The Specialty Coffee Association (SCA) announced a new plan earlier this week to combat the current coffee price crisis, which has resulted in the commodity losing nearly half of its value in the last four years. The SCA’s plan — called the Coffee Price Crisis Response Initiative — is to devote a significant amount of time, money, and human resources to research the crisis further and develop economic models which will both increase the revenue of the farmers and protect the coffee supply around the world. The SCA claims that for coffee growers to turn a profit, they need to sell their harvest for around $2.50 per pound; however, the current price is sitting just below that $1 mark at 98 cents per pound, according to Market Insider.
“The coffee value chain is long and most coffee producers are not paid enough for their coffee to maintain profitable farming operations,” the SCA wrote in a statement. “This should not be news to anyone who has been paying attention in the coffee industry; we have been hearing about this problem from coffee farmers, producing country institutions, and producer advocates for a long time.”
Despite the crisis, demand for coffee is still high. A record 64 percent of Americans drink at least one cup a day in 2018, which is two percent higher than in 2017, according to a report issued earlier this year from Reuters. These numbers represent an eight-year high and have been propped up by the millennial generation’s demand for gourmet coffee drinks. Adversely, the daily consumption rate for other beverages such as soda and juice is declining.
“We see the cola industry is declining, (but) coffee is in the front row,” said Colombian Coffee Growers Federation CEO Roberto Vélez, during a presentation at this year’s National Coffee Association meeting.
As demand grows, dominant coffee houses like Starbucks are beginning to roll out new delivery plans to increase profitability. The beverage powerhouse announced earlier this week that it would be teaming up with Uber Eats and expanding its coffee delivery service to around 2,000 major US cities after a successful test run in Miami. Starbucks plans to go live with the service during the first few months of 2019, and is also testing a similar model in Japan, according to a report from the Seattle Times.
“These are the very early days of our rollout of the program, and we anticipate that as we ramp the program, we’re going to gain a much better understanding as to the overall impact to the business,” said Starbucks group president John Culver.
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