comforted, prices WILL fall when the economic situation eases and the stock markets become buoyant again. Problem is, how long will that take?

In the meantime I know there is a great temptation for some roasters to downgrade their raw coffees in order to resist the need to increase their own prices. This would be a very great mistake as the coffee industry in Britain and Ireland has worked hard to build the gourmet business that is speciality coffee. The consumer will, I’m sure, pay that little bit extra for quality. Poor quality might make them stop coming in to the coffee shop entirely.