The cost of a cup of coffee in Australia looks set to continue to rise as the price of Arabica surges to a 13-year high.
Bloomberg has reported that Arabica coffee futures (an agreed-upon price for future delivery of the asset) has surged in New York to US$2.718 per pound, the highest since 2011. Prices over the past year have increased by almost 40 per cent.
The rising cost of coffee has been attributed to lack of supply, caused by a number of factors such as dry weather in Brazil and reduced output from Vietnam.
RMIT University in Melbourne recently conducted research to explore the price rises and concluded that there were various factors disrupting the market.
“There are several factors contributing to the rising cost of coffee beans. First is the havoc wreaked by extreme weather on key supply markets such as Brazil and Vietnam,” says Professor of Logistics and Supply Chain Management Vinh Thai.
“The continuing increase of container shipping rates and other supply chain issues, by which the lion’s share of coffee bean shipments are transported, also greatly contribute to the cost of coffee. Roasters may need to pass these costs onto cafés who, in turn, may do the same to customers.”
The researchers predict these supply chain issues will negatively affect the lifestyles of those who are already struggling with the cost of living. It also suggests several strategies that could be implemented by key coffee players to alleviate the issue.
“If customers choose to change their coffee habits, this might threaten the Australian coffee industry, which employs almost 70,000 people, as of 2023,” says Vinh.
“In the meantime, coffee importers and roasters could look to alternative markets to alleviate cost pressures. They could also increase their purchasing power by and bulk-buy coffee, by working with peak bodies such as the Australian Coffee Traders Association.”
