This article in early 2018 highlights this point by quoting a coffee trader who predicted, “(The) market will focus on a large deficit in 2019-20 due to off-years and poor husbandry worldwide driven by low prices…”Ĭould we use the multi-year mean of the C-price as an alternative benchmark?Īnother way to smooth out the volatility of coffee prices, while respecting market forces, would be to use the multi-year mean of the C-Price to establish a more stable, alternative benchmark price.Īs an example, consider a five-year time-frame call it the C-5 price. In a previous post, I explained how C-Price volatility sends confusing price signals to farmers, where they react (or over-react) by producing too much or too little coffee in following years, exacerbating price swings, perpetuating the boom-and-bust cycle we’ve seen in the past many years. However, the market is not working very well, currently it is far too speculative and reactive. I believe that there are inherent risks in setting a fixed, minimum price, and that market forces can do a better job at establishing prices over the long-term, balancing supply and demand.

This idea is criticized because of the likelihood of triggering overproduction and crashing the coffee market altogether.

Goal: Stabilize Coffee Prices For A Fairer And More Sustainable Coffee SectorĪ recurring proposal by some actors in the coffee sector is to set a minimum price and this proposal has stirred debate again this year. This post is focused on fixing the international benchmark price for coffee. Based on discussions with coffee market experts, I’m convinced that there needs to be a combination of solutions at multiple levels, and in this blog we will discuss these different solutions. In this context, it is critical that we find viable solutions to stabilize coffee prices to alleviate poverty and ensure the sustainability of the coffee sector in multiple origins. Once farmers transition out of coffee, it’s extremely difficult and costly to return again. This result is bad for everyone across the supply chain, including roasters, retailers and consumers who enjoy the variety of coffee sourced from a diversity of origins. Other writers have recently warned that that extremely low prices this year will further concentrate coffee production to a few countries where the cost of production is relatively low, i.e. There is nothing hypothetical about this analysis: extremely low prices will drive millions of farmers and farmworkers into extreme poverty this year. In a follow-up post, I argued that the C-Price is extremely volatile, threatening the livelihoods and wellbeing of farmers and farmworkers, especially when prices fall below the cost of production. In a recent post, I made the point that the coffee market is unjust because farmers and farmworkers bare a disproportionate amount of risk and remain poor, while some coffee companies and traders have generated huge profits as the coffee industry has expanded rapidly over the past decades. There is an urgent need to fix the coffee market: to reduce price volatility and ensure that a fairer share of coffee revenue reaches farmers and farmworkers.

Alternative blueharvest