Coffee Supply Chain Nightmare

COFFEE SUPPLY CHAIN NIGHTMARE
By: www.BuyOrganicCoffee.org

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SUPPLY-CHAIN-NIGHTMARE/
The price of coffee has gone up a bit on the NYMEX due a
predicted shortfall in Brazil’s coffee crop. But, the price
that you pay for coffee is going up even more due to a
coffee supply chain nightmare that is affecting global
shipping on all goods.

Bloomberg writes about freight snags driving shipping
rates to astronomical levels. Coffee inventories in the
USA are down and going lower as a global shipping
container shortage has affected virtually all shipments of
food and beverages.

Coffee Stockpiles in USA at a Six-Year Low

Coffee wholesalers in the USA are selling their reserve
inventory. As the global supply chain disruption continues
there is little hope for an early replenishment of coffee
supplies.

As the law of supply and demand asserts itself, US
wholesale and resale prices are rising in excess of what
would have been caused by the drought and reduced
coffee crop in Brazil, the biggest producer and exporter.
Meanwhile, demand for coffee has gone back up which,
in turn, has served to drive prices higher.

Demonstrations Tie Up Coffee Shipping from
Colombian Ports

Colombia dealt with the early stages of the Covid-19
pandemic by ordering a virtual shutdown of society. To
make sure that people did not starve to death the
government delivered food door to door in the barrios.
The combination of spending by the government and
reduced tax income because of businesses shutting
down has hurt Colombia’s credit rating and driven the
peso to all-time lows.

In an attempt to get back to a positive fiscal balance the
government promoted measures like reducing the
already-low monthly minimum wage and putting taxes on
foodstuffs like rice and beans. The result was months of
street demonstrations and blockage of major highways
both of which slowed commerce to a virtual halt.

The demonstrations spread to the two major ports of
Cartagena on the Caribbean and Buenaventura on the
Pacific. Thus, Colombia has shipping issues in excess of
the shortage of shipping containers and global supply
chain slowdown.

Coffee Shipping Costs

The cost of the cup of coffee you drink at breakfast or pick
up from your favorite coffee shop on the way to work is
driven by the cost of the green coffee beans at the
source, shipping costs to the roaster, roasting and roaster
profit, and retailer or coffee shop markup. Inflation is
asserting itself as the economy comes out of the Covid
recession so prices are up across the board.

But, right now, the biggest uptick in prices is coming from
the cost of shipping your coffee from anywhere in the
coffee belt to warehouses in the USA, Europe, Japan,
and everywhere else where coffee is consumed. At this
moment the movement of shipping containers across the
world has hit numerous bottlenecks and that has made
timely shipping or shipping at all impossible from some
locations.

While there are around six million shipping containers in
transit across the world at any given time, there are not
enough in the right places and at the right times to keep
prices down and keep the coffee supply chain from the
current nightmare.

Coffee shipping costs have doubled and tripled in some
instances. At Buy Organic Coffee we continue to provide
coffee direct from Colombia albeit at a higher cost, not
because the coffee farmer charges more but because of
supply chain problems.

For more insights and useful information about organic
coffee, visit www.BuyOrganicCoffee.org.

Coffee Supply Chain Nightmare

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