Chethma De Mel, Jadetimes Staff
C. J. De Mel is a Jadetimes news reporter covering Entertainment News
Prices like £5 in London or $7 in New York for a cup of coffee may seem unthinkable for some, but this could soon become the norm due to a "perfect storm" of economic and environmental factors in major coffee-producing regions. According to Judy Ganes, a market analyst, the cost of unroasted coffee beans traded in global markets has reached historically high levels, driven by troubled crops, market dynamics, low stockpiles, and even the world’s smelliest fruit.
How We Got Here: A Global Bean Shortage
In 2021, Brazil, the world’s largest producer of Arabica beans—commonly used in barista-style coffee—experienced a severe frost that destroyed many coffee crops. This created a bean shortage, leading buyers to turn to Vietnam, the largest producer of Robusta beans, which are typically used in instant coffee blends. However, Vietnam faced its own challenges, experiencing the worst drought in nearly a decade, which impacted its coffee yields.
Climate change has also played a significant role. Will Firth, a coffee consultant in Ho Chi Minh City, noted that the development of coffee plants has been affected, leading to lower yields.
The Rise of Durian: Coffee’s Smelly Competitor
In Vietnam, many farmers have shifted their focus from coffee to a lucrative alternative: the smelly durian fruit. The fruit, banned on public transport in countries like Thailand and Japan due to its pungent odor, has become increasingly popular in China. Vietnamese farmers have started replacing coffee crops with durian, driven by the promise of higher profits. Some estimates suggest durian is five times more profitable than coffee, leading to a significant decline in Robusta exports.
As a result, Robusta coffee exports from Vietnam dropped by 50% in June 2024 compared to the previous year. This decline has further tightened the global coffee market, with supply struggling to keep up with demand.
A Brewing Market Storm
With both Arabica and Robusta beans trading at near-record highs, the impact on coffee prices in high street cafés is becoming evident. Paul Armstrong, a wholesaler who runs Carrara Coffee Roasters in the UK, believes coffee lovers could soon be paying over £5 for a single cup. He describes the current situation as a "perfect storm," where rising bean costs are forcing businesses to consider passing those costs on to consumers.
However, not all sectors of the industry will feel the same effects. Will Firth suggests that lower-end coffee, like instant blends or gas station coffee, is likely to experience the biggest price increases.
Coffee Prices: Inflation or Bean Costs?
While the cost of beans is undoubtedly on the rise, industry figures caution that inflationary pressures such as labor and rent costs play a significant role in driving up retail prices. Felipe Barretto Croce, CEO of FAFCoffees in Brazil, argues that despite recent price hikes, coffee remains relatively cheap as a luxury good when brewed at home. Moreover, the increasing cost of lower-quality beans might make specialty coffee seem like better value in comparison.
Hope on the Horizon?
There is some hope that prices could stabilize if Brazil's upcoming coffee crop is successful. The timing of rains this season will be crucial. If rains return early, the coffee plants will have a chance to recover and produce a healthy yield. However, if the rains are delayed until October, further market stress and higher prices could follow.
Coffee’s Future in a Changing Climate
In the long term, climate change poses serious challenges to coffee production. A 2022 study concluded that even with drastic reductions in greenhouse gas emissions, the land suitable for coffee cultivation could shrink by 50% by 2050. One potential solution, supported by Croce, is introducing a "green premium" on coffee. This would involve a small tax that would go to farmers, helping them invest in regenerative agricultural practices to protect farmland for future generations.
While rising coffee prices today may be partly due to the growing popularity of smelly durian, the long-term affordability of coffee will depend on how the industry adapts to the impacts of climate change.
