In the past I have talked about the C price in the coffee industry. I’m sure you have even seen other roasters and organizations talk about it in the past. I dont think it is a debated topic in the speciality coffee industry how flawed the C price is. As a little refresher for everyone: The C price is a commodity market price for coffee. It is a price set by the market (read: big money) based on the entire world’s supply and demand of coffee. It is influenced by weather forecasts, recessions, market conditions, etc. So what is the flaw here?
Well, because it is a global coffee price, it does not take in to consideration that coffee grown in Vietnam might be cheaper and easier to produce than coffee in Guatemala. It is one lump market price that includes both commodity coffee and speciality coffee. When this became a topic of conversation and red flag in the specialty coffee industry, the C price was $.90-1.05/lb, sometimes lower. Speciality coffee in a lot of producing countries was costing $1.35+/lb to produce. Producers were on the losing end of the deal constantly, and with the cycle of debt that comes with financing your farm, some producers were stuck in a viscous cycle of hoping with next year’s harvest they could pay some back or move out of farming all together.
Fast Forward to today. Current C price is $1.86/lb.
Sounds great right? Well, unfortunately nothing is ever that straightforward. With all of the chaos of this past year, while producers are getting a higher price, they are selling and harvesting less all around. Also, cost of production has risen in most countries due to inflation, lack of available workers, changes in the value of different currencies. So with all that ground gained in price, no ground is gained in profit.
Now the other issue. Speciality coffee is expensive to produce. With the C price increase, why should a coffee farmer spend significantly more on producing a coffee, that could in theory get the same price on the lowest grade market? With general instability in the world, why should a producer wait and hope that everything will be normal in a few months?
What we have now is any lower scoring and middle scoring coffees are just to be sold at the market price as quickly as possible. Thinking of the future is the rich man’s game. In poverty, money now is more valuable than the potential of money later. Farmers in growing countries now have the option to strip the trees, regardless of ripeness and get a great price for it with minimal effort. I honestly can say I completely understand why you would do that. However, now we have the issue of their being no coffee for the second part of the harvest. We have a massive influx of supply that will be used up now and then we will be stuck with a shortage later.
Soon, we will most likely see an overall quality drop in available coffees. As the extra cost isn’t worth the little extra price they might get for it.
So that is current situation with the C price and what coffee is going through. Speciality coffee has been talking about the C price for years now, how then are we still in this current situation? Well, in short, because we have allowed the C price to stay relevant. Importers, purchasers, roasters, all still utilize it. Unfortunately there is still a lot of money to be made using it as a tool. The C price is an out of date tool that answered to no one except the “invisible hand” of the market, no need for transparency or the value of the people behind the coffee in these so called “exotic” lands.
With the current C market price increase, yet everyone still struggling, we see glimpses of how the system is a plague unto itself. What does the new coffee economy look like? What does it look like for equity and transparency in the process down to the cherry picker themself.