Ian Clark, director of coffee at Bridgehead, fills a bin with raw beans at the Bridgehead Roastery in Little Italy.
Centretown consumers may see an increase in the price of their morning java because of the rising cost of Brazilian coffee.
A severe drought in the South American country is pushing prices to record highs. More than 140 cities in Brazil were under water rations last month after January and December rainfall dropped to the lowest levels in 84 years. Coffee beans currently cost about $1.98 U.S. per pound on international commodities exchanges. Coffee cost just under $1.40 U.S. per pound at the beginning of February. This time last year, prices hovered around $1.35 U.S.
“We started the year at lowest it’s been since about 2004, at about $1.10 U.S. Since the threat of drought in Brazil broke, it’s just been going up and up,” says Ian Clark, Ottawa-based director of coffee at Bridgehead.
The retail chain buys only fair-trade beans, a practice that adds another 30 cents per pound to the market price. Bridgehead roasts its beans on Preston Street and operates outlets along Bank, Elgin, and Sparks streets.
Brazil produces around 2.6-million tonnes of coffee annually, according to the Food and Agricultural Organization of the United Nations. The country is the number one grower of beans in the world. Most buyers focus on arabica beans because that variety is the most popular. Starbucks, Tim Hortons, and McDonald’s all use Brazilian arabica beans. Another common type of bean, robusta, is used in manufacturing instant coffee.
Consumers don’t have to immediately worry about paying a lot more for a cup of Bridgehead coffee, even though prices continue to climb, says Clark.
The increase in bean prices would add a few cents to a takeout cup. Bridgehead will not raise prices significantly if costs go up only a small amount per cup, he says.
“A cup is only about 20 grams worth of coffee. That’s 20 cups per pound. If the coffee market were to go up to $3 U.S. per pound, which is really high, that’s five cents a cup,” he says.
Happy Goat Coffee Company, located southwest of the Bayview O-Train station, sells its beans to restaurants and coffee shops throughout Ottawa.
Henry Assad, Happy Goat’s owner, bought extra Brazilian beans in January to protect the roastery from price increases.
“If after the crop is done prices stay high, we’ll have to raise the price. Customers understand. They know the prices are going up. It’s a commodity,” Assad says.
A poor harvest pushed wholesale Brazilian coffee prices up in 2011 to $3 U.S. per pound. Happy Goat raised prices when that happened, says Assad. A spike in wholesale prices will eventually trickle down to customers, adds Fadi Karam, owner of Elgin Street’s Ministry of Coffee.
“There is room for increases so that we don’t have to pass it on to the customer, but eventually, we will have to,” he says.
The Ministry of Coffee doesn’t buy a lot of Brazilian beans, but customers would eventually notice higher prices if suppliers are affected by a price increase. The café buys its coffee from Calgary, Vancouver, and Halifax roasters.
The key to surviving this kind of uncertainty is patience, says Clark. Escalating prices would ultimately have an effect on roasters, cafes, and consumers. So far, increases have been manageable.
“It’s a major event in the coffee industry, but it shouldn’t be catastrophic,” says Clark.