Only then will the coffee tins and jars be filled, labelled and transported to the supermarket shelves or to the coffee shops. Along this long chain, everybody will take a cut of the profit. The fixed costs account for a large proportion of the price paid by consumers in the UK, while the fluctuating world price for coffee is but a small part of the total. In addition, the big coffee processors, like for example Nestle, will hedge their risks using financial futures contracts, and this will stabilise the prices they pay for green coffee. When the supply of coffee is great, the world price of coffee falls, sometimes to levels below the actual cost of growing coffee.
Many farmers then go out of business, or they stop growing coffee to grow something else instead.
Consequently, the world supply of coffee falls, and prices rise again. Once again, this makes it worthwhile for farmers to produce coffee instead of other crops. As they do so, the supply rises and prices fall again. In other words, coffee is a cyclical crop. Sometimes storms, a late frost, crop disease, war, exchange rate fluctuations or other unpredictable events can force coffee farmers out of business.