Monday Market Musings>>> Climate Change is Coming for the Coffee Industry.
Picture Credit: Mashed website
Coffee no longer just serves as a beverage; no, it would be a shame to limit it to just that, it has evolved into playing an important cultural role. With more than 2.25 billion cups consumed each day, and roughly around 120 million people depending on a cup or two (or three if you’ve had a particularly trying day) of coffee to get them through the day, coffee is a multi-million-dollar industry.
Coffee is one of the most favored drinks worldwide, around 166.63 million 60-kilogram bags of coffee were consumed worldwide in just 2020/2021. However, climate change is predicted to (and has already started to) change the coffee industry, and not for the better. As global incomes have increased in recent years, so has the world's consumption of coffee, however, despite the ever-increasing demand, climate models predict that the accessibility of the crop will drop drastically in the foreseeable future due to increase in temperatures.
Africa produces the most coffee out of the continent, since it has the greatest number of coffee-producing countries in the world. According to Statista data, Uganda is the continent's second-largest coffee exporter behind Ethiopia, with annual exports totaling about $594.2 million. Ethiopia is Africa's top exporter, bringing in almost $1.2 billion in coffee. Ethiopia and Uganda combined makes up 62% of all coffee produced by the African continent.
According to the regulator of the coffee sector, a drought that affected areas of the country's crops and reduced yields caused Uganda's coffee exports to fall 28.5% year over year in August. In comparison to the 700,990 bags exported in the same month last year, Uganda exported 501,054 60-kg bags of coffee in August, a noticeable drop, according to a report from the Uganda Coffee Development Authority (UCDA). Earnings from the bean production is the among one of the main sources of foreign exchange for Uganda. Uganda is definitely not the only country being affected by the shift in temperature, the effects of climate change have given similar results (experiencing yield shocks resulting from the climate issues, pests and diseases) for the other countries as well. Studies even show that 60% of wild coffee varieties are at a risk of extinction due to climate issues among other things.
Picture Credit: Revel Blog - Revel Systems website
“Coffee is very sensitive to even small increases in temperatures and the impact can vary depending on the stage the crop is in,” Executive director emeritus at the Cornell Institute for Climate Smart Solutions, Professor Michael Hoffman states. “A little warming at the wrong time can affect yield, aroma, and flavor.”
Coffee costs may increase, quality may decline, and it may be more difficult to find premium beans due to climate change, since the crop prefers a colder climate. If the industry and governments want to prevent these problems from transferring to the customer, they must act quickly. According to new research, coffee production in the nations that produce 75% of the world's Arabica coffee will still drop quickly even if the commitments to cut emissions (which are now made) are kept, this means the coffee industry would still suffer for a considerable period of time before any development in the situation would be made.
A shift away from the tropics is projected for coffee-growing regions; In general, a new study predicts that by 2050, less and less land will be suitable for cultivating coffee. In four of the top five coffee-producing nations in the world—Brazil, Vietnam, Colombia, and Indonesia—the finest regions for growing coffee are anticipated to become smaller and less suitable. However, it is also an opportunity for new areas to be explored in order to cultivate coffee, with the changes in the climate (scientists believe that the average global temperature will most likely climb from 1.5-4.5 degrees Celsius within this century.).
Climate change is coming for our coffee, as sad as it is, this possibility has been in the makes for a while. The coffee industry is in for a long line of troubles.
October 24th 2022 | 11:30 AM