Worldwide Coffee Shortage Expected in 2011

by Daniel Harrington on December 13, 2010

Global Warming, La Nina, Kenya Real Estate Pressure All Among Causes of Global Coffee Shortage

Coffee prices skyrocketed in 2010 capping of the year with one of the steepest rises in December. New York coffee futures went up more than 50% during the year.

Simple Laws of Supply and Demand Affect Coffee Connoisseurs

Coffee supply is going down and demand is going up. Specialty coffee of the Arabica coffee bean varietals in particular is seeing a disjunct between supply and demand.

Kenya’s last coffee auctions of 2010 saw a marked price jump attributed in part to population pressures causing real estate demands that had some farmers pulling up coffee plant crops. Meanwhile the famed Kenya AA coffee was garnering recored prices, and the price increases show no signs of abating.

Kenya’s also saw a significant reduction of output in some areas due to drought. In contrast, Brazil saw a significant reduction in some areas due to heavy rainfall.

[Also see: Best Coffee In The World.]

Worldwide Coffee Inventories Depleted

Coffee harvests have been weakening in general and worldwide inventories are being depleted. Around the globe it seems many new people are gaining an appreciation of the revered bean and with these countries drinking more coffee there is less available for the United States.

In Columbia and Central America there have been some particularly bad coffee harvests in recent years and this is having a severe effect on overall supply at a time of increasing demand.

These factors indicate a coffee shortage will be felt throughout 2011, at first manifesting mainly through higher prices which have already being noticed in coffee shops and on store shelves, as much as 30% more on some products than just one year earlier.

Many Top Coffee Growing Regions Experiencing Difficulties

Some think the harvest of the powerhouse coffee growing nation of Brazil will ease the pressure yet at best most of this crop will only help to refill depleted inventories. The appetite of Brazilians for coffee has also increased and so Brazil now keeps a lot more of its coffee production than previously. In addition predictions for Brazil’s next harvest are less than stellar.

Bad weather in Vietnam has affected their coffee crops in 2010 as it has in Columbia which is experiencing its second straight year of lower than expected production. Exports from Indonesia are expected to drop twelve percent.

In Tanzania the drought hindered flowering leading to an estimated forty percent drop in production though massive re-plantings of crops  is going on as the country hopes to export 100,000 tons of coffee by 2015, up from the current level of about 70,000 tons.

Also see: The Top Ten Coffees in the World.]

Coffee Crops Sensitive To Climate Changes

Coffee is a sensitive plant and climate changes including years that are either too wet or too dry can have significant effects on crops. If the temperature is too hot or cold it can affect the coffee plant’s flowering, and coffee plant diseases and pests are a persistent problem at best and devastating at worst.

Weather that is too wet can also lead to diseases such as coffee rust, and if the climate isn’t sufficiently dry after harvest it can affect the somewhat sensitive process of sun drying the coffee beans.

“Global Warming” and Coffee

Despite many people still claiming that global warming is more fantasy than fact, many top coffee producers have indeed blamed global warming on the higher temperatures that have caused many coffee farmers to move to higher ground to produce the famed Arabica bean which prefer the cooler temperatures found at higher elevations.

According to the International Coffee Organization the temperature in coffee growing countries has risen one-half of one degree in the last twenty-five years.

General economic indicators as well as basic laws of supply and demand indicate that a wholesale coffee price spike will likely occur during 2011.

For many large institutions that have only seen small rises so far in their prices, including Starbucks, 2011 may be the time that these companies will have to face the bottom line and respond to the reality of worldwide price increase for the green coffee beans (unroasted beans) they purchase and roast.

Because these companies, including wholesale grocery chains, often buy large quantities of coffee in advance, it takes a while for a price spike at the beginning of the supply chain to make its way through to the end.

Coffee’s Long Chain of Custody

Coffee has a particularly long “chain of custody” often making its way through numerous hands before finally reaching the consumer enjoying their brewed cup. Remember these coffee supply issues and price increases are coming on the heels of a surge in wholesale coffee prices from 2004 to 2007 when a 30% increase was seen.

Many analysts predict that the pressure on coffee prices will continue upward into 2012.

[Also see: Five Best Coffees In The World - Best Coffee Beans]

Buy Your Coffee Forward

One way consumers can protect themselves against future price increases is to buy their coffee forward. In other words, stock up a bit on your coffee. The problem is that coffee is much better when freshly roasted so this only works if you buy green coffee beans and then roast them yourself when needed.

Also see:

Coffee Prices 2011

Coffee Prices and Coffee Futures Reaching New Highs in 2011

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{ 1 comment… read it below or add one }

rohan quest February 20, 2011 at 1:24 pm

Jamaica Blue mountain is one of the best in the world, do you have any information on this coffee

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