Despite temporary wild price movements, Arabica mild coffee prices have gravitated around a pretty stable price line that is now around 135. Coffee prices did not keep up with inflation during the 1980’s and 1990’s.
The red line indicates what the price of mild coffee should have been if it kept up with inflation based on the average price in 1980. Coffee prices would be almost twice the current level.
There is nothing to imply that world coffee prices need to follow U.S. inflation. It just means that coffee is a lot cheaper relative to what it was thirty years ago.
Another interesting trend in these prices are the sharp and short upward movements have been followed by protracted low prices. The average price trend has been stable, but not prices themselves. One possible explanation may be that producers expand when prices are high but their crops do not begin to operate until prices are already low. This pushes prices further down and keeps them low for longer periods until some farms go out of business. We don’t have any evidence to prove this trend but in our gallery you can see pictures of Veracruz coffee farms that were turned into sugar cane fields when coffee prices were low.