Coffee Prices in Flux: Causes and Consequences

The price of green coffee has increased dramatically over the past year.
Coffee drinkers worldwide are now beginning to feel the consequences. What is actually happening? Many have probably read this article in VG recently, for example.

From berry to bean:
The coffee bean is the core of a berry! This berry is harvested when ripe, and the pulp is removed. The bean is then cleaned and dried. It is this dried bean that we, as a roastery, purchase and transport to our roastery for further processing. The roasting process takes place at high temperatures in a specially designed coffee roaster.

Coffee – a global commodity:
Did you know that coffee is the world's second most traded commodity after oil? Annually, around ten billion kilograms of coffee are produced and traded! Almost 60% of all coffee is produced in South and Central America, just over 30% in Asia and Oceania, and just over 10% in Africa.
There are significant differences in how coffee is grown, processed, and sold, both between countries and within different countries. The price of green coffee is set on commodity exchanges, such as ICE (managed by the New York Stock Exchange), in dollars per pound (approx. 0.45 kg).
The coffee price is driven by several different factors. And it is these factors that are interesting for us in the coffee industry, and perhaps especially in the last year.

What is driving the price increase?
The price of coffee is affected by several factors. Here are some of the main reasons for the sharp price increase over the past year:

• Climate change threatens coffee production: Unfavorable weather conditions have affected several of the largest coffee-producing countries. Brazil, the world's largest producer, has been particularly hard hit by drought and frost. This has significantly reduced yields and pushed prices up.
  
• Logistical challenges: The pandemic has caused delays and labor shortages in the transport chain. This has increased shipping and logistics costs, which in turn has driven up the price of coffee.
• Increased demand for specialty coffee: Globally, there is an increased demand for coffee, and especially for high-quality specialty coffee. This trend has further pushed prices up. Specialty coffee is more expensive to produce due to strict quality requirements, and when the price of standard coffee rises, we have to pay more for the best coffee.
• Economic instability: Currency fluctuations and general economic uncertainty also play a role. Inflation has increased costs for farmers, who have to pay more for inputs such as fertilizer and labor.
• Weak krone: The weak Norwegian krone against the dollar and euro exacerbates the challenge in Norway. Coffee is traded in dollars, and a weak krone makes it more expensive for Norwegian importers to buy coffee. In addition, the strong euro contributes to increased transport costs.

Consequences for consumers:
The dramatic price increase reflects a complex interplay between climate, logistics, economics, and global demand. The coffee price is in an uncertain period, and both producers and consumers must adapt to the new price reality.