I think you're right regarding the impact of a rising "C" being more beneficial than the past 13 years of effort in improving quality, just not too sure the money makes it all the way down to the farm level in the majority of the scenarios. As a coffee grader for NYBOT/ICE it's interesting to see that as the prices climb there are less coffees going through ICE and those that do come through seem to be mostly "re-certs" ... prices up quality down, it's an odd industry we work in.
I think a lot of the money has and is in fact making its way down to the farm level. Just look at the internal market levels in any arabica-producing country and you'll see that the farmers are doing exceptionally well. For example, historically in Brazil the level of 300 reais per bag of fine coffee ("bica corrida") has been the level at which they'd sell everything they could...and this year, with no frost, no drought and a crop of 56+ million bica is currently trading around 510 reais. It's unbelievable, really.
While I agree it's an odd industry I must disagree that there's anything especially odd about the situation we're seeing up at ICE. We're seeing poorer quality coffees there because the cash market is paying a better price than Certification is. Look at the differentials that coffee is trading at; it's not surprising that someone would pass on tendering it to the "C" (in spite of how much you and I would prefer that they put it up for grading to help pay our mortgages
Awfully selfish of them, really).