Coffee Prices Rising 2011

by Daniel Harrington on February 9, 2011

UNITED STATES (Feb. 8, 2011) – Coffee production is down in many countries at the same time demand is surging ever higher and this has created a coffee shortage worldwide.

Inclement weather and coffee plant diseases and pests as well as urbanization and real estate pressures have diminished recent coffee crops in some of the most prominent coffee growing countries.

Meanwhile there are major emerging markets – including India, China and Brazil – with many young professionals are displaying a rapidly increasing demand for specialty coffee while Europe and the United States have sustained their very high demand even in the face of an economic recession.

Coffee Harvests Down in Major Countries

From Uganda to Kenya, Brazil to Vietnam, and in Columbia and Central America coffee harvests have been lower than expected due to a variety of causes. Here is a rundown of some of the recent problems leading to lower coffee production.

Uganda Sees Lower Coffee Production

In December of 2011 Uganda saw a 13% decrease in volume of coffee shipped compared to one year earlier. The Uganda Coffee Development Authority (UCDA) reported that 237,747 bags of coffee were shipped from Uganda vs. 272,755 bags shipped in December of 2009. This was 17% lower than what had been forecast.

The cause of the decrease in coffee shipments in Uganda was inclement weather as well as coffee plant diseases and pests such as twig borers and mealy bugs. Another contributing cause was urbanization in some coffee growing areas.

The value of Uganda’s coffee exports went up, however, bringing increased profits to coffee farmers. The $28.6 million earned in December of 2010 was a 12% increase from the $25.6 million earned in December of 2009.

The country’s Arabica coffee exports continued its ascent totaling 187,044 bags in October/December 2010, which was up from 164,659 bags in 2009, which was up from 121,805 bags in 2008. Meanwhile Robusta coffee continued its downward trend which was blamed mostly on the bad weather, coffee plant diseases and pests and urbanization.

Arabica coffee prices in Uganda showed a 12.5% price increase with the highest price being realized by the Mt. Elgon (Bugisu) followed by the Bugisu A and the Organic Wuar coffee.

The UCDA also noted that “prevailing prices are supportive to the coffee production campaign, which envisages Uganda’s exportable coffee to hit 270,000 tonnes (4.5 million bags) by the year 2015.” The campaign focuses on farmer organization, extension, and access along with research and credit programs geared at boosting productivity and farmer incomes.

Vietnam Suffers from Lower Coffee Output

In Vietnam bad weather led to a drop in coffee production. Vietnam is the world’s largest Robusta coffee producer. The country exported about 140,000 tonnes of coffee in January of 2011 which was a 3.7% decrease from January of 2010 while total value of these coffee exports rose by 30% to US$266 million.

Brazil in Weak Year and Sustains Flood Damage

Rains in Brazil have damaged coffee crops in Brazil. Exacerbating the coffee production problem in Brazil is the fact that the country’s crop alternates between weak and strong years and 2011 is considered a weak year.

Since coffee consumption in Brazil is rising dramatically they will be keeping a larger percentage of their own coffee crop and it is estimated they will be keeping half of their crop by 2015.

La Nina Weather Pattern Not Good for Coffee Production

Among the many problems suffered by the world’s coffee growing is the La Nina weather pattern that is caused by cooling equatorial waters in the Pacific Ocean. In 2010 and into 2011 this pattern has been in effect and has caused floods and coffee crop damage in Columbia and Central America.

Now in its second straight year of reduced coffee production, Columbia is feeling the effects of the weather.

In an announcement by the U.S. Department of Agriculture in December of 2010 it was noted that Columbia, the world’s second biggest Arabica grower, had been experiencing floods and road damage causing delays in agricultural shipments. This was confirmed in an announcement issued by the Columbian National Federation of Coffee Growers.

Coffee Diseases and Pests Also Affecting Columbian Coffee Crop

As the world’s second largest hand-picked Arabica coffee producer behind Brazil, Columbia has felt the effects of the bad weather in recent months.

The country produced 8.9 million bags of coffee in 2010 when normal production would have been between 11 and 12 million bags. While that was due to excess rain, it comes on the heels of 2009’s 33-year low of 7.8 million bags.

The intense humidity also spawned the spread of fungus on coffee crops, and particular coffee leaf rust commonly known as roya, which attacks the Arabica coffee plant leaves creating yellow-orange lesions.

