Climate change in Columbia driving US coffee prices sky high

coffee prices

Hot weather and heavy rains have hurt Columbian coffee production as global demand catches up with U.S. coffee drinkers. Image: CC ZeePack/Flickr

Coffee prices are skyrocketing, and U.S. coffee lovers are starting to get the jitters. Coffee production worldwide is under stress from climate change, global coffee demand is rising and speculators are driving the price of coffee futures higher than they’ve been in more than 30 years. But the CEO of Starbucks spread some sunshine on the gloom and doom, vowing not to pass coffee price increases on to Starbucks customers.

Coffee prices and climate change

Coffee futures for May delivery approached $3 a pound for the first time in 34 years. According to the International Coffee Organization, a precarious balance between supply, demand and weather is driving up coffee prices. Climate change is wreaking havoc. In recent years, major coffee producing countries have been battered by rising temperatures and heavy rains. Coffee plants require their own precarious balance of temperature, rainfall and dry spells to ripen properly for optimum taste. Warm, wet weather also incubates coffee pests, such as a fungus called coffee rust. In Columbia, the second largest producer of prized Arabica beans behind Brazil, average temperatures have increased one to two degrees in three decades. In the last few years, rain in Columbia’s coffee regions has increased more than 25 percent.

Has the world reached peak coffee?

Colombia produced more than 12 million 132-pound bags of coffee in 2006. At the time, Columbian coffee producers set a 2014 goal of 17 million. In 2010 Columbian coffee production totaled 9 million bags. In Brazil, increased coffee production has been offset by rising domestic coffee demand. Brazil’s coffee consumption in 2010 grew to within 3 million bags of the U.S., the world’s top coffee-drinking nation. Consumers in the developing economies of China and India are also getting hooked on coffee. Coffee experts doubt that climate change will allow Columbia’s Arabica bean crop to recover and worry that the world has hit “peak coffee.” If peak coffee has been reached, global coffee supplies will not match growing demand, and coffee prices will rise accordingly.

Starbucks makes a stand

Starbucks CEO Howard Schultz blames skyrocketing coffee prices on speculators and has pledged not to raise prices. Schultz told Fox Business News that speculators are making money off rising coffee futures while coffee drinkers and coffee farmers suffer. He said Starbucks has already bought enough coffee to last through fiscal 2011. But Starbucks profits have been in decline. If the upward trend in coffee prices continues, by the time Starbucks replenishes its coffee supply for 2012, Schultz may be hard-pressed to maintain that pledge.


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