You may have noticed coffee prices rising recently. As a matter of fact, all commodities have been rising lately. Gold, silver, agriculture, meat and livestock, sugar, and cotton have all been steadily rising, but coffee has been affected in different ways. Poor crops in Vietnam and Brazil due to inclement weather, and below-par crop production in key Arabica bean producing Colombia have created a decrease in supply while the demand remains steady for the world’s most popular “pick me up” beverage.
In addition to poor crop production, we are also dealing with the possibility that the government will print more money to boost the economy, which in turn would undermine the dollar and force commodity prices to soar as investors look to protect against the risk of inflation.
Also, on a larger scale, because the population continues to grow, many small coffee producing farms are being forced out to give the land over to biofuels to support the growing population, not to mention the growing cost of fuel which makes it much harder for these farms to produce and ship their coffee. There are at least 25 million small coffee producers worldwide who rely on coffee for a living. For instance, in Brazil alone, where almost a third of the world’s coffee is produced, over 5 million people are employed in the cultivation and harvesting of over 3 billion coffee plants. Unfortunately, because of rising costs, many of the people employed by these farms are not getting paid what they were before, and are moving on to factory work or something else that will earn them a better living.
Finally, climate change is a huge factor in the production of coffee. According to Miles Small, editor and co-owner of Coffee Talk Magazine, "We're running out of arable land.” He said Brazil, which grows half of the world's coffee, has lost 28 percent of its arable land because of climate factors. He said coffee production in all of Central America is down by 38 percent."There is no way to increase productivity through mechanization." In addition, land is being repurposed throughout Latin America due to a growing middle class.
Although it is likely you may notice your coffee prices going up a little in the cafes and grocery stores, coffee is a fluctuating commodity and is ever changing. Just like any other commodity, there are many variables that affect production and price. So, don’t worry, your hot cup of joe will still be there in the morning, and for many mornings left to come!