The result is lower yields, and if left unchecked it can kill the coffee plant. Farmers have also noted that the coffee rust is now attacking plants at higher elevations which wasn’t previously the case. This is blamed on generally increasing temperatures due to global climate change.

The International Coffee Organization recently stated that during the last 25 years the world’s coffee-growing countries have seen a steady rise in temperature equal to about one-half of a degree, and as a result many Arabica coffee farmers have been moving to higher elevations due to the cooler climate favored by the premium Arabica coffee plants.

Another pest that has been showing up more is the broca insect infestation. The broca is a borer worm which lays its eggs inside the coffee bean.

One Columbian coffee farmer at 4,265 feet above sea level who normally didn’t see broca on more than five percent of his crop saw the infestation on 25% of his crop in 2009-2010, and this was the most plants affected by it in a quarter century as far as the farmer recalled.

Kenya Has Its Own Coffee Production Issues

In Kenya the issues leading to lower coffee production have had less to do with weather than with real estate pressures which in some areas, particular in central and western Kenya, have caused coffee plants to be uprooted. Coffee prices surged on the Nairobi Coffee Exchange at the end of 2010 for the premier Kenya AA coffee beans.

Tanzania Involved in Massive Replanting – Production Still Down

The coffee crop of the country of Tanzania was dealt a blow by a recent drought though it is expected to recover. Meanwhile Tanzania’s huge coffee planting program is underway and the country expects to produce 100,000 tons of coffee annually, up from the current 70,000 tons.

Known for its highly regarded Tanzania Peaberry coffee, Tanzania will take some time to see the benefits of the plantings since coffee plants take three to five years to begin producing significant crops.

Other Countries Also Seeing Lower Coffee Production

Guatemala, Costa Rica, and Indonesia have also seen reduced coffee harvests. Indonesia’s coffee exports declined about twelve percent.

Coffee Demand Grows – Premium Coffee Products Increasingly Popular

The world’s coffee markets are undergoing a fundamental shift in that a new group of gourmet coffee lovers has emerged and they prefer fresh-brewed whole bean coffee and specialty coffee drinks including Lattes and Cappuccinos.

Since coffee has shown to be rather inelastic with respect to price increases, it seems that the demand for Arabica coffee has remained strong in the United States and Europe even during the economic recession. Meanwhile it has been growing rapidly in emerging markets despite coffee price increases.

China’s rapidly increasing demand for premium coffee will continue to put pressure on coffee supplies. Coffee demand in China has increased about forty percent in the last two years. India’s coffee demand has been increasing at a rate of about 5% each year.

Brazil is another emerging market quickly developing a taste for Arabica coffee much stronger than before despite the fact that they are the world’s top grower.

Increasing Coffee Demand Comes at Time of Shrinking Coffee Supply

The increasing demand at a time of shrinking supply is creating the perfect storm causing coffee price spikes. If the world’s economies improve in the coming years it is likely that coffee demand could surge even more rapidly.

Since the last year has seen a major decrease in the world’s stockpiles of green coffee beans, anything that exacerbates the supply/demand disjunct in the coffee markets will likely cause immediate effects on prices rather than the delayed price rises when large stocks of coffee existed.

From 2004 to 2007 the wholesale price of coffee climbed about thirty percent and the current round of price increases will most surely exceed that rate considerably.

Major Coffee Companies Raising Their Coffee Prices

First it was the J.M. Smucker Company, the parent company of Folgers, Dunkin’ Donuts and Millstone, who raised their prices about 9% on their top coffee products in 2010 while saying it was due to an increase in the price of green coffee beans.

Then Yuban and Maxwell House, who produce coffee under their parent company Kraft Foods, followed suit, raising prices on ground coffee and instant coffee.

Green Mountain Coffee Roasters raised their prices on coffee products in North America as much as 15% in October of 2010.

The price increases included Coffee K-Cups portion packs which are designed to work with Keurig single serve brewing systems and which are sold under a variety of brand names including Timothy’s Coffee, Tully’s Coffee, Caribou Coffee, Newman’s Own Organics and Green Mountain.

Peet’s Coffee & Tea increased their coffee prices in September of 2010 stating it was due to a 35% increase in green coffee bean prices since the beginning of 2010.

At the end of 2010 Starbucks raised their prices in the U.S. as well as China where they control nearly seventy percent of the specialty coffee market. Starbucks has seen outstanding growth in China, tripling their business there from 2004 to 2009.

With about eleven thousand cafes in the U.S. and another 6,000 worldwide Starbucks, Starbucks announced that there would be no new price increases in 2011. The company has purchased all the coffee beans it will need for the year.

