First up, we’ve seen a lot in the news about coffee prices breaking record highs, in your words what is driving that?

The recent surge in coffee prices to over $4 USD per pound can be attributed to several key factors.

Firstly, climate events have significantly impacted major coffee-producing countries. For instance, Brazil, the world's largest coffee producer, experienced a severe drought followed by a frost in 2024, which drastically reduced coffee yields. Similarly, Vietnam faced flooding in October after a period of drought; so although they grow robusta, that is further constraining supply on the overall coffee market

Additionally, the cost of growing and transporting coffee has increased due to rising fuel prices and supply chain disruptions caused by global unrest.

Market speculation has also played a role in driving prices up. Traders have reacted to potential supply constraints which has contributed to price volatility. This speculative trading causes prices to spike even further.

What does the industry agree is a fair C-market price for everyone in the value chain to be sustainable?

The industry used to think that $2.00 was a fair C-market price. The fair-trade movement initially set a fixed base price for coffee, in an early attempt to protect coffee producers from the fluctuating C-market, which later evolved into the direct trade movement.

Currently, the specialty coffee industry is making an argument for a $4.00 C-market price, which has the potential to benefit everyone in the supply chain. This price helps ensure that producers can cover their costs, invest in their products and make a sustainable living.

Any stable price that allows people to make money is considered a good price. While $3.00 is better than $0.70, the industry is becoming increasingly comfortable with $4.00 due to inflation and everyone can agree that stability at any price is best for all players in the industry, as it allows everyone in the supply chain to plan and make informed decisions.

The challenge is finding the right balance between the producing side and the consuming side. For decades, that balance has been off. The C-market price determines the value of a traded product based on supply and demand of perceived market value. It doesn't care about fairness or anything else; it's just an economic lever to find the right price for the right product at the right time.

Is this increase in C-market price actually a celebration for specialty coffee?

Absolutely! Higher C-market prices can be seen as both a celebration and a challenge for specialty coffee.

On the positive side, higher prices are beneficial because they provide producers with more financial resources. This means they can invest in innovations and technologies that improve the quality of their coffee. For example, they might use the additional income to plant more shade cover, invest in better processing equipment, or experiment with new coffee varieties. These investments can lead to higher quality as producers have the means to implement practices that enhance the flavour and consistency of their coffee.

Higher prices also make coffee production a more viable business for current and future generations. The current volatility and cash flow challenges make it difficult for small producers to sustain their businesses and earn a living wage. If higher prices stabilize, coffee production would be more financially attractive to the next generation and keep producers in the game.

However, there's also a downside. Higher C-market prices can make it difficult to entice producers to grow specialty coffee. Since they can make more money by selling lower-quality, commodity-grade coffee at higher prices, some producers might choose to focus on quantity rather than quality. This shift could lead to a decrease in the availability of specialty coffee; therefore, driving quality premiums even higher as producers weigh the costs and benefits of selling commodity-grade coffee or producing a specialty product.

I think these changes will lead to a larger spread between the quality of commercial (C-market) and specialty coffee. As some producers exit specialty to sell lower-quality coffee at higher prices, others will use the extra income to invest in quality improvements. This divergence could result in lower quality commercial-grade coffee as producers focus on quantity, while specialty coffee improves as quality-minded producers have the resources to enhance their practices to produce even better coffee for specialty roasters.

With that being said, how can the industry support producers and entice them to continue growing specialty coffee?

The key will be to continue to support and incentivise producers to continue growing high-quality specialty coffee by continuing to buy specialty at a premium. These quality premiums have increase exponentially on top of the rising C-market prices to reflect the true value of specialty coffee and to ensure that producers are fairly compensated for their efforts.

Grabbing your crystal ball, do you believe coffee prices above $3 are the new normal and why?

I hope that coffee prices stay above $3. This would indicate that prices have stabilised. There is a sense of dread in coffee-producing communities that the current high prices are temporary and that prices may go back down if there is a big crop in Brazil or Vietnam. Stability at any price is better for the industry but at $3, we would have a more sustainable future for specialty coffee throughout the supply chain.

A QUICK LI'L GUIDE TO SPECIALTY COFFEE