From import surges to financial speculation, here are the causes of the rising cost of green coffee

The increase in imports post lockdown has led to maritime congestion. Added to these complications are highly irregular harvests caused by climate change. 

It is not easy to understand the state of health of the coffee sector at such a worrying start to the year. However, the rising cost of raw coffee has well-defined causes: the post-lockdown import surge compounded by complications from financial speculation and climate change. This price hike spills over into the supply chain of Italy’s 927 coffee roasters and cascades down to businesses and consumers, reaching almost €1.50 per cup.

Istat data speaks for themselves: compared to the previous year, there was a growth in imports in 2021: +5.5% for green coffee and +21.2% for unroasted decaffeinated coffee. A turnover of over EUR 982 million was recorded for green coffee imports, compared to EUR 930 million in 2020. In contrast, exports declined by 3.8% for green coffee and 14.7% for decaffeinated raw coffee in 2021: from over 41 million, exports dropped to 38 million euros.

“The lockdown period inevitably slowed down the supply of raw coffee: many roasters reduced their inventories during the lockdown, only to increase them with the post-lockdown recovery in 2021,” says Alessandro Bianchin, ceo of Bin Caffè and president of the Italian coffee roasters’ group Gruppo Italiano Torrefattori di Caffè. This elastic effect would have led to the current difficulties at embarkation ports, where there was congestion and above all complexity in finding containers suitable for transporting the raw materials. Procurement now takes a very long time.

Adding to the complications weighing on the more than 10,553 workers in the sector (source: Unioncamere-Infocamere) are climate change, the cause of the highly irregular harvests, and international financial speculation on the stock exchanges. Coffee quotations on the London and New York stock exchanges have in fact been on an 80% upward trend for Arabica coffee and 70% for Robusta for over a year.

“However, the difficult phase has its months numbered: Italian coffee is recognised around the world and is eager to bounce back, but it is important for companies to change or integrate their business models,” Bianchin reiterates. “We will not let quality decline in order to cut costs; on the contrary, the future calls for an increasingly careful selection of ingredients even for home brewing.”

It is inevitable that the crisis in the sector will lead to different dynamics in both the consumers’ approach and the roasters’ business strategies. For now, the renewal of now ended subsidies aimed at internationalisation would be of help for long-term growth and for consumer protection.