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Brazil’s once-in-a-century drought has hit the world’s largest coffee crop, pushing wholesale prices to their highest levels in years.
This week, the price of precious Arabica coffee beans was close to $1.70 per pound. This is nearly 60% higher than last summer.
The unusually dry conditions at the end of the growing season in Brazil are the culprit, because Brazil usually produces about one-third of the world’s coffee beans supply.
Rainfall in the agricultural area of ??Minas Gerais is the lowest on record in Brazil’s summer months (from January to April). This is usually when coffee plants absorb moisture before harvesting during the dry winter. But this year, it never rained.
“This seems to happen at a critical moment when the crop needs to absorb water to bloom and bloom. It just didn’t happen in time, so the yield was severely affected,” said Kona Haque, the head of the department. Conducted research with London-based agricultural product trader EDF & Man.
It is difficult to determine how small the crop will be, but experts in the field agree that this is important enough to keep world supply below demand for the first time in years.
Part of the problem is that coffee production in 2021 is always lower than normal. This is because, like many tree crops, coffee runs on a two-year cycle. After the harvest year, plant yields decrease.
Stuart McCook, an economics professor at the University of Guelph, closely follows the development of the coffee industry, saying: “They follow the so-called biennial model in the industry.”
2020 is a bumper year for coffee. Because the load is so heavy, McCook said that in this past season, “many farmers pruned the branches of coffee trees so that the trees… can grow new healthy tissues to support future crops. .”
Due to the pandemic, last year’s bumper harvest looked bigger than usual. The pandemic completely changed the traditional supply and demand pattern of coffee.
“The world is slowly getting rid of lockdowns and pandemics, which means that coffee consumption outside the home is starting to recover,” Haker said. “Demand for outdoor coffee consumption… is expected to recover. Just when this demand starts to recover, you will see a supply shortage.”
Together, this is the secret of a record price, from farm to cup.
Losel Tethong, founder and president of Propeller Coffee, a Toronto artisanal coffee roaster, sources as much coffee as possible from independent farmers. Because he believes in sustainable development, he is happy to see their prices higher. However, selling finished products without passing on these costs is also a challenge for him.
“It’s great to see the price increase; it’s just trying to absorb it in less than a year, which is very difficult,” he said.
Watch | The pros and cons of rising coffee prices:
Like many retail-focused businesses, when the pandemic hit, Tethong said he lost about 80% of his customer base. He managed to slowly but steadily develop the e-commerce business, selling bags directly to consumers, but COVID-19 has increased the cost of almost everything, including supplies such as filters and machinery, as well as transportation costs.
“As a company, we have not raised prices for five years,” he said. “We will continue to make every effort to reduce prices, but this year, we have implemented a small increase of 5% on the retail price of coffee.”
Sylvain Charlebois, a professor of food policy at Dalhousie University in Halifax, said the 5% increase in goodies is insignificant compared to cheaper, mass-produced mixtures. Coffee prices in grocery stores have risen by 17% since January.
“Something went wrong,” he said. “No matter what food is out there, the manufacturer [are] Charge more to the grocery store, which will eventually catch up to us. “
The impact of climate change
It’s not just tropical crops such as coffee that are affected.
Canadian staple foods, such as wheat, rapeseed and barley, are currently at a record high price Because the extreme high temperature in western Canada severely affected this year’s crop yields.
As with these crops, experts interviewed by CBC News said that climate change has also had an impact on coffee-which means that drinkers should get used to tight Java prices.
Watch | How climate change affects coffee plants:
In addition to the drought that affected this year’s harvest, Brazilian farmers also suffered unprecedented frosts, which is bad news for next year’s harvest.
“This drought is not a normal phenomenon, but at the same time, the frost that just occurred last week is the second time in three years,” Hacker points out.
“We may have to endure more extreme weather conditions. If this is the case…the supply will change, and when the supply changes, the price will inevitably fluctuate.”
This means that for coffee lovers, from now on, uncertainty will become the name of the game.
As Tethong puts it, “We are short on time to deal with climate change and other pressures.”
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