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Feeling the grind

Your morning java jolt might soon be putting a bigger dent in your wallet.

“We continue to carefully monitor and evaluate green coffee prices and are responding with pricing adjustments that balance our need to run the business effectively while providing maximum value,” Starbucks said in a recent statement.

Translation: At Starbucks, a caffeine fix is getting costly for customers.

“It went up I think last week, or the week before,” says fourth-year kinesiology student Stephanie Paplinskie.

The cost to fill up her reusable mug at the Western Student Recreation Centre Starbucks location went up from $1.64 to $1.84, she says.

And Starbucks isn’t the only company hiking up retail prices thanks to the rising cost of coffee.

Global coffee prices surged to a 14-year high in February to $2.46 US per pound. It’s the highest coffee has traded since May 1997, when beans were going for $3.20 per pound.

Last month, Tim Hortons said it might soon be charging Canadian customers more – and the popular chain already jacked up coffee prices by three per cent at its locations south of the border.

So why are these little brown beans getting pricey? On one hand, it’s the basic economic principle of supply and demand.

Poorer-than-average crops in coffee-producing countries like Colombia, Mexico and Kenya led to a dip in supply. Meanwhile, North Americans can’t seem to get enough of their brew.

Forty per cent of 18 to 24-year-olds who responded to a 2011 survey by the National Coffee Association drink coffee daily – compared to 31 per cent in 2010.

But there are other reasons too, says Chris Hannah, the operations manager for Trees Organic, a coffee chain with shops throughout the Vancouver, British Columbia area.

“Think about all the added costs that you wouldn’t normally think are associated – [like how] fuel goes up, then transportation costs more,” he adds.

And stock market speculators can drive values even further, thanks to assumptions that demand will continue to surpass supply.

“If things stay the way they are, we’re certainly going to have to increase our menu prices,” Hannah says.

“Just as an example, six months ago we were buying a Mexican organic for just under $3 a pound and now it’s $4.50 a pound. We’ve been eating that cost the whole time.”

However, it’s a different scene for coffee shops outside the typical supply chain – and it seems fair traders are faring better than other coffee companies.

“Traditional coffee was selling for pennies,” says Jeffrey Stinson, owner of Fair Grounds Café & Roastery, a Toronto-based organic and fair trade coffee company.

“Now that it’s going up, the companies that are usually getting it for pennies are starting to raise prices.”

Fair trade coffee, on the other hand, is always pricier – so companies purchasing from fair trade co-operatives aren’t noticing the global price increase to the same degree.

So what is a co-op, exactly?

“It’s a co-operative of coffee farmers that try to get together and obtain a better price for coffee,” Stinson explains. “What happens normally is coffee farmers who grow the coffee can’t eat or send their kids to school.”

Middlemen buy coffee from the farmers at the lowest price possible, he explains, in order to make a profit when they sell it to coffee companies.

“Coffee farmers have no way of getting it to market themselves,” Stinson adds. Co-operatives solve that problem by ditching the middlemen and allowing farmers to actually turn a profit on their own.

“Fair trade coffee ensures the people who are working there get paid a fair wage,” adds Jeff Armour, food and beverage manager for the University Students’ Council here at Western.

Armour says The Spoke serves only fair trade coffee.

The Spoke buys coffee that’s twice as expensive as the beans bought by Tim Hortons – but Armour says being socially responsible outweighs the cost.

So will The Spoke’s prices be going up like Timmy’s too?

“You can’t predict the future, but the one thing we can predict is that The Spoke café will remain competitive,” Armour says. “We’ll do our best to produce the cheapest cup of coffee that is socially responsible for students.”

Wherever students buy their cup of joe, it’s doubtful price point will ever be a deterrent for them getting their daily fix.

“If it’s twenty cents more, I’m still going, I’m still buying it,” says Paplinskie.

“If you need a coffee – you’re going to get it.”

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