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What’s Next for Coffee Prices in 2020?

What’s Next for Coffee Prices in 2020?

By Bill (William) Murray, President & CEO, National Coffee Association

After hitting historic lows in mid-2019, coffee prices began to rebound in November of 2019, an upward slope that continued through the end of December 2019.  Dramatic world events in early January 2020 have already caused spikes in commodity markets – including in the price of oil – that could drive coffee prices up further. 

And so the question on everyone’s mind is whether this upward price trend will continue. 

We can’t predict future coffee prices – but here’s what we do know:

Last year’s historically low coffee prices put unprecedented pressure on some of the 25 million farmers who grow coffee.  This, in turn, led to an unprecedented industry-wide conversation about the impact of low coffee prices on farmers.   

Initially these conversations were simplistic, in today’s click-bait style – broad, black-and-white portrayals of a supply chain populated with villains and innocents, with equally simplistic solutions that could easily cure all ills.

But as the conversation continued, it became apparent that the truth is more complex – just as coffee itself is a complex beverage. 

The reality is that many of the challenges facing coffee farmers are not unique to coffee. Price volatility, poor infrastructure at home, a lack of information, and other factors are the same issues facing small-scale famers in all agricultural sectors.

And while there are common elements bedeviling all small-scale farmers, there is no simple, appealing, one-size-fits all “solution” for helping coffee farmers improve their lot.

This is why it is crucial – especially if coffee prices continue to rise – that we continue to work together as an industry to support farmers.  If you want to be part of the solution, here are four things you can do now:

Understand the Facts.  Current low prices are due to an oversupply of coffee, with other factors, such as the natural, cyclical nature of the market, and foreign currency fluctuations, further challenging farmers.   Devising solutions starts with accurately identifying the challenges.

It Takes a Village.  Know that solutions involve many hands – from international organizations such as the United Nations, to the governments of coffee-growing countries, NGOs, corporations, and even coffee drinkers who send a signal about their values and what they are willing to pay for every time they buy a cup of coffee.  A local – or national – dimension to helping farmers is especially important, as communities must shape programs designed to meet their needs.

A great place to start for a better understanding of the challenges and solutions is the International Coffee Organization’s 2019 “Coffee Development Report.” This report’s 10 page “Overview” provides a rich, deeply researched perspective on today’s market with a focus on development.

What else?

Take Action.  Join us.  Work on your own, through your company, and with others to do what you can now and make a commitment that will persist regardless of price levels.  Hundreds of companies and organizations are supporting program work and buying practices that support farmers.  NGO programs, such as Conservation International’s Sustainable Coffee Challenge, are convening companies to collaborate and directly help farmers — as is the Global Coffee Platform.  More immediately, there are charities that are working on a day-to-day basis to help farming communities in need, like the Coffee Trust.

And finally…

Drink More Coffee.  Market prices were driven down by an oversupply of coffee, and drinking more coffee – to help lap up the surplus – not only helps farmers, but can bring health benefits.

In the meantime, the NCA will continue our work, together with others — for change will not come quickly or easily.  We’ve been supporting, sponsoring, and participating in the ICO’s work;  We’ve partnered with the Sustainable Coffee Challenge, including creating resources to help improve labor practices at origin; and we’ve identified charities through our Showcase and Award Program that we believe are worthy of your support.

Where are coffee prices going in 2020? 

Up or down, one thing is for certain: there won’t be any coffee without farmers to whom we are all connected.

This post appeared first on National Coffee Association USA.

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