The world needs another Brazil if it is to continue drinking coffee, warns Bloomberg. Increasing consumption, especially in emerging markets means that global production will need to increase by 40-50 million bags in the coming decade. That’s more than the entire harvest in Brazil, which is the largest producer and exporter of coffee in the world.
The threat of global warming and lower prices discourage farmers from increasing production. This is a potential problem that manufacturers, officials and industry discussed at the World Coffee Summit, which was held in October in Milan.
The world is facing a deficit in coffee production totaling 3.5 million bags in the 2015/2016 season, warned the Swiss Volcafe in August.
Years ago there was a global shortage of 6.4 million bags. The last harvest in Brazil suffered a severe drought in 2014, which resulted in an increase of about 50% in the prices of Arabica futures in New York. Since the beginning of 2015, prices fell by 27% with the depreciation of the Brazilian currency against the dollar, which in turn made exports from the South American country more attractive.
Global consumption of coffee will increase by a third to 200 million bags in 2030, predicts Michael Neumann, chairman of the Hanns R. Neumann foundation, associated with the German company Neumann Kaffee Gruppe, based in Hamburg.
“This year the production amounted to 144 million bags and can be increased to balance the market in 2030, as long as the smaller farmers manage to increase volumes by then,” said Neumann during the forum in Milan.
Global warming threatens about a quarter of production of Brazil. Farmers in Nicaragua, El Salvador and Mexico are facing potential losses if they do not adapt to the new conditions, concluded a study by the International Center for Tropical Agriculture, published in May. Producing regions will probably have to move from Central America to the Asia-Pacific region and East Africa, where the crop can be grown on higher ground.
Arabica, which is grown by a number of producers is most threatened by rising temperatures. The largest producer of Arabica is Brazil, and Robusta – Vietnam.
“Farmers are willing to change, to adapt to high temperatures,” says Jean-Marc Dyuvozin, CEO of Nespresso, owned by Nestle SA. The company uses coffee from South America, Asia and Africa. “We often visit farms and more of them are located high in the mountains. Warming has a negative impact,” Dyuvozin adds.