Introduction to the Coffee Crisis
With her purple-and-pink hair swaying, Reneé Colón stands on a stepladder in the rented corner of a warehouse, pouring Brazilian coffee beans into her groaning old roasting machine. The beans are precious because they survived severe drought in a year when environmental conditions depressed coffee production globally, doubling the price of raw beans in just months. “Unfortunately, coffee is going to become more scarce,” said Colón, founder and roaster at Fuego Coffee Roasters. “Seeing that dramatic loss of the Brazilian crop is a perfect example.”
Global Coffee Production and Prices
Losses from heat and drought have cut production forecasts in Brazil and Vietnam, the world’s largest coffee growers. Global production is still expected to increase, but not as much as commodity market investors had expected. That’s sent coffee prices up, largely because of continued high demand in Europe, the U.S., and China. Prices peaked in February but have remained high, forcing roasters like Colón to weigh how much of that cost to absorb and how much to pass on to consumers.
The Cost of Coffee Beans
The beans Colón was roasting cost her $5.50 per pound in early March, more than double what they cost in September. And that was for mixed, midrange beans. Specialty coffees — grown in delicate climates to slow growth and add flavor — can cost even more. President Donald Trump’s current 10% tariffs cover most coffee-producing countries, including Brazil, Ethiopia, and Colombia, and are expected to drive up costs for Americans.
Challenges for Coffee Roasters
“With all these changes in coffee maybe we should open our own damn farm,” Colón muses. Rural New York isn’t an option, of course. The world’s best coffee thrives near the equator, where seasons are long, and in high altitudes, where slow growing allows beans to gather flavor. But Puerto Rico, where Colón and her husband have roots, isn’t a serious option, either — labor costs are too high and she worries about the increasing risk of crop-damaging hurricanes.
Seeking Solutions
She shrugs off buying coffee from Hawaii and California, which she says is either poor quality, overpriced or both. In February, global coffee green exports were down 14.2% from a year earlier, according to the International Coffee Organization’s market report. The shortage led to the highest price ever for raw coffee in February, breaking the record set in 1977 when severe frost wiped out 70% of Brazil’s coffee plants. Climate isn’t the only thing driving up prices, said Daria Whalen, a buyer for San Francisco-based Ritual Coffee Roasters. Inflation is driving up the cost of labor, fertilizers, and borrowing, she said.
Impact on Consumers and Farmers
Some of the recent rise in coffee prices may be from importers buying extra in anticipation of the tariffs. Colón believes prices will go still higher as import taxes begin being paid. And with consumer confidence hitting a 12-year low, Colón could see a decrease in demand for her premium coffee. “It is tough on our end because it drives the price up, tough on the consumer end because they have to pay more and tough on the farmers’ end because they may be experiencing really significant losses,” Colón said.
Expanding Despite Challenges
Yet she’s committed to expanding. In December, she and her husband took out a $50,000 loan to buy a custom coffee roaster from Turkey that will triple capacity. They’re trying to increase sales by adding new wholesale clients like coffee shops, and selling directly to homes via a beans-of-the-month-style subscription service. The Colóns have raised the wholesale price on a pound of roasted beans by 25 cents. They’re considering doing the same for pour-overs and espresso drinks at their two retail locations.
Conclusion
The coffee industry is facing significant challenges due to climate change, tariffs, and inflation. Coffee roasters like Colón are struggling to absorb the increased costs of coffee beans and are being forced to pass on the costs to consumers. Despite these challenges, Colón is committed to expanding her business and finding ways to mitigate the effects of the coffee crisis.
FAQs
Q: What is causing the increase in coffee prices?
A: The increase in coffee prices is due to a combination of factors, including climate change, tariffs, and inflation.
Q: How are coffee roasters like Colón affected by the coffee crisis?
A: Coffee roasters like Colón are struggling to absorb the increased costs of coffee beans and are being forced to pass on the costs to consumers.
Q: What is Colón doing to mitigate the effects of the coffee crisis?
A: Colón is committed to expanding her business, finding ways to cut costs, and cultivating relationships with farmers to minimize price spikes and control bean quality.
Q: How will the coffee crisis affect consumers?
A: The coffee crisis will likely result in higher prices for consumers, which could lead to a decrease in demand for premium coffee.
Q: What is the long-term outlook for the coffee industry?
A: The long-term outlook for the coffee industry is uncertain, but it is likely that the industry will continue to face challenges due to climate change, tariffs, and inflation.
