In December 2024, when the price of arabica was between 3 and 3.50 USD a pound (454 grams), an increase of 75% over one year, I explained that this reflected an increase in demand that was putting a strain on a sector in crisis due to global warming and a vocation and labour crisis*. This situation is the direct result of persistent agricultural and commercial practices inherited from the colonisation of a sector, which now falls under the hegemonic domination of the global agri-food industry.

In other words, before these increases, the market price covered little or nothing of the true cost of production for small and medium-sized producers, and was more closely aligned with the cost price of the large mechanised plantations in Brazil and Vietnam. The latter have now been hit full force by climate chaos, highlighting their lack of their resilience.

What is the situation two months later?

Prices broke all records, peaking at 4.40 USD per pound, and a cumulative rise of 100% over one year, and almost 300% over 3 years. Harvest forecasts for Brazil and Vietnam are poor, with declines of around 4%. These figures keep prices high, of course, but what is most worrying is that the conventional sector is in such a state of decay that it cannot counterbalance the failings of these two giants of world production.

I have just spent over a month of the coffee season in Mexico and all the producer countries of Central America, visiting our producer partners, working with them to find a way to liberate ourselves from the commodity market for our coffees impacted by this market, namely those rated between 80 and 84/100. Together, we need to find the right price. A price that includes the real cost of production, investments in infrastructure and sustainability, and a net margin. We need to think in terms of 3 or 5 years to free ourselves from price volatility, which is a scourge for producers and roasters.

Our partners gave us a very warm and enthusiastic welcome, despite the fall in production of between 15% and 30% depending on the country, and the clouds gathering over the coffee sector in general. By taking the time to talk to each of them, we were able to see not only that there are production difficulties, but that production is actually collapsing! Any resilience has been broken, and the vertiginous rise in the market, far from benefiting producers, is making the situation worse. As we have said, the latest climatic events – drought, frost, violent winds, floods, etc. – and climatic imbalances (it has rained every day for a month, even though we are in the dry season, and production needs a marked dry season to harvest and dry the coffees) are bringing the industry to its knees, and it can no longer find enough labour to perform the harvests. The fruit, damaged by the rain, rots on the ground or on the tree, and the farmers sell their farms at high prices for property developments. Prices are high, but growers don't have enough coffee to sell, and roasters who don't sign purchase contracts, hoping to see the market fall, are causing a financing crisis: no contracts, no bank financing, no money for exporters and cooperatives to buy berries from small and medium-sized growers. Bankruptcy follows bankruptcy for these important economic players who complement the major producers.

Jesùs Salazar and Christophe Servell, Mexico. Photo by Fabrice Leseigneur

Climate chaos will increase as global warming intensifies each year. Agricultural producers and workers will become scarcer, and there will be increased failures in intermediary economic players in the face of price volatility. We can assume that market prices will remain high and continue to rise in the face of the gap between growing demand and a shortfall in supply.

We have been talking about this situation for ten years now. Today, it is having a brutal impact on all players in the sector, including consumers. It forces us to draw conclusions and make a forward-looking assessment of the market in order to build a renewed and sustainable industry:

• Quality coffee must liberate itself from the commodity market governed by the industry. The current situation clearly confirms that coffee, which is complex and expensive to produce, should never have been considered a commodity.
• The balance of power between producers and roasters, traders and importers will gradually be reversed.
• Small and medium-sized conventional coffee producers will gradually disappear.
• Medium-sized and large-scale producers who are able to pursue a policy of economic, environmental and social sustainability will continue to produce and export.
• The trade in quality coffee is already becoming a trade based on relationships, partnership and mutual respect. The economic partners, producers and roasters must choose each other, work out joint development strategies and share the added value fairly to ensure the long-term future of the sector.
• Coffee consumption on the domestic markets of producing countries is set to increase in both volume and quality, putting further pressure on prices and supply guarantees.
• The gap in quality between so-called industrial coffees sold in supermarkets and local or speciality coffees will widen.
• The gap in price between so-called industrial coffees sold in supermarkets and local or speciality coffees will narrow. The price-quality barrier for end consumers will fall considerably, starting this year.
• In the face of rising coffee prices, the transition in consumption patterns and habits is set to accelerate. The issue must become "drink better and less" VS "drink more and mediocre", leaving the spurious argument of purchasing power to industry and supermarkets.
• Globalised industrialists or major local players, with identical commercial practices and largely responsible for the current situation, will seek to position themselves on the better quality of ranges on the world market, and deliberately maintain the vagueness of the definition of speciality coffee, which derives its definition and legitimacy from quality and traceability.
• The responsibility of speciality coffee roasters is therefore even greater. It is up to them to suggest, inform and educate consumers about what coffee is, its different flavours and the need to change their approach to drinking it. They offer the best opportunity to support the upmarket consumer trend that has ongoing now for some years. They are responsible for repositioning and promoting coffee as a product with multiple terroirs and expertise, and for being clear about the definition of speciality coffee.
• The responsibility of professional buyers is also very important. They must understand and make their hierarchies and organisations – independent hotels, companies, hospitality and F&B chains, institutions, etc. – understand that the days of (too) cheap, over-roasted coffee that tastes like coal and cold ashtray are over, and that a move upmarket is vital if they do not want to miss out on the transition in coffee consumption. Good coffee comes at a price. The fact that 40% of Parisian bistros have disappeared in 20 years is food for thought!
• Finally, end consumers must feel free to be demanding, always and everywhere, about the quality of the coffee they are offered.

The advent of speciality coffee some twenty years ago, which has become a global market over the last ten years, has paved the way for the necessary transformation of the sector, from production to consumption, albeit without any real determinism.

Before the acceleration of climate change brought down an ailing industry, players in the speciality coffee sector set new standards in the commercial relationship by connecting the terroir to the end consumer, by promoting coffee and the work of producers and roasters.

This has been possible thanks to the direct and privileged relationship between producers and roasters, the remuneration of quality through liberation from the commodity market, plus the protection or regeneration of ecosystems for the most committed and visionary among them. The coffee market will never be the same again, because every day, roasters create a relationship of trust with their customers, and more than that, a community of values.

Speciality coffee means liberation for producers, roasters and consumers.

Tomorrow began 20 years ago, and tomorrow is today.

Christophe Servell.

Terres de Café

*The coffee price structure is made up of the FOB (free on board) market price + positive differential depending on country and quality or negative differential for inferior qualities + organic premium where applicable. To this is added the cost of transport to the harbour, financial costs, customs clearance, storage, transport to the roasting site, roasting, packaging and roasting margin. The coffees impacted by stock market prices are the blends and pure origins rated up to 83/84 out of 100. The coffees rated above this level have fixed prices, above the market price, and much less subject to price volatility.