Tag Archives: coffee

Bean shortage drives up cost of that Cup of Joe

Revelations 13:16-18 “Also it causes all, both small and great, both rich and poor, both free and slave, to be marked on the right hand or the forehead, so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name. This calls for wisdom: let the one who has understanding calculate the number of the beast, for it is the number of a man, and his number is 666.”

Important Takeaways:

  • Bean shortage drives up cost of even the cheapest cup of coffee
  • The crops in Brazil, which is the second-largest grower of the Robusta variety, have been hurt by drought.
  • Key growers, however, are finding it difficult to keep up with the surge in demand, with wholesale prices this week hitting the highest level in nearly twelve years.
  • The odds of global Robusta shortages easing any time soon look bleak.
  • The switch was first observed among roasters who increased the amount of Robusta used in commercial blends to offset higher arabica costs and energy bills.
  • Then, double-digit inflation in many parts of the world saw grocery bills surge to the highest in decades, forcing some consumers to trade down to cheaper options.

Read the original article by clicking here.

Wake up and smell the coffee … made in the United States

By Marcelo Teixeira

NEW YORK (Reuters) – Farmer David Armstrong recently finished planting what is likely the most challenging crop his family has ever cultivated since his ancestors started farming in 1865 – 20,000 coffee trees.

Except Armstrong is not in the tropics of Central America – he is in Ventura, California, just 60 miles (97 km) away from downtown Los Angeles.

“I guess now I can say I am a coffee farmer!” he said, after planting the last seedlings of high-quality varieties of arabica coffee long cultivated in sweltering equatorial climates.

Coffee is largely produced in the Coffee Belt, located between the Tropic of Cancer and the Tropic of Capricorn, where countries such as Brazil, Colombia, Ethiopia and Vietnam have provided the best climate for coffee trees, which need constant heat to survive.

Climate change is altering temperatures around the globe. That is harming crops in numerous locales, but opening up possibilities in other regions. That includes California and Florida, where farmers and researchers are looking at growing coffee.

Armstrong recently joined a group of farmers taking part in the largest-ever coffee growing endeavor in the United States. The nation is the world’s largest consumer of the beverage but produces just 0.01% of the global coffee crop – and that was all in Hawaii, one of only two U.S. states with a tropical climate, along with southern Florida.

Traditional producers of coffee such as Colombia, Brazil and Vietnam have suffered from the impact of extreme heat and changing rain patterns. Botanists and researchers are looking to plant hardier crop varieties for some of those nations’ coffee growing regions.

Top producer Brazil is going through the worst drought in over 90 years. That was compounded by a series of unexpected frosts, which damaged about 10% of the trees, hurting coffee production this year and next.

CALIFORNIA DREAMIN’

“We are getting to 100,000 trees,” said Jay Ruskey, founder and chief executive of Frinj Coffee, a company that offers farmers interested in coffee growing a partnership package including seedlings, post-harvest processing and marketing.

Ruskey says he started trial planting of coffee in California many years ago but told few about it. He said he only “came out of the closet as a coffee farmer” in 2014, when Coffee Review, a publication that evaluates the best coffees every crop year, reviewed his coffee, giving his batch of caturra arabica coffee a score of 91 points out of 100.

Frinj is still a small coffee company targeting high-end specialty buyers. Frinj sells bags of 5 ounces (140 grams) for $80 each on its website. As a comparison, 8-ounce packages of Starbucks Reserve, the top-quality coffee sold by the U.S. chain, sell for $35 each. Frinj produced 2,000 pounds (907 kg) of dry coffee this year from eight farms.

“We are still young, still growing in terms of farms, post-harvest capabilities,” said Ruskey. “We are trying to keep the price high, and we are selling everything we produce.” The venture is already profitable,” he said.

The company has been growing slowly since, with Armstrong’s 7,000-acre (2,833-hectare) Smith Hobson Ranch one of the latest, and largest, to partner with Ruskey.

“I have no experience in coffee,” said Armstrong, who typically grows citrus fruits and avocados, among other crops.

To boost his chances of success, he installed a new irrigation system to increase water use efficiency and has planted the trees away from parts of the ranch that have been hit by frosts in the past.

Coffee uses 20% less water than most fruit and nut trees, according to the United Nations Food and Agriculture Organization. Water has become scarce in California after recent droughts and forest fires. Many farmers are switching crops to deal with limits on water use.

Giacomo Celi, sustainability director at Mercon Coffee Group, one of the world’s largest traders of green coffee, said the risks of cultivating coffee in new areas are high.

“It seems more logical to invest in new coffee varieties that could be grown in the same current geographies,” he said.

FLORIDA HOPES

As the climate warms in the southern United States, researchers at the University of Florida (UF) are working with a pilot plantation to see if trees will survive in that state.

Scientists have just moved seedlings of arabica coffee trees grown in a greenhouse to the open, where they will be exposed to the elements, creating the risk that plants could be killed by the cold when the winter comes.

“It is going to be the first time they will be tested,” said Diane Rowland, a lead researcher on the project.

Rowland said researchers are planting coffee trees close to citrus, an intercropping technique used in other parts of the world as larger trees help hold winds and provide shade to coffee trees.

