What is the coffee industry facing in 2022 at origin and at home?
You might notice that the cost of your coffee has gone up since the last time you shopped at the supermarket, and we want to take this opportunity to explain what’s going on in the world of coffee.
Coffee is a traded agricultural commodity, meaning producers sell green coffee at prices set by the New York Stock Exchange. Like any commodity on the stock market, this is subject to change and fluctuation and over the last few years, the international coffee commodity prices have fluctuated more rapidly and unpredictably than we’ve seen for a long time; from 2019 when prices dropped dramatically (the lowest we’d seen in 14 years), to 2021-2022 where the arabica coffee market has seen a price increase of almost 80% with prices hitting 10-year highs. Changing weather patterns play a significant role, along with rising global shipping and logistical costs all of which are beyond our control.
As a result, we’ve had some tough decisions to make over the last year, but we’ve always made sure that we stick to the core values that make our business what it is today.
Our goal is to be open and honest; we want to show you exactly where your coffee comes from and to be transparent about the issues we are facing into alongside our suppliers.
Taylors Sourcing Approach
An important part of our sourcing approach at Taylors is paying a price that always covers the cost of production for our suppliers, despite market fluctuations. This is managed through long-term, multiyear sourcing agreements and contributions to projects that address important needs in the local communities
Origin, Climate & Labour
The topic of climate change is well discussed, but the implications of climate change are more than just rising temperatures. We’re seeing erratic weather patterns, unusual rainfall and unpredictable frosts.
In recent years, frosts have become harder to anticipate due to changing weather patterns, and in 2021 Brazil experienced a severe, incalculable frost which destroyed many crops. Because Brazil is the biggest coffee producing country in the world, any change to their yield has an impact on the overall coffee market. Last year, Brazil was also hit by severe drought; this has pushed the global commodity price even higher, making quality coffee harder to get hold of.
Coffee, like any plant, is also susceptible to a variety of pests and diseases. One disease that is becoming more and more prevalent is the threat of the ‘leaf rust’ disease. Without proper and timely treatment, the leaves of the coffee plant start to wither away and eventually fall off. This disease has been known to wipe out entire coffee crops and is on the rise again due to changing weather patterns in coffee growing countries.
On top of this, the cost of chemicals and fertilisers needed to keep coffee plants healthy and productive are soaring to unprecedented levels in most countries, affecting smallholder farmers the most.
Working with World Coffee Research
We recognise we can’t work alone to make the changes that are needed for our planet and suppliers. For that reason, we work closely with organisations such as World Coffee Research, a non-profit agricultural research organisation, to find ways to improve coffee crops for the future by running breeding programmes to develop new strains of coffee that will survive the harsher temperatures and unpredictable weather conditions.
Coffee Market / Buying & Shipping
Coffee is dependent on international shipping lines to find its way to markets. During the pandemic, shipping costs have sky-rocketed as global supply chains and trade channels have been disrupted.
Shipping has become a sellers’ market and as a result the cost of booking a container to transport goods has increased dramatically. Since last year, we’ve seen shipping costs increase by over 66% globally.
Logistics & At Home
The final piece of the jigsaw is the rising costs at home. Inflation is expected to hit a 30 year high in 2022 and the impact is being seen across all industries and aspects of life. From a shopping basket point of view, you will have seen an increase at the till and there are multiple reasons for this.
It is not simply the cost of raw materials and foodstuffs that are increasing, but the cost of packaging too. Energy price rises are affecting manufacturers and retailers as are the costs of transport. On top of this, the job market is becoming increasingly competitive and a lot of industries are experiencing labour shortages, meaning it’s harder to find key people, such as the lorry drivers who get your coffee to the supermarket shelves.
We’ve balanced up all the factors discussed, with the awareness that shopping baskets costs are rising across the board. But it’s important that we don’t compromise on the quality of our coffee and the relationships we’ve built with suppliers to support them and their communities – the things that are integral to a proper cup of coffee.
If you have any more questions, feel free to email us at firstname.lastname@example.org