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Coffee prices rising along with other groceries
Personal Finance

Coffee prices rising along with other groceries 

coffee prices are set to soar as grocery prices continue steady climb

Coffee and other food prices keep going up. Yet, we keep eating and drinking. And, unvaccinated workers may get a jab in the pocketbook if they don’t get one in their arms.

Coffee Prices Rising

The morning cup of coffee (Yummmm, coffee) that over 150 million Americans drink every day will get more expensive in the next few weeks.

The rise in prices is being attributed to harsh weather extremes in Brazil — the largest coffee grower. It produces 25 percent of the world’s supply. 

Home Brew

Coffee prices were already edging up, but the cost for domestic companies jumped 30 percent in July. Further increases are expected to be seen at grocery stores and restaurants soon.

However, Starbucks and Nestle have said they can withstand the coffee shortage. Both companies keep large inventories and say they can maintain prices for another year.

How did we get to this point?

First Drought

Brazil is experiencing its worst drought in 91 years. The epic dry spell began in spring. As a result, the United States Department of Agriculture (USDA) estimates production of Arabica coffee will be down 30 percent from the drought alone.

Then Freeze

As if a record drought wasn’t bad enough, Brazilian coffee growers were hit with the worst freeze in almost three decades on July 20. An estimated 20 to 30 percent of crops were impacted.

“It was worse than I imagined,” Adriano de Rezende, technical coordinator at the Minasul coffee cooperative told Reuters. “It’s hard to see a field that hasn’t suffered any damage.”

Transportation Costs`

To top it all off, the cost of transporting coffee out of Brazil is increasing. There is a global shortage of shipping containers. In addition, there are shipping bottlenecks at ports. All that increases transportation costs.

“Everybody is feeling the pinch,” Christian Wolthers, coffee importer and president of Wolthers Douque, said. “These bottlenecks are turning into a container nightmare.”

Wolthers estimates shipping costs have almost doubled.

It can take three to four years to replace a coffee tree, so you might want to drink your java slowly and savor it for a while.

Health Insurance Premiums May Rise for Unvaccinated

Covering the cost of treating COVID-19 patients who refuse to be vaccinated is taking a toll on many companies and insurers. As a result, the idea of raising rates or adding a surcharge on health insurance for unvaccinated workers is gaining traction. 

Healthcare officials report, more than 97 percent of hospitalizations and 99.2 percent of COVID-19 deaths in the United States are unvaccinated people. According to Healthcare Finance, those hospitalizations run up an average medical tab of $51,389 to $78,569.

Somebody has to pay those costs.

Many employers have offered incentives from cash cards to cars and vacations to get employees to take their medicine. However, vaccination rates stalled and the Delta variant raged in recent months.

Greater Cost To Cover Greater Risk

Adding a surcharge to health insurance premiums of unvaccinated employees is catching on with many companies.

“Unvaccinated individuals have potential to cost the employer more from a health care spend perspective,” Wade Symons, of benefits provider Mercer Health told CBS. “They could get COVID and incur expensive hospital costs up to $50,000 for an individual with a tough COVID case.” 

The rationale is that workers who choose a high-risk lifestyle should have to pay for that choice. Similar to the higher rates smokers pay.

Pooled Risk

Health insurance is a pooled risk. In other words, people in good health are combined in a group with people who may be less healthy. Healthy people cost the insurer less. Those with health issues cost more. The idea is to average costs out for the insurance company.

Is This Legal?

Health insurers face restrictions in coverage. As a result, they can not use health factors to determine policy prices or eligibility. The Affordable Care Act (ACA) prohibits insurers from pricing plans based on health. The one exception is smoking. The ACA allows smoker premiums to be as much as 50 percent higher.

Consequently, some feel the smoking exception may be a precedent for raising rates on the unvaccinated.

“For years, tobacco users have faced health plan premium surcharges if they failed to cease using tobacco products (and if they also failed to comply with reasonable alternatives, such as completing a smoking cessation program),” writes attorney Joesph Lazzarotti in SHRM.

“More COVID-19 ‘unvaccinated’ employees may start facing similar surcharges if they choose to remain unvaccinated for COVID,” notes Lazzarotti.

More New Jobs Require Vaccination

A growing number of businesses are requiring vaccination.

In addition, job postings requiring vaccination are trending higher.

AnnElizabeth Konkel, an economist for the job site Indeed, told the Wall Street Journal that jobs requiring vaccination rose from 50 per million in February to about 1,200 per million in the first week of this month.

“While the number of postings requiring a vaccine is still low, it’s a trend that’s really taking off,” Konkel said. “I think a growing number of employers are trying to keep workers safe and do not want to shut down again this winter. They see vaccines as the way out of this pandemic.”

Will Grocery Prices Ever Stop Rising?

In addition to coffee, other grocery prices continue to edge higher. Many analysts see no end in sight.

Food prices have risen 2.6 percent year over year, according to the U. S. Bureau of Labor Statistics

“All six major grocery store food group indexes rose over the span,” according to the report, “with increases ranging from 1.1 percent (nonalcoholic beverages) to 5.9 percent (meats, poultry, fish, and eggs).”

Steady Rise Will Continue

Food prices are rising at a constant pace. Analysts expect that trend to continue for the next couple of years.

“In 2021, food-at-home prices are expected to increase between 2.0 and 3.0 percent, and food-away-from-home prices are expected to increase between 3.0 and 4.0 percent,” states a U. S. Department of Agriculture report. “In 2022, food-at-home prices are expected to increase between 1.5 and 2.5 percent and food-away-from-home prices are expected to increase between 3.0 and 4.0 percent.”

Two culprits are to blame for the steady climb of grocery prices.

Climate Change

More than coffee is being impacted by unusual weather. Climate change is affecting the world’s food supply, according to the USDA.

Transportation

Getting food from farms to stores has become more expensive.

Tyson Foods recently raised the price of beef by 12 percent, chicken by 16 percent, and pork by 39 percent. Transportation costs contributed to that increase, according to Phil Lempert, a food trend analyst.

Meanwhile, refrigerated truck transportation prices jumped 12 percent, according to Lempert. 

How to Cope

Lempert suggests a couple of strategies for dealing with rising food prices.

  • Shop in-person. It costs less than delivery.
  • Review weekly ads, including drug and thrift stores.
  • Switch to no-frill grocery stores that sell their own brands instead of name brands.

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