According to IBISWorld, the “world price of coffee” has spiked 21.6% to AUD $3.65 (US $2.66) per kilogram of raw coffee beans. The rise in cost is due to climate change-related weather events as well as recent global supply chain issues, including droughts and frosts. The demand for coffee is also a factor for maintaining these high prices.
As a result of the recent frosts in Brazil, the production of growers has been cut by 25%. Since Brazil is the world’s largest coffee producer and produces about half of the world’s supply of coffee, this cut is drastic. Importers are paying more for speciality coffee beans from Brazil — importer Marcelo Brussi pays 45% more than he was before.
As coffee roasters are second in the supply chain, they are also affected by the increased price. Speciality coffee roaster Brendon Bonacci admitted that they are having to pay an additional 50 cents extra for a kilogram of imported coffee beans, which now costs them AUD $1.50.
Coffee roasters like Bonacci supply roasted beans to other cafes, and since they can’t absorb the extra cost on their own, they have to share some of the added costs with these cafes. Bonacci said:
To have to pass on the cost to a suffering industry that has already been slaughtered by lockdown after lockdown is like a dagger in the heart.
The droughts in North Africa, as well as the increased freight costs, are also adding to the price rise of coffee. However, an expert in logistics and supply chain management at Swinburne University, Hadi Ghaderi, stated that the demand for coffee is also a reason for the price to remain quite high. Due to the pandemic that caused lockdowns and remote working, people have been more interested in coffee and high-end coffee machines.
A senior analyst at IBISWorld commented that they “have not seen that type of price peak since 2014”.