Brief - The Hustle

A tale of 2 coffees: Prices are at all-time highs, yet growers continue to struggle 

Written by Wes Schlagenhauf | Jun 30, 2020 9:33:19 AM

The coffee biz is worth over $100B globally. Baristas are considered artists, Starbucks is so influential it breeds quasi-presidential candidates, and consumer coffee prices are at all-time highs ($5 Joe, babayyy). It practically fuels the universe.

But, for the talent behind this whole java frenzy — the bean growers — realities are less flashy, more desperate, and a whole latté more expensive to make than what they sell for.

A different side of the coffee coin

For decades, coffee growers, arguably serving across the broadest range of consumers in all of the food and beverage industry, have suffered from low prices — mainly due to overproduction from the world’s top producers like Brazil and Vietnam.

In the ’60s, growers from around the world tried to police their production addiction by forming the International Coffee Agreement (inspired by OPEC 2 years earlier), in hopes that it would better control prices.

And, for nearly 30 years, it helped…

Until the late ’80s, when the US withdrew from the coffee club. 

And ever since, the price balance of consumption and production has been almost nonexistent. Earlier this year, some farmers in Ethiopia were earning less than a cent per cup as global consumption continued to grow.

Now, the coffee police are back

In May, the price of beans dropped to 87 cents a pound — 33 cents less than the average $1.20 it cost to produce. It has since risen to $1.06, but, to growers, it’s still a matter of caffeine or death for the industry.

Growers met in Brazil last week to try to brew up a plan to climb their way out of their financial black hole, but historians and officials believe the roast is still lookin’ a little dark.