In the mountainous highlands of Chiapas, Mexico, around 150 coffee farmers on the Edelmann family farm work tirelessly under the shade of tree canopies to produce coffee using a shade-grown method that is more drought-resistant, but is still impacted by climate change. The longer-than-normal dry season caused crop yields to suffer, leading to higher production costs that could potentially result in higher prices for consumers in the future. Roasters and coffee experts are warning that prices could remain elevated for a longer period, as factors like climate change continue to reduce the global supply of coffee.
The International Coffee Organization reported that the ICO Composite Indicator Price reached a 13-year high, averaging $2.27 per pound, due to various supply and demand factors impacting the price of coffee. Experts note that coffee is more sensitive to changes in temperature than other crops, and recent climate-related events have further impacted production. Brazil, as the top producer of Arabica coffee, experienced a supply shock when a strong frost damaged crops in 2021, leading to higher prices for Arabica and subsequently impacting the Robusta market as well.
While Robusta is a hardier plant than Arabica, recent droughts and high temperatures have affected its yields, particularly in Vietnam, the top producer of Robusta. The rising costs of Robusta are driving up the overall price of coffee, with experts attributing these price increases to the effects of climate change. Coffee retailers such as Lavazza and Nestle have already raised prices due to factors like poor harvests, climate change, and the impact of global conflicts, causing challenges for budget-conscious consumers.
Starbucks, however, has been able to maintain stable prices for consumers by utilizing fixed-price contracts and hedging strategies to protect against market fluctuations. Despite this, experts warn that if costs continue to rise, consumers may eventually see higher prices for their favorite coffee drinks. Despite the price hikes, experts believe that demand for coffee will remain strong, as it is a staple in many people’s daily routines. Whether coffee prices are $3 or $1 per cup, consumers are unlikely to change their coffee consumption habits based on price alone. Ultimately, while coffee prices may continue to increase due to climate change and other factors, the demand for coffee is expected to remain steady in the foreseeable future.
