Brian Phillips gets texts from coffee farmers in Brazil almost every day. They send him photos of rain gauges showing some — or no — water. They report coffee trees flowering, then failing to produce fruit.
“My friend Sergio texted me and was like, ‘Hey, when you’ve got time for a call, we have to talk about next year,'” said Phillips, who sources beans for Anthem Coffee Imports in Kansas City, Mo. “There’s definite concerns.”
That’s because Brazil’s coffee harvest is coming in short — by as much as a quarter, according to one of the top coffee traders.
Brazil is by far the biggest grower of the world’s most popular coffee bean, called arabica. It goes into most ground or roasted coffee. Brazil’s farmers this year faced one of the worst droughts on record.
“It eventually started to rain … but they had determined so much of the drought damage was irreversible,” said long-time importer John Cossette with Royal Coffee in California. “And that’s going to affect next year’s crop pretty significantly.”
Brazil’s troubles followed an earlier wave of alarming coffee news.
Vietnam is the top grower of the second-most popular bean, called robusta, which is often used in instant coffee. Growers in Vietnam also faced a severe drought followed by heavier-than-usual rains. Scientists say climate change is shifting weather patterns in these coffee-growing regions.
Over the past year, the cost of arabica has jumped around 70%, while robusta has doubled in price. Last week, arabica prices on the futures market surpassed the previous record from 1977 of $3.35 per pound. It’s not all because the industry needs the beans; financial speculators, too, have been cashing in on the chaos.
The situation has many U.S. roasters and smaller coffee shop owners assessing whether or when to raise their own prices without scaring away customers. For many cafes, the price of raw beans is part of a long list of expenses that fuel the total price for a cup of coffee, including worker wages, shipping costs and utilities.
Meanwhile, major supermarket brands — including Folgers, Maxwell House and Nescafé — have already raised prices.
The companies, on calls with investors, say shoppers seem undeterred. Folgers’ parent company J.M. Smucker said it raised prices twice, in June and October, and in November reported coffee sales were still growing by 3%.
“People forget that coffee is a drug, a legal drug,” Phillips said, laughing. “Coffee consumption is not slowing down by any means.”
In fact, coffee shops are sprawling throughout countries where people didn’t used to be into gourmet coffee. China is a huge market. But so are the very countries that produce coffee — such as Brazil, Indonesia and Vietnam.
“They’re drinking a lot more coffee, and they’re drinking their own coffee that they’re growing,” Cossette said. “So there’s going to be less available coffee to export, and that’s going to make it more expensive as well.”
He and Phillips both take the long view, noting that by historic standards — when adjusted for inflation — raw coffee costs are nowhere near the record. Both of them think the futures prices will settle back down, at least somewhat. But big-picture, the market has changed.
“To me, the days of cheap coffee are gone forever,” Cossette says.
At least coffee grows in many different parts of the world, allowing Phillips and other importers to offer their clients alternatives to Brazilian beans: for example, beans from Honduras, Mexico or Peru. Historically, these options might have been pricier, but not after Brazil’s drought.
That’s unlike cocoa, the majority of which grows in just two West African countries, Ghana and the Ivory Coast. Volatile weather there last year still has cocoa prices on a record-breaking surge to this day.
Transcript:
MICHEL MARTIN, HOST:
Now to a story about something near and dear to our hearts here at MORNING EDITION – and maybe you, if you’re up this early. Of course, we’re talking about coffee. The cost is soaring to levels not seen in decades. That’s after droughts and abnormal weather in coffee-growing countries. What does this mean for us coffee drinkers? NPR’s Alina Selyukh reports.
ALINA SELYUKH, BYLINE: Almost every day, Brian Phillips gets messages from his friends in Brazil who are coffee farmers.
BRIAN PHILLIPS: They send me, like, pictures of their rain gauges – how much it rained, how much it didn’t rain.
SELYUKH: I called Phillips in Kansas City, Missouri, where he works at Anthem Coffee Imports. It brings in raw coffee beans from about two dozen countries, and the biggest one is Brazil.
PHILLIPS: Literally, as we’re on the phone, my friend Sergio texted me, hey, when do you have time for a call? We have to talk about next year.
SELYUKH: That’s because Brazil’s coffee harvest is coming in short – by as much as a quarter, by one assessment. Earlier this year, farmers there faced one of the worst droughts on record. By the time rain fell – belatedly – many coffee trees were too weak to produce any fruit. John Cossette is a longtime importer with Royal Coffee in California.
JOHN COSSETTE: They had determined, you know, so much of the drought damage was irreversible, and that’s going to affect next year’s crop pretty significantly.
SELYUKH: The reason this is a big deal is because Brazil is by far the biggest grower of the most popular coffee bean. And this was the second wave of bad news for coffee after problems in Vietnam, the top grower of the other most popular coffee bean – a drought followed by heavier-than-usual rains. Scientists say climate change is shifting weather patterns in these regions.
(SOUNDBITE OF COFFEE BEANS POURING)
SELYUKH: And these two beans – you know them. They keep the world caffeinated. Brazil’s bean is called arabica. It has a milder taste. It goes in your ground and roast coffee.
(SOUNDBITE OF COFFEE GRINDER)
SELYUKH: Vietnam’s bean is called robusta. It tastes edgier, more bitter, and it often goes in your instant coffee.
(SOUNDBITE OF COFFEE JAR OPENING)
SELYUKH: Over the past year, the cost of arabica has jumped around 70%. Robusta has doubled in price. The market is partially fueled by financial speculators just trying to make a buck on the chaos. All this has many roasters and coffee shop owners assessing how to raise their prices without scaring away customers. Meanwhile, big brands like Maxwell House, Folgers and Nescafe have already been hiking supermarket prices, saying shoppers so far seem undeterred.
PHILLIPS: People forget that coffee is a drug – a legal drug (laughter).
SELYUKH: Coffee importer Brian Phillips again.
PHILLIPS: The coffee consumption is not slowing down by any means.
SELYUKH: In fact, there’s a new factor in play. People are now drinking a lot of coffee in countries where they did not use to. China is a huge one, but also the very countries that produce coffee, including Brazil. Here’s Cossette.
COSSETTE: They’re all drinking a lot more coffee, and they’re drinking their own coffee that they’re growing. So there’s going to be less available coffee to export, and that’s going to make it more expensive, as well.
SELYUKH: Phillips shared how, 10 years ago, his friends in Brazil couldn’t sell a bag of specialty coffee inside the country. And now that bag fetches more in cash in Brazil than it would in a complicated export deal with a U.S. company. He and Cossette both take the long view. They point out that by historic standards, when adjusted for inflation, raw coffee prices are nowhere near the record, but the market has changed.
COSSETTE: To me, the days of cheap coffee are gone forever – over a long time ago.
SELYUKH: Cossette thinks the current price will come down somewhat. And he keeps his cool, knowing that people need their coffee.
(SOUNDBITE OF COFFEE POURING AND STIRRING)
SELYUKH: Alina Selyukh, NPR News.
(SOUNDBITE OF SLEEPY FISH’S “FOR WHEN IT’S WARMER”)
