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Coffee Bean Reserves Have Reached 20-Year Low

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Of all the shortages that I have reported in recently, a possible coffee bean shortage must be ranked among the most dire.

It turns out coffee bean reserves have plunged to their lowest since the 2000s.

…Stockpiles of high-end Arabica beans, a favourite of artisan coffee shops and chains such as Starbucks, totalled 1.078 million bags, or about 143 million pounds, according to data released Monday by the ICE Futures US exchange.”

Brazil is the world’s top coffee producer. By the 1820’s it was already producing thirty percent of the world’s coffee. Today, it produces a third of the world’s coffee with 40 to 60 million bags annually. However, its global demand for coffee has been put in jeopardy due to factors such as the ongoing COVID-19 pandemic and climate change.

In part, the stockpile took a hit because Brazil produced less coffee than expected.

Brazil’s government on Tuesday said that farmers in the world’s largest coffee producer will harvest 55.74 million bags in 2022, 16.8% more than in the previous year, but an amount that is smaller than most in the market expect.

Brazil’s coffee production is key to balance the global supply. A smaller-than-average crop could cause a deficit and sustain coffee prices around current 10-year highs.

…HedgePoint coffee analyst Natalia Gandolphi said the Conab [Brazil’s food sully agency] number would trigger a deficit for global arabica of around 1 million to 3 million bags and flat balance or a deficit for global production, considering both arabica and robusta.

“Would be a first in recent years for the coffee market, given that consecutive years of deficit/flat balance have not been seen since 2008-10,” she said.

“It does confirm the general pessimism about the 2022 on-cycle crop, which prior to the frost had been thought might be a new record,” said Ryan Delany, chief analyst at Coffee Trading Academy, LLC.

Weather conditions and supply chain issues are contributing factors to the deficit in the stockpile. The effects of the drought were being felt last fall.

The “world price of coffee” has surged 21.6 per cent this year to $3.65 a kilogram, according to IBISWorld.

The dataset’s annual figures are the average of monthly prices of arabica and robusta green, or raw, coffee beans.

“We have not seen that type of price peak since 2014,” said Suzy Oo, senior industry analyst at IBISWorld.

What’s behind the price rise? Climate change-related weather events have affected key coffee-producing regions and global supply chain issues are hurting importers.

Drought and severe frost are estimated to have destroyed about 20 per cent of Brazil’s coffee plants.

More recently, the surging price of fuel has impacted coffee bean prices.

[Coffee roaster Matt] Swiatkiwsky said the price for a pallet of coffee had almost doubled from about $7,000 to $13,000 over the past two years.

“Freight would be the big one for us with the cost of fuel going up,” he said.

Mr Swiatkiwsky does not expect the price of coffee to fall anytime soon, if ever, because some businesses are “just getting by”.

“In all honesty, I think a lot of these prices should have been passed on some time ago,” he said.

Finally, blame for the coffee crisis can also be placed on covid. The real long-covid effect is that employees do not want to go back to work. There is now a labor shortage among coffee harvesters.

Farmers of the famed Blue Mountain coffee have, among other infrastructural challenges, lamented what they believe to be the scarcity of workers needed to drive seasonal production.

Like several other industries locally, which have also been plagued by labour shortage, some coffee farmers have cited a mass exodus of their workers, which they say has worsened since the outbreak of the novel coronavirus pandemic.

Ronald Rodney, a coffee farmer who operates the Radonor Estate situated in St Thomas near the peak of the world-renowned Blue Mountains, said that his numbers are now down to six, moving from over 30 workers in previous years.

“COVID has changed a lot of things. We have seen the loss of a number of our more seasoned workers as many of them moved on to engage in other ventures during the lockdown and slow periods. Since then, several of them have not returned. Those we have now are fairly new and sometimes they don’t even stay for too long as coffee harvesting requires long hours and a lot of people can’t manage, so what we have found is that the newer workers will sometimes come for a day when they need quick cash and then they do not return,” he said during an interview with the Jamaica Observer.

There are many dreadful, unintended consequences of the covid lockdowns. Struggles to find qualified workers willing to work essential jobs may be one of the worst and longest-lasting.


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