Introduction
The coffee industry is in mayhem, the C-market has broken the $3.00 a pound mark for the first time since 2011. Coffee farmers celebrate, traders have their hands tied by the banks that finance the trade and coffee roasters see their margins evaporate. To read more about these inner workings check out Bram’s blog with the technical details.
This is a time of justice for coffee farmers and we sincerely hope these prices maintain at this level for the next months and years. For too long coffee producers have been subject to absurdly low prices as a consequence of the low C-market prices. This is the time that coffee producers finally see a decent reward for their efforts.
Coffee roasters that have invested in long term relationships and set prices based on merit will benefit from that commitment. Roasters that have always been shopping around and looking for good deals now will face their maker as that strategy can now cause significant harm to their business.
What does this mean for Paso Paso?
At Paso Paso we discussed the market increases during our monthly virtual get-together. This type of situation is exactly the reason why we started our unique business model. Through our vertical integration we are mostly insulated from the majority of these external factors. As we only use the coffee we produce ourselves we can continue to price our coffee according to the cost of production of the farms, the roastery’s overhead and the cost of retailing and distributing our coffee.
Each farm only has one harvest each year, which means we have secured and committed significant quantities of coffee that will last us until the new harvests will arrive between May and September 2025. This means that all that coffee has been paid for, is now in Europe and does not increase in price.
For the next harvest, we also start to come closer to the point where the best local alternative comes closer to the price Paso Paso pays for green coffee to our own farming operations. It goes without saying that Paso Paso must always be the best option for the producers to sell their coffee too. Yet, we are still quite far away from getting to that. For the last 2024 harvest our weighted average price paid was $4,50/lb. Still a leap from the current C-market and local prices.
At this time we are discussing the prices paid for green coffee for the 2025 harvest and we have agreed on a standard annual increase of 4% of our retail prices starting 1 July 2025. This increase helps to off-set the increase of cost of production on the farms and further growth of our distribution network.
Are you affected by the increasing coffee prices?
We have put in a tremendous effort to establish a company that is completely vertically integrated. This unique model has allowed us great insulation from external factors and bridge the gaps between coffee producers and coffee shops. We create meaningful relations across the globe with unmatched quality, consistency and service. Currently we have enough stock to onboard distributors and we look forward to welcoming new partners in our model.