Price and Profitability

Falling Prices = Falling Quality 

These low prices fail to incentivize higher coffee quality, leading to a decline in the quality in your cup. On top of that, as prices continue to fall, we will see a consolidation of coffee production in the origins that are able to produce coffee most cheaply. Think a lot more coffee from Brazil, Vietnam and the like with shrinking production in some of the highest-scoring specialty coffee areas such as Ethiopia, Burundi and more. 

In another blow for specialty coffee quality, low prices mean that farmers will not have the funds to continue to invest in their farms and infrastructure, leading to declining coffee quality and an overall decay of conditions and plant health. 

No Easy Answers: The Search for a Solution 

Roberto Vélez, CEO of The Colombia Coffee Grower’s Federation (FNC), said, “We need the industry and consumers to realize that this is a situation that cannot be maintained if we want the coffee industry to survive.”  In order to preserve coffee, especially specialty coffee, for future years and generations, we need to begin to act now. 

So, what can we do? There are no easy answers, but exploring potential solutions is imperative to finding positive outcomes. 

One proposed solution is a price floor. The appeal of a price floor is that it means that farmers would always get at least get the cost of production back from the sale of their coffee and would hopefully, get considerably more. 

However, appealing this idea may be, it comes with its own problems. As we’ve witnessed with American corn and soy production, a promised price floor can often lead farmers to grow for quantity over quality and to switch other crops over to the crop with the price floor, leading to a glut on the market where no one can sell their coffee or some governing body must step in. For a more in-depth exploration of the price minimum, check out this Perfect Daily Grind article. 

Moving Forward 

Without a clear single solution, we need to begin exploring other alternatives on a more individual level. One such solution may be direct farmer-to-roaster contracts. With the help of importers like Sucafina, roasters can contract to purchase specialty coffee from individual producers for a number of years at a set price. 

While riddled with their own problems, direct trade contracts can still be a good place to start for building relationships between consuming and producing countries and weaning ourselves off of the C market pricing system.