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Business|Why Coffee Prices Are Soaring (Again)
https://www.nytimes.com/2024/12/28/business/coffee-prices-climate-change.html
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Wholesale coffee prices are trading near a 50-year high because of shortages related to extreme weather and increased global demand.
Dec. 28, 2024, 5:00 a.m. ET
When it comes to coffee, Thaleon Tremain has always tried to ignore what the market is telling him.
As the chief executive and a co-founder of Pachamama Coffee in California, Mr. Tremain sells his specialty beans for more than what the global commodity price might dictate. He wants his customers to think of coffee as a luxury product and pay for it accordingly, so that farmers who grow his beans in countries like Peru, Nicaragua and Ethiopia can cover their costs.
But now, Mr. Tremain is worried that coffee is getting more expensive for the wrong reasons. In recent years, repeated droughts and flooding have strained the global supply of coffee, frequently causing prices to soar, as climate change has done for other staples, like cocoa, olive oil and orange juice. At the same time, global demand for coffee has kept rising, with few signs that java drinkers are cutting back. This month, prices in one market broke a nearly 50-year high.
Even though prices might fall, Mr. Tremain said the volatility threatened the sustainability of businesses like his — and the livelihoods of the farmers who grow his beans. Lattes will probably also eventually get more expensive.
“Over time, we’re going to see much higher prices,” Mr. Tremain said in an interview. “Supply is not meeting demand.”
Despite being one of the world’s most consumed beverages, coffee can be grown only under very specific conditions, requiring misty, humid and tropical climates, with rich soil free of disease. Aside from a small batch grown in Hawaii, the United States produces little coffee domestically. It is the world’s largest importer of the beans. The scarcity of sources leaves global coffee prices susceptible to the effects of extreme weather.
According to the U.S. Department of Agriculture, around 57 percent of the world’s coffee production last year came from arabica beans, and Brazil is the largest exporter. But a severe drought there this summer devastated the harvest, which typically runs from May to September, and it could threaten next year’s crop as well.
Wholesale price of coffee beans
