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.

Coffee prices are on the rise

We found this article quite interesting. In fact just this weekend Starbucks had to raise their prices by $1 also. Please read below for more information. If you have questions about why this is happening, don't hesitate to call (865.681.0517) or email us (info@viennacoffeecompany.com).


By Marcy Nicholson

NEW ORLEANS, March 17 (Reuters) - Kraft Foods Inc

said Thursday it raised its U.S. list prices for Maxwell House

and Yuban ground coffees by a whopping 22 percent and its

instant coffee by around 10 percent.

The price hikes, which were effective on Wednesday, marked

the company's fourth coffee price hike in a year and came after

arabica coffee futures soared to a 34-year high this month.

"(The) increases are due to sustained increases in green

coffee," Kraft spokeswoman Bridget MacConnell told Reuters on

the sidelines of the annual National Coffee Association meeting

in New Orleans.

The company raised the price for Maxwell House and Yuban

ground coffees by 70 cents per pound equivalent, and for

instant coffees by 6.25 cents per ounce.

Excluded from the increase were single-serve Tassimo items

and the Maxwell House International line of specialty soluble

beverages, MacConnell said.

Arabica coffee futures more than doubled in price by early

March in a rally that began in June 2010 on fund buying and

tight supplies, with the benchmark May contract reaching

a 34-year high for the second position at $2.9665 per lb.

Roasters have been forced to raise their list prices over

the past nine months as a result of the sustained rally.

Kraft most recently raised its prices in December. J.M.

Smucker Co , known as the trendsetter for coffee price

changes, most recently increased its coffee prices last month,

by 10 percent.

Robusta futures trading on Liffe in London have

joined in the rally, soaring to a three-year high at $2,661 per

tonne on Thursday.

(Editing by Walter Bagley)

((marcy.nicholson@thomsonreuters.com; +1 646 223 6043; Reuters

Messaging: marcy.nicholson.reuters.com@reuters.net))