Coffee Prices are on the rise due to Climate Change

Thanks to unusual temperatures and rainfall, coffee production is falling in some parts of the world, just as emerging markets like India and China are embracing the drink.

Coffee

Freshly-roasted espresso coffee beans cool in a refurbished 1918 Probat coffee bean roaster. (Sean Gallup/Getty Images)

Jeremy Hobson: The price of coffee beans is above $3 a pound for the first time since the 1970s. And experts say coffee inventories are unlikely to build up in the forseeable future. Worse yet, some are saying we've reached "peak coffee" levels.

Here to explain is our sustainability reporter Adriene Hill. Good morning.

Adriene Hill:Good morning Jeremy.

Hobson: So what is going on here? Why are we talking about peak coffee?

Hill: Well, coffee production in some parts of the world is falling. Places like Colombia have seen their coffee production really just decline pretty dramatically since 2007. And a lot of what's happening seems to be related to weather issues. So they're seeing unusual rainfall, they're seeing unusual temperatures. These things are not good for coffee beans; especially the very finicky, the very precious arabica bean is not interested in big weather changes. And the problem is, it looks like, and some scientists think it could be related to climate change.

Hobson: Climate change, so it's not a temporary thing?

Hill: That's the big worry, and that's why we're talking about peak coffee. Right now, it's so concerning that some international organizations have actually turned to the United Nations and said that, hey, let's start talking about coffee crops. As you look for it, as you start thinking about climate change globally, we need to pay attention to the coffee supply.

Hobson: And what is all this going to do to coffee prices?

Hill: You want to guess?

Hobson: Uh, going up?

Hill: Up is right. Way up. So coffee production is falling at the same time that people in emerging markets like India and China are realizing just how delicious and wonderful coffee really is. And the price of coffee futures -- what the traders buy and sell for it -- has doubled in the last year.

Hobson: So not good news at all for coffee drinkers.

Hill: Not at all. Starbucks just upped the costs of its bagged coffee about 12 percent. Kraft announced it would bump the cost of Maxwell House by more than 20 percent. And that's just one in a series of price hikes. So our morning coffee is going to get a lot more expensive, which is bad news for me.

Hobson: And me as well. And probably most of the people listening right now. Thanks Adriene, Marketplace's Adriene Hill.

Hill: Thank you Jeremy.

Home Sweet Home

John, Les, and Jamie are all back from a great trip in Guatemala.

There were so many great things that happened this trip that we will continue to update the blog with new photos and stories from this past month.

The first image is of Demetrio, one of the new farmers of La Armonia Hermosa Coffee. He is showing us his large arabica trees. He has a wide assortment of coffee trees of all ages and an assortment of shade trees. He's great! Incredibly animated, and very passionate about his crop.

The second image is Demetrio walking back from his farm to the path probably carrying about 40 pounds worth of jocote (a tropical fruit) on his back! The incredible part is he is 56 years old and barely broke a sweat!

Also incredible is this path that he and all the other farmers have to walk up with all of their products to go back up to Santa Maria from their farm! Wow... these guys are strong and fit! You didn't want to see us after climbing this hill without anything on our backs.

The last image is John and Les talking with Demetrio about his crop this year and eveything that goes into it. Very exciting!

Next edition: Juan's farm and family

WEEKLY DEAL: Columbian coffee prices reach 11 year high


Coming from the Financial Times,

By Javier Blas in London

Published: April 9 2009 03:00 | Last updated: April 9 2009 03:00


Prices for Colombian wholesale coffee have skyrocketed recently causing the American market's coffee retailers to raise their prices by almost 20 percent at time when customers are "tightening their belts."

Colombia is the leading seller in specialty grade mild washed Arabica coffee and third top-seller for coffee overall. The prices have raised due to the amount of rain and a government program to renew all old coffee trees to aid in the medium future.

The scarcity in top quality coffee has made buyers resort to buying similar style coffee from surrounding countries such as Honduras, Guatemala, and Costa Rica. Unfortunately, due to bad weather and exports running low, the situation is not much better.

To find out more about this topic please click here.

This week's deal pertains to Colombian Coffee...

Colombia is the third seller for coffee over all in the world behind which two countries?
a. Vietnam
b. Brazil
c. Ethiopia
d. Guatemala

(please pick two) and receive a free 2oz bag of Colombian Supremo coffee.