The rising price of green coffee beans is a complex issue that involves both global and local variables. Here is a breakdown of the primary reasons:

Global Factors:

a. Production: Pests and diseases like the leaf rust on Robusta beans in Brazil, Vietnam, and Colombia have drastically affected worldwide coffee production. This lowers the overall supply, driving prices up.

b. Rising Demand: Global coffee demand is increasing, particularly in developing countries such as China and India. This increased demand puts further strain on a limited supply, driving prices even higher.

c. Geopolitical issues: The crisis in Ukraine, as well as sanctions imposed on Russia, have disrupted global coffee supply lines and raised shipping costs. This adds another layer to the price rise.

 

Local Factors (Indonesia):

a. Weather: Extreme weather occurrences such as floods and droughts in Indonesian coffee-growing regions can disrupt production and reduce harvests. This could effect in price increases for local coffee.

b. Production Costs: Rising prices for fertilizers, fuel, and transportation can increase the cost of coffee production for Indonesian farmers. This can lead them to raise their selling prices.

c. Domestic Demand: Coffee consumption in Indonesia is also increasing, driven by a modern lifestyle and a rising coffee culture.

 

This higher demand drives up prices. Overall, the present increase in green coffee bean prices is the result of both global and domestic forces. Lower global output, strong demand, geopolitical issues, extreme weather, increasing production costs, and increasing domestic demand are all contributing to the price increase in Indonesia.