It is indeed true that markets can have little pockets of really rather strange behaviour. Veblen Goods exist, those that are more desired as they become more expensive, even Giffen Goods exist, those where
effective demand rises as price does. but these are strangenesses, oddities, confined to small corners of the marketplace.
When we come to commodities, by definition those things widely traded, we do tend to think that the weirdnesses get ironed out. Except among those who work at Vox apparently:
The global coffee crisis is coming
It’s getting harder and harder to grow coffee.
That would be a danger to body and soul everywhere, especially to members of drinking households early in the morning. We’d thus like to get to the bottom of this.
But coffee is becoming harder to grow. It’s a notoriously picky plant that requires very specific conditions to grow. And as climate change warms the planet, the places that can sustain the plant are shrinking. A recent study estimates that by 2050, the amount of land that can sustain coffee will have fallen by 50 percent.
But while there may be time to save the coffee plant, the crisis has already arrived for coffee farmers. Deteriorating conditions and plummeting prices have made it difficult to make a living growing coffee, not to mention invest in measures to adapt to climate change.
Erm, what? If prices are falling then something is going on, right? One issue could be that demand is falling in which case it doesn’t actually matter that it is getting more difficult to grow coffee. For falling demand meeting falling supply capability really isn’t a problem, it’s one of those self-solving things.
As it happens demand isn’t falling. It is production that is rising:
If production of coffee is rising then it must be becoming physically easier to grow coffee. Even as it could be true that it is becoming financially more difficult to do so.
Basic economic logic tells us that it cannot – in the absence of that falling demand – be more difficult to grow coffee if the price is falling. Isn’t it a pity that Vox cannot recognise such basic economic logic?