The C-price is overwhelming the real coffee economy because it significantly increases risk to farmers (and other actors at the production side of the supply chain). Farmers are assuming far more risk than anyone else in the industry.
“Finance overwhelms the real economy.”*
This is a point from Laudato Si, Pope Francis’ recent encyclical on the environment and poverty.
This phrase helps to explain what’s happening in the coffee sector. The “real economy” of the coffee sector consists of: millions of farmers and farmworkers who produce the world’s coffee, millers and roasters who add value to coffee, honest traders and retailers, and coffee consumers around the world. Surrounding this “real economy” is the finance sector, which is necessary for mobilizing capital, but has proven most adept at concentrating wealth for a relatively small group of people with the financial and economic power to exploit the coffee market.
While some of the worlds’ largest coffee companies and shrewd traders have generated massive profits over the last decade, most coffee farmers and farmworkers remain poor, and are increasingly vulnerable to market volatility and other threats.