Why Your Coffee Could Get More Expensive: The Coffee Crisis in Brazil
Increase in coffee bean prices observed in producing nations compared to previous year's levels - Escalating costs for coffee bean harvest in producing nations: current prices far surpass those of previous years
Hey there! Let's dive into the reasons behind why your morning cup o' joe might cost a pretty penny. It's all thanks to a coffee crisis in Brazil, the world's leading coffee-producing nation.
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You guessed it! The hike in consumer coffee prices can be attributed to the soaring import costs for raw, unroasted coffee beans. The import prices for green coffee were up by a whopping 53.1% in April compared to the previous year, and an even more mind-boggling 147.4% compared to April 2021. This is not just a recent trend, but a longer-term issue for consumers in Germany and beyond.
The favorite green coffee for German coffee lovers mainly comes from one place - Brazil! In the past year, 516,000 tons of coffee, both raw and roasted, were imported from Brazil, accounting for a hefty 41.1% of the total import volume. Vietnam contributed 16.2%, Honduras 5.5%, and Colombia 4.3%, while other significant trading partners for coffee imports included Uganda, Italy, and Peru.
Despite the rising prices, the world's second-largest coffee consumer - Germany - has barely seen a drop in coffee consumption. According to the German Coffee Association, each German consumed an average of 163 liters of coffee in 2024. Interestingly, during the pandemic-induced lockdowns and office-from-home phase, coffee consumption even peaked slightly at 169 liters per capita, but has since dipped moderately.
- Harvest Failures
- Green Coffee
- Brazil
- Global Market
- Climate Change
- Logistical Challenges
Things got a bit grim in Brazil due to a perfect storm of climate change and logistical headaches.
The Climate Change Conundrum:
The abnormal weather patterns in Brazil involving droughts, erratic rainfall, and extreme temperatures have taken a toll on coffee farming. These harsh conditions interrupt the flowering process, lower crop quality, and boost the presence of diseases and pests, which ultimately lead to shrinking yields.
Logistical Pitfalls:
On top of the natural disasters, Brazil's port infrastructure is causing logistical bottlenecks that lead to shipping delays, increased costs, and inefficiencies throughout the supply chain.
These challenges in Brazil have some serious implications for the price and availability of green coffee in Germany:
- Steep Price Increases: With reduced supply and increased shipping expenses due to delays, green coffee prices could skyrocket. The global coffee market is already grappling with widening deficits, which could exacerbate the situation further.
- Reduced Availability: A scarcity of Brazilian coffee exports may lead to fewer options for green coffee in Germany. This could result in coffee importers seeking alternative suppliers, which might impact the quality and consistency of the coffee.
- Shifting Market Dynamics: The impact on the global market could result in price volatility and changes in the supply chain dynamics, affecting coffee traders and consumers in Germany.
- The climate change conundrum in Brazil, characterized by droughts, irregular rainfall, and extreme temperatures, has negatively affected coffee farming in the country, hindering the flowering process, lowering crop quality, boosting the presence of diseases, and pests, ultimately leading to smaller yields.
- Logistical challenges, such as bottlenecks in Brazil's port infrastructure causing shipping delays, increased costs, and inefficiencies throughout the supply chain, further complicate the situation.
- Given the high import volumes of green coffee from Brazil, the steep price increases and reduced availability caused by these challenges could have significant implications for Germany, potentially leading to changes in market dynamics and affecting both traders and consumers.
