We all know that the C-market price for coffee recently reached an all-time high (and it is still experiencing volatility), and while many in the industry are focused on its effects on consumers, it’s equally as important to talk about the impact felt by producers and suppliers.
A common misconception is that when the New York (NY) market price peaks, producers automatically earn more. The reality is more complicated because of fluctuating differentials (the extra amount paid on top of the NY market price), as well as the way local payments are handled.
Differentials fluctuate depending on supply and demand. However, the financial market has become increasingly disconnected from the physical coffee trade, meaning differentials alone don’t always reflect what producers actually earn.
Producers also face other challenges that can't be fixed by a high market alone. For example, climate challenges may matter more than price as response to supply. Frost, droughts, and aborted flowering have farmers worried about their future yields. When coffee trees are under extreme stress, they focus on growing leaves instead of cherries, forcing producers to take measures like extensive pruning to protect next year’s crop.
Plus, farmers face steep increases in production costs, including rising prices for fertilisers, pesticides, and ongoing labour shortages. While a high market can present opportunities for better earnings, these benefits are not always guaranteed when such challenges are so prominent.
This is why it's crucial to partner with suppliers who prioritise fair payments to farmers, ensuring their earnings remain stable and are always above production costs, regardless of market fluctuations.
Why relationships at origin matter more than ever
With the high C-market, there’s a growing argument that specialty coffee is losing its relevance—that producers will opt for commercial contracts instead of investing in quality production. However, this is misleading.
Stability in relationships remains more valuable than short-term gains. Many producers and suppliers prefer working with trusted specialty buyers rather than taking a gamble on commercial market opportunities that may not last.
At Nordic Approach, paying above the market average has always been our standard, ensuring sustainable prices for our partners in every origin—regardless of market fluctuations.
Specialty coffee relationships go beyond just pricing; they’re built on consistency, trust, and long-term sustainability. Strong, transparent partnerships focused on quality and mutual support offer security that the commercial market simply can’t guarantee.
How we’re preparing for the year ahead
The rising market means coffee will be more expensive. While this is a given, the true challenge lies in navigating an increasingly unpredictable purchasing landscape. The key to mitigating risk in this environment is maintaining strong relationships with our partners.
As the buying window closes in Kenya, Ethiopia, Uganda, and Central America, it's time to shift focus to Brazil, Peru, Colombia, Indonesia, and Rwanda. Here are some steps we can take now to stay ahead:
- Planning as early as possible. We’re starting conversations with our partners well before the buying window, to ensure we have a clear understanding of our sourcing needs and their production costs. It's just as important for us to understand what our customers need so we can share those expectations with our suppliers on time.
- Securing larger lots cautiously. With a narrower buying window, we must act quickly while balancing financial risk.
- Adapting to supplier realities. Exporters will hold less stock and prioritise back-to-back sales, meaning we need to commit swiftly to avoid missing out on top lots.
- Fast payment will be critical. Helping suppliers maintain cash flow so they can continue purchasing from producers without financial strain.
- Adjust pricing based on production costs. Our goal is to ensure profitability for our partners at origin while maintaining balanced, fair pricing for our business and customers.
What’s next
Navigating a high C-market requires agility, trust, and clear communication. As buyers and importers, our role is to support a stable, sustainable market for producers and suppliers, not just procure good coffee.
For our partners at origin, investments in their operations will likely remain practical rather than expansive. With the 2024 price increase not significantly outpacing 2023, major reinvestments may not be immediate. Producers and suppliers will likely prioritise quality and consistency over risky financial moves, though this is still to be seen.
Global data indicates that the current price movement is somewhat disconnected from supply levels. In other words, the shortage isn’t as severe as the market pricing suggests, and is not necessarily reflective of supply vs. demand fundamentals alone.
Regardless of commercial stock, our hope is that specialty coffee supply will somewhat remain steady—albeit at a higher cost. In fact, buyers may see specialty coffee as a more reliable, high-quality option despite the price increase.
Specialty coffee is a strong and viable market, offering value to both producers and buyers. While the C-market will fluctuate, a well-structured, relationship-driven approach can help ensure stability within a new reality.
