The Rising Cost of Coffee: What It Means for Philippine Coffee Farmers
Your morning cup of coffee may be costing more these days, but have you ever wondered if the people growing your coffee are benefitting from these price increases? In my over 25 years in the coffee industry, I’ve never seen coffee in such high demand. While global coffee prices have surged to levels not seen since 1977, many Filipino coffee farmers continue to struggle with rising production costs that outpace their earnings. Despite the higher prices, the reality is that these increases rarely trickle down to the hardworking farmers.
The irony of this situation lies in the fact that, while coffee is thriving as a commodity, the very people who grow and harvest it are being left behind. Rising input costs for fertilizers, labor, and equipment add to their financial burdens, making it difficult for them to break even, let alone profit. This disconnect between market demand and farmer earnings highlights deep issues within the coffee value chain—issues that need to be addressed for the industry to thrive sustainably.
Adding to their struggles is the rise of cafés that disrespect the value of coffee by selling it at ridiculously low prices. While these prices may appear attractive to consumers, they make it impossible for anyone in the coffee value chain—farmers, roasters, or café owners—to make a fair living. This practice not only undervalues the product but also jeopardizes the long-term sustainability of the coffee industry, undermining efforts to build a more equitable and resilient value chain.
These cafés treat coffee not as a carefully crafted product but as a mere “come-on” to drive foot traffic and sales of other items. This approach devalues the immense effort that farmers, roasters, and baristas pour into every cup, sending a damaging message that coffee is just a commodity. If this trend continues unchecked, it risks eroding the foundation of the industry, making it harder for smallholder farmers and ethical businesses to survive.
In this blog, we’ll explore why coffee prices are rising, how these increases still fall short of supporting local farmers, and why respecting the true value of coffee is essential for everyone in the value chain. Behind every cup of coffee is a story of resilience, and it’s time we ensure that story includes the farmers who make it possible.
Current Coffee Prices: What’s Happening?
As of December 1, 2024, the global coffee market has seen a dramatic surge in prices, with Arabica coffee futures reaching $3.23 per pound—the highest level since 1977. At the current exchange rate of 58.75 PHP to 1 USD, this translates to about 189.76 PHP per pound, or approximately 418 PHP per kilogram.
In contrast, Filipino coffee farmers face significantly higher production costs. For instance, the cost of producing green arabica coffee (unroasted beans) in the Benguet Philippines averages around 1,500 PHP per kilogram. Despite these realities, many cafés continue to disrespect the value of coffee by selling it at unsustainably low prices—sometimes as low as 50 PHP per cup.
These cafés treat coffee not as a product to be valued but as a “door crasher” to attract customers and drive sales for other items—or worse, as a devious strategy to lure investors into franchise opportunities based on an unsustainable business model. This practice devalues coffee and forces everyone in the value chain—farmers, roasters, and even café staff—into a race to the bottom, perpetuating unfair pricing and unsustainable practices.
When cafés sell coffee at prices that fail to reflect its production costs, they undermine the integrity of the coffee industry. This short-sighted approach erodes trust, diminishes the quality of the coffee experience, and, most critically, threatens the livelihoods of those at the very foundation of the value chain—the farmers. It’s time to advocate for businesses that value coffee as a labor of love, respecting its true worth at every step. By supporting such businesses, we contribute to a fairer, more sustainable coffee ecosystem that benefits everyone involved.
Challenges for Filipino Coffee Farmers
Filipino coffee farmers face numerous challenges, from high production costs to undervaluation in local markets. These systemic issues perpetuate a cycle of undercompensation and financial instability, threatening the sustainability of the local coffee industry.
1. High Production Costs
In the Philippines, the cost of producing green coffee averages 1,300–1,500 PHP per kilogram, depending on the location. This includes labor, fertilizers, post-harvest processing, and transportation. Despite these expenses, farmers are often paid prices that barely cover their production costs, leaving them in a constant financial struggle.
Additionally, coffee harvest is a once a year endeavor, meaning farmers face opportunity costs as they often go months without any income. Unlike salaried employment, coffee farming offers no financial stability, pushing farmers into a precarious economic position.
2. Undervaluation in the Local Market
Despite producing high-quality beans, Philippine coffee is frequently undervalued in the local market. Imported coffees are often marketed as premium, while local beans are positioned as cheaper alternatives. This disparity not only affects the farmers’ earnings but also undermines the potential of Philippine coffee to be recognized globally as a premium product.
Loving local should mean putting a premium on local products. In countries like Colombia, consumers proudly embrace and pay the right price for their coffee, driven by cultural pride and recognition of its value. Adopting this mindset in the Philippines could significantly enhance the local coffee industry, ensuring farmers are compensated fairly and their work is respected.
