Monday, August 23, 2010

From NPR: Why Coffee Is Getting More Expensive

Here is an excellent new piece from NPR's always-engaging Planet Money team about the recent upswing in coffee prices.  It echoes several themes I articulate in my recent monograph, Fair Trade? Its Prospects as a Poverty Solution, especially the reasons why short-term coffee prices can be quite volatile.  They even mention that coffee "demand is inelastic!"
August 23 - The price of coffee beans hit a 12-year high today. I thought there might be some kind of reclusive-hedge-fund-guy-corners-coffee-market story, like we saw with cocoa earlier this summer.

But the main driver of coffee prices right now is more prosaic: Colombia has had a few years of weak coffee harvests because of too much rain, which has reduced the global supply. And coffee drinkers keep buying coffee, even as prices rise (in other words, demand is inelastic). . . .


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