Climate change and U.S. trade tariffs are converging to drive up coffee prices, affecting both producers and consumers.
Climate Impact on Coffee Production
Severe droughts in major coffee-producing countries like Brazil and Vietnam have led to reduced yields, significantly increasing raw bean prices. Specialty coffee beans, which require specific growing conditions, are particularly affected. For instance, Arabica coffee prices in Brazil surged by 38% in November 2024, reaching their highest levels since 1998.
U.S. Tariffs and Trade Policies
The U.S. has imposed a 10% tariff on coffee imports from several key exporters, including Brazil, Ethiopia, and Colombia, under policies initiated during President Trump’s administration. There are also proposed higher tariffs on imports from Vietnam and Indonesia. These tariffs are intended to protect American jobs but have raised concerns about increased costs for consumers and disruptions in the coffee supply chain.
Impact on Coffee Businesses
Coffee roasters and retailers are facing challenges due to rising bean prices and tariffs. Some businesses are investing in expanded operations and increasing wholesale prices to manage higher costs. Others are establishing direct contracts with farmers to mitigate volatility. However, inflation and decreased consumer confidence are compounding the issue, potentially impacting demand.
Supply Chain Disruptions
Logistical issues, such as port delays in Brazil, have further strained the coffee supply chain. In 2024, Brazil faced export delays affecting approximately 1.7 million bags of coffee, leading to significant financial losses and highlighting the need for infrastructure improvements.
Conclusion
The combined effects of climate change, trade tariffs, and supply chain disruptions are contributing to rising coffee prices. These factors are forcing businesses to adapt through various strategies, but the overall trend suggests continued pressure on coffee prices, influenced by environmental and geopolitical forces.
Sources:
(How will trade tariffs drive up US coffee prices? – Coffee Digest)
(Coffee and Tariffs — Beans of Glory Coffee Roasters, Climate change is making coffee more expensive. Tariffs likely will too)
(Coffee Prices Soar as Brazil Faces Crop Losses and Holiday Season Demand, Brazil Sees 1.7 Million Bags Impacted by Export Delays)
(How will trade tariffs drive up US coffee prices? – Coffee Digest, Climate change is making coffee more expensive. Tariffs likely will too)
(Climate change is making coffee more expensive. Tariffs likely will too, How will trade tariffs drive up US coffee prices? – Coffee Digest)
(Climate change is making coffee more expensive. Tariffs likely will too, Arabica Coffee Prices Increased by 38% in November of 2024 in Brazil; and more news about agriculture in Latin America)