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Coffee prices have increased by 20%, while global demand for coffee continues to grow. Although several factors are responsible for the price changes, lower production in Latin America is one of the reasons.
Supply, Demand and Drought
The Wall Street Journal reports that coffee prices increased from a low of $0.93 to $1.157 per pound in recent weeks. However, for the past several years, coffee prices have been falling. For example, the price of coffee per pound was about $3 in 2011.
While trade prices continue to fluctuate, the demand for coffee is increasing at a steady pace. People drink two billion cups of coffee per day around the world. Exporting coffee is a $20 billion industry, but most of the production happens in developing nations.
Coffee berries grow at the Cielito Lindo group farm in Pena Blanca, Honduras. Tomas Ayuso/Bloomberg
The Wall Street Journal blames the current drop in prices on lower coffee production in Honduras because of dry conditions. In Honduras, five years of droughts have devastated crops, including coffee, and a rust fungus threatens what is left.
“And for coffee farmers, yet another problem, an epidemic of rust fungus, roya in Spanish, an insidious plant disease they liken to cancer, which grows quickly in dry, warm climates, destroying entire coffee plantations,” Marcia Biggs said.
The Growing Threats to Coffee
The coffee rust fungus is not the only threat to the industry. Climate change is increasing the number of unpredictable and long droughts, which affects farmers trying to grow the crops in different parts of the world. Fluctuating temperatures increase the overall number of diseases for coffee plants, while potentially killing important pollinators.
Another threat is the loss of plant biodiversity, which can affect coffee growers on a global scale. Wild coffee plants provide important genetic diversity that can enhance commercial varieties, so their disappearance could have lasting consequences for farmers.
Close up of coffee flower with beans forming behind. Photo by FlowerPhotos/Universal Images Group … [+]
“The first full assessment of risks to the world’s coffee plants shows that 60% of 124 known species are on the edge of extinction. More than 100 types of coffee tree grow naturally in forests, including two used for the coffee we drink. Scientists say the figure is ‘worrying’, as wild coffee is critical for sustaining the global coffee crop,” according to the BBC.
Coffee prices will continue to change and may increase even more if these threats become bigger. However, the world’s addiction to coffee is unlikely to fade.
