Climate change leads to coffee shortage and eventually rising prices
As reported by Bloomberg, coffee lovers need to be prepared as the world is experiencing a global shortage of coffee that will lead to a rising prices of coffee.
Extreme weather is seen as the reason behind the shortage, not to mention the rising global temperatures that exacerbates threats to production. “Climate change is a major issue for coffee plants,” said Head of Coffee Research at the Royal Botanic Gardens Kew Aaron Davis.
Moreover, a La Nina pattern forecast through early 2022 is expected to further hurt yields. It is not a short-term issue as it could take years for the market to recover.
Arabica coffee is worst hit by the global coffee shortage. It is the coffee variety that gives the smoothest flavour and makes up about 60% of global coffee production. Arabica bean prices have spiked by about 80% this year. Arabica coffee beans are now priced at around $220 per pound, and there certainly seems to be room for further growth, as reported by Indonesia Investments.
The crisis started off in Brazil, as the country was hit by the once-in-a-generation frosts following droughts that negatively affected the crops. Many crops are badly damaged while newly planted ones will take several years to mature.
Coffee farmers or producers are also grappling with surging costs for fertilisers and labour shortage. Suppliers are also dealing with logistics issues fueled by a shortage of shipping vessels and containers.
As reported by ABC7 New York, a Brazilian coffee supplier said shipments from Brazil to the US now might take more than 100 days, when normally it only took a month.
Due to these issues, coffee retailers are faced with different options to choose from. First, to increase their own prices; second, to use arabica’s harsher cousin and cheaper variety, robusta. Robusta contains more caffeine, so it gives out more bitter flavour and it is typically used in instant coffees.
The problem is that the shortage does not only happen in Brazil. It also affects other coffee-producing countries, such as Columbia and Vietnam. Vietnam, which is known as the biggest exporter of robusta, is also expecting a second bumper crop this year.
Freight hold ups will also make exporters struggle to ship the beans. However, unlike arabica, traders know that it is just a matter of time and the robusta will hit the market eventually.
Although some coffee roasting companies in Brazil have tried to replace arabica with robusta, many brands and cafes are still reluctant to risk alienating customers by changing blends and flavour profiles.
Either way, it seems increasingly likely that coffee retail prices are set to rise. Roasters, such as Nestlé, have warned that the increased price will eventually be transferred to end-consumers.
It is seen as another example of inflation in the post-pandemic economy, as coffee roasting companies not only face rising coffee bean prices, but also higher labour costs and energy bills.