Climate change, crop damage to burn hole in coffee-lovers' purses

Are you a coffee lover? If yes, there’s some bad news for you.

Coffee prices are soaring, and they show no signs of cooling down.

Futures for Arabica beans, the premium variety prized for specialty brews, surged to $3.1845 a pound in New York on Wednesday (November 27), the highest level since 1977.

This year alone, prices have climbed nearly 70 per cent, leaving traders and roasters grappling with a market dominated by supply fears and climate challenges, according to Bloomberg.

Soon, coffee lovers may have to brace themselves for the bitter taste of even higher prices.

Climate change hurting coffee crops

Global coffee production has been hit hard by extreme weather conditions, a grim nod to the growing impact of climate change.

Brazil, which accounts for almost half of the world’s Arabica supply, has suffered from a severe drought earlier this year, leaving soil moisture levels critically low.

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Despite recent rains, concerns persist about next year’s crop as flowers struggle to attach to branches, jeopardising cherry formation. In Vietnam, the world’s largest robusta producer, the harvest has been delayed by heavy rains following a dry growing period, further tightening supply.

In an interview with Anadolu earlier this year, Sarada Krishnan, a scientist, and Hanna Neuschwander, communications director at World Coffee Research, pointed out that rising temperatures, erratic rainfall, and droughts are wreaking havoc on coffee crops.

These changes not only reduce yields but also impact quality, leading to early ripening, diminished flavour complexity, and lower-grade harvests.

Market dynamics compound the crisis

Brazilian farmers have already sold up to 70 per cent of this year’s crop. Now, they are confident that prices will climb further and are holding back on forward sales for next year.

This reluctance to sell, coupled with cash flow challenges for traders and limited hedging options, has dried up supply pipelines.

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“There are not many sellers,” said a coffee expert at a leading agricultural trade house. “Brazil farmers are not interested in selling, the trade has no cash, and speculators won’t sell either.”

Customers pay the price

The repercussions are spilling over to consumers. Nestlé SA, the world’s largest coffee maker, has announced plans to raise prices and shrink package sizes to offset escalating costs.

For cafés and specialty coffee roasters, higher bean prices mean tough decisions on how much of the burden to pass on to customers already reeling from inflation in other staples.

Amid these challenges, demand continues to grow.

Emerging economies are embracing coffee culture, while developed markets are increasingly drawn to specialty brews and innovative products. However, these trends may soon clash with dwindling supply, making it harder for the average coffee lover to enjoy their daily cup without feeling the pinch.

With inputs from agencies