3. The Impact of Cheap Cafés
Cafés selling coffee for less than 50 PHP per cup and offering “unlimited refill coffees” cause irreparable harm to the entire value chain. These establishments treat coffee as a disposable commodity, forcing farmers and roasters to lower their prices to unsustainable levels. This practice devalues coffee, perpetuates exploitative labor conditions akin to modern-day slavery, and prevents the industry from achieving sustainable growth.
Cheap coffee is not just a low-priced beverage—it represents the systemic undervaluation of the hard work, skill, and dedication of everyone in the coffee value chain. Farmers bear the brunt of this exploitation, struggling to recover their costs while being denied fair compensation for their labor. Supporting these establishments enables the continued exploitation of coffee farmers, trapping them in cycles of poverty and preventing the industry from evolving into one that is equitable and resilient.
We must collectively reject “cheap coffee” and the practices that support it. Saying no to these products means taking a stand for fair wages, ethical practices, and a future where Philippine coffee is celebrated for its true worth. Every cup of coffee we choose to purchase has the power to shape the industry—let’s make sure our choices contribute to a fairer, more sustainable system.
By addressing these challenges, we can pave the way for a thriving coffee industry that uplifts Filipino farmers, ensures fair compensation across the value chain, and secures the future of Philippine coffee. Supporting ethical practices, valuing local coffee, and rejecting exploitative businesses are steps we can all take to create meaningful change.
Coffee Prices: Cheaper Today Than 47 Years Ago
Coffee prices may seem high today, but they are actually much cheaper than they were 47 years ago when adjusted for inflation. In 1977, coffee reached $3.35 per pound, which, when adjusted for inflation using the Consumer Price Index (CPI), would be worth about $17.21 per pound or approximately $37.94 per kilogram today. In comparison, the current price of $3.23 per pound (around $7.10 per kilogram) shows that coffee is significantly undervalued in real terms, costing less than 19% of its inflation-adjusted value.
This stark disparity highlights a systemic undervaluation of coffee. While production costs for farmers have steadily risen due to inflation, including the costs of fertilizers, labor, and transportation, the value they receive for their product has not kept pace. As a result, many coffee farmers today earn far less in real terms than they did nearly five decades ago, leaving them with increasingly slim margins—or none at all.
Understanding this history is crucial for addressing the undervaluation of coffee and advocating for pricing models that reflect its true worth. A fair pricing system would not only account for the rising costs borne by farmers but also secure their livelihoods and foster the sustainability of the coffee industry. Without such changes, the cycle of undervaluation and exploitation will continue to threaten the very foundation of this global industry.
A Call to Action
Every cup of coffee you drink represents the dedication, resilience, and hard work of countless individuals—from the farmers who grow the beans to the roasters and baristas who prepare your drink. By choosing to support ethical practices and sustainable businesses, you can help create a thriving, equitable coffee industry that uplifts farmers and secures the future of Philippine coffee.
Here’s how you can make a difference:
1. Choose well
Support cafés, roasters, and brands that prioritize fair prices and sustainability. Look for cafe’s with a selection of locally sourced beans and be willing to pay a price that reflects their true value.
2. Spread Awareness
Share the story of Philippine coffee with your community. Highlight its unique flavors, origins, and the dedication of Filipino farmers.
3. Demand Transparency and Fair Pricing
Ask questions about where your coffee comes from and how it’s priced. Encourage businesses to be transparent and accountable.
4. Reject Exploitative Practices
Boycott cafés and businesses that sell coffee at unsustainably low prices, and advocate for fair wages and ethical treatment of everyone in the value chain.
By making informed choices and encouraging others to do the same, you can be part of the movement that reshapes the coffee industry. Together, we can ensure that every cup of coffee contributes to a sustainable, equitable future—one where farmers, roasters, and cafés alike thrive— Together we can build A Beautiful Coffee Future.
Sources:
1. Macrotrends - “Coffee Prices - 45 Year Historical Chart”
https://www.macrotrends.net/2535/coffee-prices-historical-chart-data
2. Trading Charts - “Coffee Historical Prices in 1977”
https://futures.tradingcharts.com/historical/CF/1977/0/continuous.html
3. US Bureau of Labor Statistics (CPI Data) - Consumer Price Index for Inflation Adjustments
4. YCharts - “US Dollar to Philippine Peso Exchange Rate”
https://ycharts.com/indicators/us_dollar_to_philippine_peso_exchange_rate
5. ABS-CBN News - “Rising Costs for Farmers in the Philippines”
6. FT.com - “Coffee Futures Prices Surge to Record Highs”
