Arabica coffee, on average, has been priced at $1.3 per pound during the more than 50 years in which prices have been collected in international markets, but in recent months its price has skyrocketed to unsuspected levels. If in 2023 the price of the bean began the year at around 1.5 dollars, since the summer the price of Arabica coffee has not stopped rising in price, reaching 3.2 dollars per pound this Tuesday for the first time since 1977. . The increase in 2024 already exceeds 70%, and the price of coffee is only 4.7% away from reaching the highest prices ever seensince prices began to be recorded in the international market. The two largest producers on the planet, Brazil and Vietnam, are suffering from disastrous weather conditions for the coffee harvest, and large companies, such as Nestlé, are raising prices and cutting the amount of coffee in their packages.
Drought is responsible for poor harvests in Brazil and Vietnam. Brazil produces around 35% of all the coffee in the world, and Vietnam is the second largest producer of the Arabica variety, and the first of the robusta variety, which has also become more than 80% more expensive so far this year. For Vietnam, the climate problem is now twofold: The drought severely affected the first months of this year’s harvest, and at the time of harvesting, heavy rains arrived, unusual for this time of year, which flooded the fields at the time of harvesting.
This, according to calculations by Savor Brands, the packaging firm specializing in coffee, will deteriorate the Vietnamese harvest by at least 10% for this year, a cut that is driving prices of the raw material.
In Brazil, many producers are warning of the seriousness of the situation. “It’s a disaster, there is no other word to describe it,” Marcelo Paterno explains to Global Coffee Report. “The last harvest I produced less than half of what is usual, even below the 2021 harvest, which was hit by frost. If you look at the fields, it is very evident to someone who knows coffee that the harvest is going to be even worse,” laments Paterno. Statements in this sense are repeated, after four consecutive years of poor harvests in Brazil.
In fact, an example of the serious problem that is being experienced is the Alto Cafezal farm. It began producing in 1970, under the command of José Carlos Grossi, and this year 40% of its fields have frozen. The damage has been so severe that the family has decided to cut back on their coffee production and replace it with other crops, such as cereal. If prices did not rise “much more” than current prices, The family rules out planting coffee again, in a business that had been dedicated to this grain for more than half a century.
Global Coffee Report explains that “it is sad that the trees are not producing even a fraction of a normal harvest. And the problem continues: a severe frost in August damaged trees that were already flowering for the next harvest,” they highlight. The damage, in fact, is also punishing and skyrocketing the prices of another of the main agricultural resources that Brazil generates, cocoa.
Due to the problems that large harvests are suffering, and the rise in prices in international markets, consumers are already suffering the consequences in their pockets. Nestlé, the world’s largest seller of coffee, announced in November that it will raise prices and reduce the size of coffee packages, to try to reduce the damage of price increases.
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