Frost in South America
To understand what triggered this huge increase in green #coffee prices, we need to go back to September 2020. Unusual meteorological patterns moved across South America, causing a frost that severely damaged the crops of many coffee-growing countries such as Brazil and Brazil. Colombia.
What does frost do to coffee trees?
Coffee trees such as Arabica grow at an optimal temperature of 20-22 °C. They can withstand a bit of cold when the temperature drops at night, but frost takes a toll on them and causes their leaves to drop. Without leaves, the energy they collect is significantly reduced and they cannot produce coffee cherries. Also, it may take several years for trees to fully recover from frost. As a result, many farmers in South America have seen a huge drop in the yield of their crops.
Supply and demand
Brazil is by far the largest producer of coffee, with an average of 55 million bags of coffee per year. The next largest is Colombia, which produces around 14 million bags. This means that Brazil's annual coffee production can fluctuate as much as Colombia's total output. Therefore, it is Brazil's harvest that determines the market value of coffee.
The coffee cycle is annual, and while prices weren't affected that dramatically last year, this year it's been a very different story. The prospect of much lower production this year, and therefore the probability of demand outstripping supply, means the price of coffee has nearly doubled from around $1.25 to $2.35 per pound.
What does this mean for farmers?
At first glance, it may seem that higher prices mean better pay for #farmers. We wish this were the case, but unfortunately the frost means they have much less coffee to sell. Therefore, they will earn at most the same amount and in many cases much less than in a regular year.
We continue to persevere in our commitment to pay farmers a premium that gives them a better quality of life. In some cases, this may mean paying a much higher amount than before, and this is an important step towards helping support them during this challenging time.
Is this because of climate change?
Weather events like the 2020 frost have always happened. However, this was followed by a drought in the same year that caused further reductions in the yield of coffee trees.
It is highly unusual to have two such events in such close proximity, and there is no doubt that these events are occurring with increasing frequency – most likely as a result of climate change.