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02.14.22

Coffee prices, chasing that high

By Stratton P. Constantinides

As supply chain issues and climate change continue to affect the coffee industry, caffeine aficionados may soon find that those morning cups are harder to come by. The price rally for coffee futures has reached its largest annual percentage gain since 2010, and the same goes for Arabica coffee futures, which have risen 76% over the past year. These increases are being passed along by coffee sellers and roasters directly to consumers.

One of the biggest contributors to the increase has been extreme weather suffered by large coffee-producing regions. Countries such as Brazil, which led the world in coffee production with more than 7.8 billion pounds of coffee in 2020, have suffered from prolonged drought and crop-killing frost that has handicapped their ability to meet global demand — as reflected in the rising prices. Despite the fact that Brazil boasts the largest amount of freshwater in the world, largely due to the Amazon River, it has seen a massive shortage in water reserves held in rivers, lakes, and aquifers compared to the 20-year average, primarily fueled by climate change and deforestation. Combine that with supply chain issues that have struck the global shipping industry over the past couple years, and many coffee sellers have been forced to hike prices just to maintain their bottom lines.

As shifting climate conditions and the effect on agriculture continue to affect food and coffee prices, these regions must prioritize diversification of water sources and agricultural practices to keep up with global demand.

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Stratton P. Constantinides

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