With a spectacular rise in prices, coffee becomes a luxury good

Is coffee becoming a haven? The prices of this commodity are breaking records, with a pound of arabica surpassing $3.40 on November 28. This trend is causing a lot of turmoil in the market and has led producers to reevaluate their strategies.

Coffee is reaching prices that have not been seen in almost 50 years. The prices of both the arabica bean—which represents two-thirds of world production—and robusta continue to rise steadily. In 2024, the price increased by 70%.

There are several reasons for this phenomenon

According to Tomás Edelmann, a coffee grower from Chiapas in Mexico and vice president of the International Cooperative of Coffee Producers, this can be explained by several reasons, starting with “climate change.” The main producing countries, Brazil, Vietnam, and Indonesia, experienced very adverse climate changes.

In the case of Brazil, there was a very prolonged drought in a vast area, and as they were going intensively, they even had the death of plantations or fires of entire plantations, so their production for the next harvest was reduced by more than 20 or 30%. We also had a vital drought because we grew our coffee under shade, which helped us not suffer so much from the drought.”

On the other hand, he emphasizes, “Central America’s problem is the great lack of labor. Practically all of them migrated to the north, to the United States. As a result, many farms have seen their productivity reduced.”

Towards a revitalization of the sector?

According to Edelmann, prices like the current ones could revitalize the sector and the labor force and also limit supply: “I believe that, if this price continues and is above three dollars, it is very likely that many of the people who are outside will return.

What is going on? I see here with my neighboring small producers that they are doing everything they can not to release the coffee; they are keeping it at home and waiting for the price to go up. In other words, this has already made the news, and it has already reached all sides. And the big buyers like Nestlé, like Neumann Kaffee Gruppe, like Trading, another of the big ones here in the area, well, you see their warehouses, and you don’t see much movement,” he emphasizes.

Nestlé, for example, announced this month that in the face of reduced profits, it will inflate its sales prices and reduce the volume of its doses.