Coffee prices are going up — here’s why trouble’s brewing

The price of a cup of coffee could get even higher. A devastating frost in Brazil — a top producer of coffee beans — is driving up farming costs, and it might cause a hike in prices at local cafes and grocery stores by the end of this year.

According to the Trading Economic website, “frost and drought in top shipper Brazil has destroyed crops.” Excessive rain in Colombia has also limited production.

The Arabica bean was going for $2.30 per pound in mid-November. Compared to 6 months ago when prices were $1.50 per pound.

The Brazil frost comes after Covid-related delays, causing labour shortages and hiccups in shipping. Higher transport costs are to blame as well. The frost is expected to significantly affect the 2022-23 harvest.

Edil Hassan, the owner of Royal Tea Coffee, a new small business that opened in the middle of the pandemic, says she fears the price hike.

“As if opening a coffee shop during a pandemic wasn’t enough now, I have to worry about upping my prices to customers,” Hassan says.

Hassan imports homegrown coffee beans from Kenya and grinds the beans herself. “I love getting my coffee from my home country, but it is starting to get expensive, I was thinking of switching to Arabica beans but now I fear having to pay more,” Hassan says.

It is uncertain if retailers will be affected directly. Traders believe while consumers will soon have to pay more to purchase coffee from supermarkets, the cost of a latte or Americano at high street coffee chains may not follow suit in the short term.

“If the price of coffee does go up, I will have to adjust and up my prices but as a new business I wouldn’t want to do that to my customers,” Hassan says.

The extent of the damage is still being assessed. But in areas where coffee trees have not survived it may take up to seven years for production to fully recover.

According to Trade Economics Brazil supplies 40% of the world’s total supply. Other major exporters include Peru, India, Uganda, Ethiopia, Mexico, and Ivory Coast.

The average Canadian consumes 5.5 kilograms of coffee per year. This makes Canada one of the most coffee-loving nations in the world.