Starbucks saw profits rise about 44% in the first fiscal quarter ending January 2, 2011 as compared to that same quarter the previous year. The profits were 45 cents a share, beating Wall Street estimates of 39 cents, and the profits totaled $346.6 million.

Starbucks continues to grow in emerging markets and also is expanding offerings of its products in grocery stores, including the new Via instant coffee product.

Premium Gourmet Coffee is Arabica Coffee

Virtually all specialty coffee consists of Arabica coffee beans while lower grade coffee is most often comprised of Robusta coffee beans, which is also use for most instant coffee.

Arabica coffee plants are grown in East Africa as well as Central Africa and also in Latin America, India, Indonesia and many other countries between the two tropic lines. Arabica Coffee is harder to grow than Robusta coffee because Arabica is more vulnerable to coffee diseases and pests and prefers higher elevations than the hardier Robusta coffee plants.

Arabica Coffee plants also show more sensitivity to temperatures and improper handling, and overall the Arabica plants yield a smaller coffee cherry harvest per acre than Robusta. Arabica coffee beans are typically harvested by hand (e.g., hand-picking) to ensure a high quality of coffee fruit (cherry) picked at peak ripeness.

Coffee harvesting occurs periodically throughout the months of fall and winter as the coffee cherry ripen. The specialty coffee market also heralds Organic Coffee (including Fair Trade Coffee), Bird Friendly Coffee and Shade-Grown Coffee.

The World’s Coffee Crops – Arabica, Robusta, Liberica

Coffee plants worldwide are mostly Arabica and Robusta, the two most popular coffee plant varietals. Robusta is a variety of the Canephora coffee plant varietal and is classified as Coffea canephora var. robusta.

Also grown is a much smaller amount of the Liberica coffee plant varietal. Liberica is grown mostly in West Africa as well as Malaysia. The Liberica varietal, like Robusta, is considered generally inferior to Arabica in regard to its flavors and aromas.

Arabica grows best in sub-tropical and tropical climates at elevations typically at least two thousand feet above sea level, usually growing best from four thousand to six thousand feet above sea level. Among the numerous varietals of Arabica the most common are Typica (Coffea arabica var. typica), Bourbon (Coffea arabica var. bourbon), and Arabica (Coffea arabica var. arabica).

The Robusta-Arabica Blending Wall

Some roasters blend a particular amount of Robusta in with Arabica beans to impart a particular quality that is popular in some espresso blends used for making espresso coffee drinks.

However there is a limit to the amount of Robusta which can be reasonably blended while still producing a specialty coffee, and this is known as the “blending wall.”

Rising coffee prices may lead some to increase the amount of Robusta in blends and some specialty coffee enthusiasts advocate increased quality evaluations in the premium coffee market.

Espresso Coffee Guide – The Top Coffee Source

More great coffee information can be found in All About Coffee which covers all aspects of coffee from soil to sip.

This includes coffee plants and coffee cherry, and full descriptions of all of the world’s top gourmet coffee beans including Organic Coffee, Fair Trade Coffee, Bird Friendly Coffee and Shade-Grown Coffee.

Coffee Makers and Espresso Machines

Also included are full details about Coffee Makers (Automatic Drip Coffee Makers, Single Serve Coffee Makers, Pod Coffee Makers, Coffee Pods, Coffee K-Cups, T-Discs, and French Press, (also see Best Coffee Makers), and Espresso Machines (including Pod Espresso Machines) as well as Instant Coffee and Decaffeinated Coffee.

Coffee From Soil to Sip

You can also learn about coffee harvesting and processing, coffee grading and roasting, coffee grinding and packaging, coffee storing, brewing, and all about the coffee beverage itself including Espresso.

Barista Guide For Perfect Espresso Drinks

Perfect espresso brewing is described along with tips on Pulling A Perfect Espresso Shot and Steaming and Frothing Milk.

Also check out the Barista Guide to Perfect Lattes and Cappuccinos with comprehensive details and instructions for Espresso Drink Recipes. We even give you tips on how to write a Barista Resume.

Thank You! for visiting Espresso Coffee Guide and Reading Coffee Prices Rising 2011! Savor Your Gourmet Coffee and Espresso!

{ 1 comment… read it below or add one }

madhu January 6, 2012 at 8:09 pm

i want to start a coffee production in nepal in the himalayan area. at the height of 1200meter height from the sea level. what can i do?

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