The graph on the right shows recent coffee prices - both world-wide and also in nepal. The price we paid for Nepali coffee increased 20% in 2012 and 25% in 2013. By all indications it will increase by another 30% this year. "Why?
1. "Seller's Market" - the current local coffee situation is one in which demand significantly outstrips supply.
2. "Time Lag" Between Demand & Production - with coffee prices currently "high," a considerable investment is being made in more planting. Remember, however, that it requires roughly 5 years from the time a coffee bush is planted until in comes into "full production."
3. "Skewed Export Market" - small quantities of coffee are being exported for significantly-high prices. As all farmers strive toward this unsustainable level, it artificially drives the price of local coffee high.
US$ 5.51/kg - Current FOB Port cost of a world-class Central American coffee.
US$ 6.92/kg - Current FOB Port cost of quite-ordinary Nepali coffee.
Our Company Guiding Principles include the mandate of supporting Nepali coffee. As you can see, however, (being a business and not a charity) this is not easy under the current run-away market situation. Remember: the "price bubble" must ultimately "break."