With many global affairs affecting supply chain continuity, coffee has seen its supply dwindle in a period of increasing demand. COVID-19 restrictions, extreme weather events, war, and supply chain breakdowns have prevented coffee from being distributed inline with demand.
Now, surging oil prices are expected to create a significant impact on the price of coffee.
The price of crude oil has been on the rise since Russian's invasion of Ukraine. The price rose above $100 per barrel the day of the invasion, the highest price since 2008. Rising oil prices increase costs across the supply chain, which has the be absorbed someone along the line - usually by the consumer.
The owner of Hartley Transportation spoke about struggling with the increase in petrol/diesel prices, increasing the costs associated with transported goods. elevated transportation costs, a lack of shipping containers and staff shortages are all burdening the supply of coffee at a fair price.
Along with transportation costs increasing, the coffee industry has seen crop yield decrease in recent years. Coffee exporting countries, such as Brazil, have struggled to keep up with demand. Arabica coffee futures surged 76% last year, with Robusta closely following suit.
This has caused many coffee growers to alter plans and implement alternative ways in which to transport their coffee to buyers, consistently. Luca Scamardella, from the Mediterranean Shipping Company, claims green coffee buyers and traders are trying to modify their capacity and adjust shipping schedules to accommodate for this, with some avoiding certain congested ports altogether.
It's already a battle for coffee producers and importers - a rise in oil price due to armed conflict is only adding fuel to the fire. Even with all this happening, there is one silver lining: specialty coffee has proven itself as resilient to these external market shocks. According to Specialty Coffee Transaction Guide, the price of specialty coffee has risen reliably year on year, with no breakouts. Even so, this gradual increase in price is largely to accommodate specialty coffee's commitment to long-term relationship building with producers and offering a fair price to farmers.
Whilst oil prices remain volatile, we're expecting an increase in shipping costs across all exports, affecting specialty coffee and commodities alike. Despite this, the specialty coffee sector appear resilient for now - time will tell.