Producer countries have seen little change in their share of coffee prices over the last 20 years, despite rising consumer costs. While specialty coffee prices have surged, this increase has not significantly improved earnings for farmers. Instead, the majority of the profits are captured by traders, roasters, and retailers. A recent study reveals that while large roasters may operate on thinner margins, they often provide better prices for consumers compared to smaller specialty firms, which charge more to cover their costs. This challenges the perception that higher prices in specialty coffee equate to fairness for producers.
• Producer countries' share of retail coffee prices has remained stable at around 23.5%.
• Specialty coffee often does not translate to higher earnings for farmers; their share can be as low as 10%.
• Large roasters can leverage economies of scale to offer lower prices while maintaining thin margins.
• Smaller specialty firms tend to mark up prices significantly without proportionately increasing payments to farmers.
Understanding the dynamics of the coffee market is crucial for consumers and producers alike. The findings suggest that the narrative around specialty coffee may need reevaluation, as larger firms might be more equitable than previously thought. As the coffee industry faces challenges from climate change and market volatility, ensuring fair value distribution will be vital. This study encourages consumers to reflect on what they are truly paying for and emphasizes the need for transparency in how profits are shared along the supply chain.
Enjoying the read? Subscribe for free to one of the fastest-growing newsletters and get weekly coffee news (TL;DR updates) delivered right to your inbox.