A bumper crop of coffee from Central and South America has forced wholesale prices to a seven-year low. The wholesale commodity price for Arabica coffee is at approximately $1 per pound – less than half it was just two years ago. A bumper crop expected from Brazil will only add to the surplus and may force wholesale prices even lower. Currently the average cost of production for farmers for one pound of coffee is approximately $1.15. At such losses, higher end growers may exit the industry. The price collapse is a significant benefit for companies such as Starbucks which has announced it expects an additional $120 million in 2014 on top of the $90 million it saw in 2013 as a result of the widening margin between wholesale and retail prices.
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