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How Is the Changing Coffee Market Impacting Equal Exchange's Coffee Prices? |
Over the last couple of months (prior to September, 2010) there's been a sudden change in the coffee market that has reduced supply in the market worldwide. This change in supply is due to a combination of factors, including:
- Unusual weather patterns in coffee growing regions. Our partners have told us that weather has been causing reduced yields from existing coffee plants. This included changing weather patterns where there is drought during normally wet times of year and too much rain during other times of year. The result has been reduced supply in addition to taking a human toll on coffee farming communities.
- Farmers are increasingly facing higher costs, including both agricultural inputs and the cost of labor. Their higher costs have resulted in steadily increasing green (unroasted) coffee prices. The cost of green beans has been increasing over the last year, and has affected the whole market; the impact is not limited to only a few coffee producing origin countries, nor is it limited to only certain niche markets.
- In high markets, local middlemen are flush with cash and thus able to offer farmers relatively high prices on the spot. Most farmer co-ops, on the other hand, ultimately pay members a better price but lack the capital to pay the entire price up front. Generally, co-ops must wait until selling the season's harvest to make final payments to farmers. Here, pre-harvest financing is critical, and Equal Exchange is proud to facilitate millions of dollars in such payments each year. But for farmers living on the margin, immediate cash sometimes trumps longer term interest. Coffee then "leaks" out of the system, reducing a co-op's supply and challenging their ability to deliver on commitments to buyers.
These factors, as well as others, have increased Equal Exchange's cost for purchasing high quality Fair Trade coffee. These increased costs are not solely being faced by Equal Exchange, but are affecting the entire coffee market. Some recent press articles about coffee can be found below:
As a result, our range of coffee products will experience a modest price increase on October 15, 2010 to help offset these rising green bean costs. We thank you for understanding.
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