Per 1st March we increased the prices of our coffees from Ecuador, as you may have noticed. We received the new harvest in late January this year and as always we had to first run some test roasts before we could offer the coffees to you in March. And I can tell you: we are in love with the tastes of this new harvest. However, as we were testing and tasting, we were also doing the math to be able to keep the prices for our dear costumers as low as possible while still having paid the farmers the prices they asked for since for this new harvest we paid the farmers in Ecuador considerably more for their coffees compared to previous years. But why did the farmers increased their prices?
As you may know, Brazil is the world’s largest coffee producer. In 2020 Brazil first suffered the worst drought in nearly a century, which significantly reduced the coffee yield. Following this, certain regions of Brazil were hit by a cold snap with sub-zero temperatures and this was really bad as frost completely kills coffee plants. As a result the yield was reduced again. With less coffee produced by Brazil there was more demand than offer in the coffee world which lead to the first increase in prices in 2021.
Then Colombia, the third largest coffee producer also had problems. Starting at the end of 2019 for a period of 4 months there were protests and a national strike that prevented part of the harvest to be collected, transported and sold. Even though Colombia has 2 coffee harvests per year, the strike from November to February coincided with the main harvest for most coffee regions which is from September to December. And similar to Brazil, it leads to a shortage of coffee on offer which leads to an increase of prices. One year later, Colombia experienced the effect of the climate phenomena called La Niña, which is not favourable for coffee growing as it comes with rain and cold weather. The consequence was that the latest harvest from Colombia was 11% lower than the harvest of the year before.
Additionally, Brazil, Colombia, Ecuador and other coffee producing countries suffered with the implications from the Covid-19 pandemic in terms of sick workers and limitations to hire workforce due to travel restrictions. Additionally, there were increased cargo costs and a shipping bottleneck due to reduced shipping container availability, port strikes and restrictions. This all translated into another increase of prices for green coffee.
And finally, since we pay both our farmers and all transport costs in dollars we had to take into account the fact that by late 2021 the dollar was stronger against the euro than the year before.
So all together it is a combination of several unfavourable price increasing effects coming together at the same time that makes the price of coffee increase quite suddenly. One could say it’s the perfect coffee storm, and there is not much we can do about it apart from appreciating our daily cup of coffee even more.