Talking about coffee is talking about Brazil and Colombia. They are two of the paradises of Arabica coffee and, although there are nuances between both and a battle to see which is the best, it is clear that Colombian coffee is one of the most emblematic products of the country and is something deeply rooted in both local culture as international. And that coffee is experiencing a significant increase in price not due to quality or exclusivity issues, but due to external agents that are affecting both buyers and producers.
This new coffee crisis is largely due to a tremendous drought, but also to geopolitical issues. And the worst thing is that the future of the price of Brazilian and Colombian coffee is not encouraging.
Sequa en Brasil. Brazil’s coffee production represents a third of world production. It is a huge market and it has converted the largest coffee producer in Latin America and the Caribbean. In 2023, the production Brazil was 55 million 60-kilo bags, something that is expected to be surpassed in 2024 with a production of 59 million bags.
We will finally see if the forecasts come true, since Brazil is facing the worst drought in more than 70 years. Temperatures are reaching 44 degrees and the average is higher than in other years, something that is already affecting the 2025 harvests. There are already producers who they claim that there are plants that are dying before flowering and that, of the 120 bags of grain that they expected to harvest this season, they have only obtained 100.
Impact in Colombia. This drought not only affects Brazil, but also Colombian plantations. Alexander Taborda is the representative of the Antioquia coffee committee and comments that there is a risk that the coffee cherries will not reach the appropriate weight and quality due to the extremely hot conditions of August and September.
Colombia is another gigantic coffee market and this year they were in a sweet moment thanks to exports that had increased by 36% during the first half of 2024 compared to the same period of the previous year. The problem is that an increase in exports does not imply more benefits for producers: if the quality or weight of the coffee is lower, large buyers have room to adjust prices, so producers will have fewer benefits.
coffee inflation. This series of coffee disasters has already had implications for the stock market. In recent days, the pound of Colombian Arabica coffee reached a price of 2.70 dollars on the New York Stock Exchange. It is an increase of 43% so far in 2024 and that implies that the price for the final consumer will also experience an increase. Giuseppe Lavazza, president of the Lavazza group, already stated a few weeks ago that he had never seen a price increase like the one now, and it is something that affects the international price of coffee, but also the local one.
In Colombia, 125 kilos of dry parchment coffee cost 1,360,000 pesos in 2023, about 302 euros. Now, that same shipment costs 2,200,000 pesos, about 488 euros. And the bad thing is that now the second half of the harvest begins, something that represents 60% of the annual production for 2025, and producers expect prices of between 1,800,000 pesos and 2,000,000 pesos to be profitable. , between 400 and 450 euros.
Differences between big and small. Ok, the cup of coffee is going to be more expensive, but what about the producers? If you are paying more for coffee, you will earn more, right? Well, it seems that’s not the case. At least, not for everyone. The coffee market in Colombia is made up of 90% small coffee growers. These producers have plantations of less than five hectares and produce 60% of the country’s coffee. The remaining 10% of coffee growers have medium and large plantations, producing 40% of Colombian coffee.
It is a very unequal distribution and, when negotiating, not all producers benefit from this price increase in Arabica coffee. The reason? This price increase is occurring at this time when the large producers have already harvested, but many of the small producers have not yet started that harvest, so they have not benefited from the increase.
War and transportation. With the start of the war between Russia and Ukraine, in addition to the escalation of violence in the Middle East, the price of some products has increased. It is not that there are products that arrive directly from those countries, but that getting to those countries is now more expensive. This is something that can seriously affect the economy and an example is Russia and Colombia.
Colombia not only exports coffee to Russia, but many other products, and chartering a plane during the harshest months of the conflict has multiplied for ten its price in some caseswhich contributes its grain of sand in this escalation of coffee prices.
The Girl and The Boy. And as if several simultaneous wars and a tremendous drought were not enough, the worst thing is that there is a perfect storm that is causing the increase in the price not only of Brazilian and Colombian coffee, but also of other parts of the world (robusta from Vietnam, in the other part of the world, for example).
El Nio and La Nia are two extreme climate events: one that causes abnormal warming and cooling on the ocean surface, affecting both temperatures and precipitation. The serious thing is that global warming is causing these natural phenomena to become more unpredictable, which directly affects plantations.
Leaving Colombia and Brazil, in Vietnam we prev that the drought that is also hitting the country will cause a 10% drop in Robusta coffee production because this drought has come into play right in the cherries’ formation phase. And all this is linked to a global demand for coffee that, especially thanks to countries like China, continues to grow.
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