Source: Radio New Zealand
[s ]Rising oil costs have put pressure on prices across New Zealand including food and grocery essentials.
Fuel shortages or a change in fuel phases in Aotearoa would be the toughest part of ensuring coffee supply according to Carl Sara. Public domain
Coffee isn’t going to get cheaper, but there is currently no risk of supply shortage to Kiwis.
Rising oil costs have put pressure on prices across New Zealand including food and grocery essentials.
Carl Sara president for the New Zealand Speciality Coffee Association said there were a few factors playing into how we get and how much we pay for our morning cup of joe.
“There’s lots of complications and it’s a very complicated supply line.”
The first hurdle is the price of coffee beans.
He said the price was initially dropping after record highs for the past 18 months, but the uncertainty caused by the war in the Middle East pushed it right back up.
“When the Iran crisis came on and we saw a small rally back up, but it sort of flatlined at what is still very high historical records.”
He said the prices remained high because the market was worried about supply, that’s pushed some international buyers to go straight to the stored reserves or ‘certified inventories’ at commodity exchanges to ensure they get what they need when they need it.
That kind of buying impacts the ‘futures pricing’ but doesn’t represent an actual shortage of coffee supply.
The second component adding to your flat white is war surcharges.
“War surcharges are being placed on containers coming out of the regions which are most impacted, so sort of around the top of Africa and some of those places, especially coffee beans coming out of Ethiopia.”
That comes at a cost of about $2000 per container. Sara said that’s not going to hugely impact roasters in New Zealand, but it adds up.
“Alongside of that, we’re seeing containers that aren’t in the right place in the right time and shipping lines that are struggling to keep up with the demands of shipping.”
The third part of the problem which New Zealand has largely avoided he said was a “just-in-time” supply method, something that hurt roasters during Covid.
“Everyone learned their lessons… So we have a little more inventory in the pipeline at the moment.
“Roasters aren’t quite so hand to mouth as they were before.”
The final component is fuel.
As anything roasted in Aotearoa first has to come from the port after it arrives.
It needs natural gas for the roasting process and more diesel to get it distributed to supermarkets and cafes.
“That cost has risen very quickly and it’s really the silent shock.”
Sara said roasters and freight were absorbing that cost because the stock had been priced before the crisis.
“That can’t always be immediately changed or altered.”
And consumers might not want or even be able to meet those costs when they are passed on to the purchase price.
He said even if the war ended tomorrow, the impact would flow for some time.
“I don’t think coffee is on it’s own either… anything that’s being sourced from overseas will be subject to the same.
“I can’t see a situation where anything is getting cheaper at the moment.”
Sara said fuel shortages or a change in fuel phases in Aotearoa would be the toughest part of ensuring supply.
“The potential for fuel tightness in New Zealand and the ongoing implications of distribution of the green [beans] to get it roasted, and then once it’s roasted to take it to those points of sale is more likely to be the challenging point for us.
“That’s not a coffee specific problem.”
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
