Australia’s love affair with coffee goes back a long way and comes at a price.
And now Australian caffeine lovers must prepare to pay more for a cup of coffee. This is all due to a global coffee shortage, due to adverse weather conditions, critical logistics bottlenecks and confinements around the world because of COVID.
Until 2019, the average price of a latte in Australia was around $ 3.96 a cup, but that price is set to rise if everything continues to go wrong in global markets.
Why are coffee prices soaring?
Major coffee producers around the world have been affected by adverse weather conditions, such as drought and frost, in recent years.
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Brazil, which has been the largest coffee producer for the past 150 years, has experienced erratic rainfall and the worst droughts in a century, which has already injured farmers and destroyed coffee plantations.
This was followed by extremely cold weather this year which caused further damage to the crop. This means that Brazil’s production is expected to drop to its lowest level in almost two decades.
Some plantations in Brazil may need to plant new crops because the damage is so severe. It will take years for the new crop to mature, which will subsequently affect world markets.
There was a 40 percent increase in purchase prices for importers of specialty beans from Brazil.
Vietnam, which is the second largest coffee producer in the world, not only suffered heavy losses due to the increase in COVID cases and the lockdowns that followed, it was also unable to transport its beans from the plantations to the cities, which means they are unable to reach global consumers.
A wave of anti-government protests in Colombia, the third largest coffee producer, has caused a record rise in prices this year and has profoundly affected market sentiment and global supply.
According to IBISWorld, the world price of coffee jumped 21.6% in 2021 to $ 3.65 per kilo. This figure is the average in 2021 of the monthly prices of the two varieties of coffee beans – arabica and green robusta – which differ in taste and texture.
How will this affect Australia?
Experts in the coffee industry (importers, roasters and sellers) in Australia believe we could experience a coffee shortage by November.
Australia’s coffee industry has already taken a hit, thanks to several lockdowns linked to COVID-19, and importers are now forced to pay a higher percentage (40% more) for some of the specialty coffee beans that ‘they buy in Brazil and other countries.
With production from producers in Brazil falling by around 25 percent, Australian importers will have to share the burden of rising prices with roasters, and the disaster could continue to plague the coffee industry over the next two years. years.
While the price hike may take a bit of time to nip consumers, businesses are already starting to suffer as roasters have to sell specialty coffee to coffee owners at a higher price or at least brew them for it.
Coffee owners will in turn be forced to charge more per cup of coffee if they hope to recoup the higher prices they pay for the beans.
A daily dose of coffee has been a welcome respite for many during the difficult times of the pandemic and a rise in prices could leave a bad taste in a great source of joy to thousands of Australians.
Demand exceeds supply
The pandemic has wreaked havoc across all supply chains, but demand has continued to rise.
Global coffee consumption is expected to exceed production this year for the first time since 2017, according to the USDA.
Prices for robusta and arabica – the world’s most popular bean – have hit multi-year highs over the past 12 months. In August of this year, coffee prices registered their tenth consecutive month of increases.
Growing demand and low supply, coupled with supply chain issues – including a shortage of shipping containers, labor shortages, and other production hurdles – mean that one cup more expensive and bittersweet coffee is brewing for enthusiasts around the world.
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