Coffee addicts? Distress in the industry may cause world prices to rise

by time news

Tel Aviv, New York or London, where is the cheapest place to drink coffee? (Freepik photo, unsplash)

The corona and supply chain damage and climate crisis continue to make waves, and this time, Bloomberg News reports point to the following industry showing signs of distress: the coffee bean industry, specific to the Arabica variety, but not only. This will of course lead to an increase in prices worldwide, as well as a decrease in the quality of the products.

Reports indicate a severe shortage of Arabica coffee beans, the most popular variety that makes up 60% of the global coffee industry. Like other agricultural industries that have been hit by climate damage in the past year, so too here – the past year has caused a lot of damage in the growing industry, with this year’s battle not boasting good that will restore what was destroyed.

A shortage will, as expected, also lead to a rise in prices. And when it comes to a popular consumer product like coffee, which is consumed in almost every home, it is going to be well felt. Kone Hakyo, head of research at ED&F Man in London, commented on the expected shortfall in the industry and told Bloomberg, “This is not just a short-term problem, something we intend to take into account for at least the next two years.”

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Apart from the Arabica variety, there are other types of coffee varieties that are marketed in the category, but without a doubt these are the most common beans. Due to the shortage of the variety, the market is expanding the trade and marketing of the other varieties that are less popular, which sometimes causes a different taste to be emphasized from the regular taste and a stronger bitterness. Another solution is mixing varieties, when here too of course the product does not reach the level of the original product.

Brazil, the largest coffee growing center in the world is the focus of the problem here. Last year extreme cold weather after droughts caused much destruction to crops. The destruction has resulted in damage to entire trees and the expectation for the restoration of the situation reaches a time span of years ahead. Growth costs have soared in the past year following the corona due to a shortage of manpower and fertilizers, thus creating a situation that necessitates price increases.

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“We have a lot of customers who usually do not buy from us, who now order larger quantities and from different sources than usual we have a disproportionate demand, I think it is because of the general shortage of supply.” Said Johanna Berry of the Norwegian company Tropic who buys coffee for coffee roasting companies across Europe.

Despite the problems in Brazil, the Kingdom of Arabia, and Vietnam – the leading exporter of the Robusta variety is reporting a good and fruitful year and is preparing for the second year in a row of successful crops. At the same time, Vietnam does not miss the problem of supply chains, and it is this that will put the expensive price between the consumer and the coffee tower in this case. Either way a Robusta variety is much less loved and perceived by coffee and bristle marketers as a type B coffee, and most of them will probably prefer to pay more for Arabica than switch to Robusta.

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