Coffee prices have risen this past year. They have risen a lot. The trading price determined by the “C” market has spiked due to a number of factors. We have seen about a 40% increase in our cost year over year. On top of this, we are now dealing with tariffs impacting our green coffee purchases. On average, these are bumping our price up an additional 10%. The coffee trade is wilder than ever.
Current State
Tariffs are essentially a tax on imported goods, a tax that the importer pays. Because we purchase our green coffee from importing trade houses, they tack on the tariff fee to our invoices as we release the coffee.
We are currently buying from origins that only have a 10% tariff. There are other origins with a higher tariff, and we are avoiding those purchases for the time being. And luckily, we were not sitting on any contracts for incoming Brazil coffee because the tariff on those is currently at 50%!
We started to get hit with these costs on our organic Guatemala and Honduras coffee this summer, followed up by our recently landed organic Colombia and organic Ethiopia coffees. Organic Peru is incoming and that one is up next. We were able to purchase a portion of Organic Mexico earlier this summer for some of our blends that was tariff free due to the trade agreement. We are still working through our pre-tariff inventory of Brazil and Costa Rica that are currently in Nordico and Foundations.
Relief?
On September 5th, President Trump signed an executive order updating tariff rules in line with ongoing trade negotiations. This has in it the potential to exempt coffee, as it is a product not grown in the USA in sufficient quantities. This has brought some optimism, but also some confusion.
The National Coffee Association (NCA) has lobbied against these tariffs. William Murray, the President and CEO at NCA stated on Linkedin: “…our understanding is that President Trump's EO provides a framework through which tariffs on coffee COULD be reduced/removed IF countries reach trade deals with the United States. For coffee this is an important step, reflecting that coffee is an "unavailable natural resource" of critical importance for Americans and the U.S. coffee economy.”
We Plan
So, we wait for now and hope for the best. But we’ve learned from the past year to plan for the worst and hope for the best. We are doing everything we can to keep our green cost down. There are a few ways to this: pre-book coffee, strike our contracts on our green coffee when the C Market is down, buy from countries with low tariffs, adjust our blends where needed, and avoid buying spot coffee (these are coffees on importers inventory lists that they have already brought into the country). We are doing everything we can to ride this out and come out the other side stronger, more resilient, and running a sustainable business. We appreciate your support!
