Climate, tariff threat making coffee more expensive

With her purple-and-pink hair swaying, Reneé Colón stands on a stepladder in the rented corner of a warehouse, pouring Brazilian coffee beans into her groaning, old roasting machine.

The beans are precious because they survived severe drought in a year when environmental conditions depressed coffee production globally, doubling the price of raw beans in just months.

“Unfortunately, coffee is going to become more scarce,” said Reneé Colón, founder and roaster at Fuego Coffee Roasters. “Seeing that dramatic loss of the Brazilian crop is a perfect example.”

Losses from heat and drought have cut production forecasts in Brazil and Vietnam, the world’s largest coffee growers.

Global production is still expected to increase, but not as much as commodity market investors had expected. That’s sent world coffee prices up, largely because of continued high demand in Europe, the United States, and China.

Prices peaked in February but have remained high, forcing roasters like Colón to weigh how much of that cost to absorb and how much to pass on to consumers.

The beans Colón was roasting cost her US$5.50 per pound in early March, more than double what they cost in September. And that was for mixed, mid-range beans. Speciality coffees – grown in delicate climates to slow growth and add flavour – can cost even more.

US President Donald Trump’s current 10% tariffs cover most coffee-producing countries, including Brazil, Ethiopia and Colombia, and are expected to drive up costs for Americans. Amid his chaotic tariff pronouncements – at one point he threatened 46% tariffs on Vietnam imports and 32% on Indonesia imports, before pausing them – American coffee roasters are rethinking their supply chains.

“With all these changes in coffee, maybe we should open our own damn farm,” Colón muses.

Rural New York isn’t an option, of course. The world’s best coffee thrives near the equator, where seasons are long, and in high altitudes, where slow growing allows beans to gather flavour. Puerto Rico, where Colón and her husband have roots, isn’t a serious option, either – labour costs are too high, and she worries about the increasing risk of crop-damaging hurricanes.

She shrugs off buying coffee from Hawaii and California, which she says is either poor quality, overpriced, or both.

In February, global coffee green exports were down 14.2% from a year earlier, according to the International Coffee Organization’s market report. The shortage led to the highest price ever for raw coffee in February, breaking the record set in 1977 when severe frost wiped out 70% of Brazil’s coffee plants.

Climate isn’t the only thing driving up prices, said Daria Whalen, a buyer for San Francisco-based Ritual Coffee Roasters. Inflation is driving up the cost of labour, fertilisers and borrowing, she said.

She described being in Mexico in April seeking to finalise contracts between Trump’s fits and starts on tariffs. It reminded her of being in Colombia a month earlier as Trump threatened and then backed away from tariffs that would have affected coffee prices.

“It was kind of like roller-coaster day, because at the end of the day it didn’t exist,” Whalen said.

Some of the recent rise in coffee prices may be from importers buying extra in anticipation of the tariffs. Colón believes prices will go still higher as import taxes begin being paid. And with consumer confidence hitting a 12-year low, Colón could see a decrease in demand for her premium coffee.

“It is tough on our end because it drives the price up, tough on the consumer end because they have to pay more, and tough on the farmers’ end because they may be experiencing really significant losses,” Colón said.

AP