Monday, October 4, 2010

The commodity price of green coffee has risen dramatically in the last year; and in the last month has just gone wild.

Our costs have increased more than $.50 per lb. We have been watching the price hoping that it would calm down and eventually decrease. This has not been the case. Café Altura must raise prices at this point and we will evaluate our situation again in sixty days.

The cause of this sudden increase in the cost of coffee is two-fold. Colombia has reported very poor crop yields the last two years. They are a major coffee supplier for good quality specialty coffees. When they ran short, the “big boys” went looking to other sources (Peru, Mexico) for replacements. By the normal laws of supply and demand, the market rose according to this fundamental issue.

Adding to this are the hedge fund traders. They are always looking for places to invest their client’s funds, and their choices have been limited as late due to our poor economic climate. They saw opportunities in the Coffee ‘C’ market and started driving the price up dramatically.

We do expect the prices to even out in the future. When is the big question? Colombia expects a good size crop this year, and consumption may decrease due to increase costs.

It is important to note that this increase is for all coffees, not just organic or Fair Trade. It is also important to note that the increase in revenue will make it to the places and people responsible for the coffee we all enjoy – the farmers.

They have been struggling for years to maintain their coffee fields, and this increase will provide them with extra revenues which they will use to improve the growing conditions on the farm and in the end, improved the qualities of their coffees.

Chris Shepherd
Founder and CEO
Café Altura Coffees