The project, however, is about more than just coffee cultivation. Alina Zare, an artificial intelligence researcher at UF’s College of Engineering, said scientists are also trying to improve how to study plants’ root systems. That, in turn, could help in the selection of optimal coffee varieties for the region in the future.

According to the National Oceanic and Atmospheric Administration, the U.S. weather agency, annual mean temperatures were at least 2 degrees Fahrenheit (1.1 degrees Celsius) above average for more than half the time in the long-term measuring stations across the United States’ southeastern region in 2020.

Florida experienced record heat last year, with average temperatures of 28.3 C (83 F) in July, and 16.4 C (61.6 F) in January. That is hotter than Brazil’s Varginha area in Minas Gerais state, the largest coffee-producing region in the world, which averages 22.1 C (71.8 F) in its hottest month and 16.6 C (61.9 F) in the coldest.

“With climate change, we know many areas in the world will have difficulties growing coffee because it is going to be too hot, so Florida could be an option,” Rowland said.

(Reporting by Marcelo Teixeira in New York; Editing by David Gaffen and Matthew Lewis)

Coffee, cane and orange crops at risk as temperatures plunge in Brazil

By Ana Mano

SAO PAULO (Reuters) -Temperatures fell in swathes of Brazil on Thursday – with rare snowfall overnight in some places – as a polar air mass advanced toward the center-south of the global agricultural powerhouse, threatening coffee, sugarcane and orange crops with frosts.

Unusually cold weather in Brazil has already sent international prices for coffee and sugar higher and Friday was forecast to be the coldest day of the year, according to Marco Antonio dos Santos, a partner at weather consultancy firm Rural Clima.

In a report on Thursday, dos Santos said the south of Goiás and the south of Mato Grosso do Sul, states where farmers grow crops like corn, would face cold temperatures on Friday as the wave of cold air marched northwards.

“With the polar air mass strengthening, it is getting even colder in most of the agricultural producing regions of center-south Brazil,” Santos said. “As such, the chances of frosts in coffee, sugarcane and orange areas increased dramatically.”

In Brazil’s southernmost state of Rio Grande do Sul, the cold wave has brought snow and cold rains to at least 13 cities on Wednesday.

Local television images showed tourists and locals taking photos and playing in the snow in the town of Sao Francisco de Paula as temperatures fell below zero.

The polar air mass should move over Sao Paulo and Minas Gerais, major producers of sugar, citrus and coffee, on Friday, bringing freezing temperatures.

The extreme weather sparked concerns in global markets of a weak harvest in Brazil, which is a major exporter of agricultural commodities.

Raw sugar futures on ICE hit a five month high on Thursday as investors continued pricing in the effects of the cold front in the world’s largest producer.

Agriculture federation FAESP in the main sugar belt Sao Paulo state said last week frosts had already hit 15% to 30% of the cane crop, which will probably lead to lower production.

Indian traders for the first time have signed sugar export contracts five months ahead of shipments as a likely drop in Brazil’s production prompted buyers to secure supplies in advance.

Arabica coffee prices touched a nearly seven-year high earlier this week as the unusual cold weather affected the crop in Brazil, the world’s top producer, with companies poised to pass on higher costs to consumers.

Preliminary estimates from the Brazilian government indicated last week’s frosts alone had affected 150,000 to 200,000 hectares (370,000-490,000 acres), about 11% of the country’s total arabica crop area.

“No one really knows the depth of damage undertaken,” said coffee exporter Comexim, which estimated a 13% loss on next year’s production at the Cerrado region in top coffee growing state Minas Gerais.

Brazil’s second corn crop, which represents 70% to 75% of production in a given year, has suffered from drought and the ill-timed frost as farmers began to harvest it. Corn is a key ingredient for livestock feed.

The state of Parana, Brazil’s number 2 grains producer, cut its projection for the second corn crop by nearly 40% on Thursday to 6.1 million tonnes.

The situation led global grain traders to exit their export contracts using washout clauses, sharply reducing Brazil’s export prospects this year and increasing the need to raise corn imports.

Wheat is also at risk from frosts as around a third of crops in Parana, the largest Brazilian producer, is at a development stage prone to damage from cold.

(Reporting by Ana Mano; additional reporting by Marcelo Teixeira in New York;Editing by Daniel Flynn and Marguerita Choy)

A rediscovered forgotten species brews promise for coffee’s future

By Will Dunham

(Reuters) – In dense tropical forests in Sierra Leone, scientists have rediscovered a coffee species not seen in the wild in decades – a plant they say may help secure the future of this valuable commodity that has been imperiled by climate change.

The researchers said on Monday that the species, called Coffea stenophylla, possesses greater tolerance for higher temperatures than the Arabica coffee that makes up 56% of global production and the robusta coffee that makes up 43%. The stenophylla coffee, they added, was demonstrated to have a superior flavor, similar to Arabica.

Botanist Aaron Davis, who led the study published in the journal Nature Plants, said stenophylla was farmed in parts of West Africa and exported to Europe until the early 20th century before being abandoned as a crop after robusta’s introduction.

Many farmers throughout the world’s coffee-growing belt already are experiencing climate change’s negative effects, an acute concern for the multibillion dollar industry.

Arabica’s flavor is rated as superior and brings higher prices than robusta, which is mainly used for instant coffee and coffee blends. But Arabica has limited resilience to climate change and research has shown its global production could fall by at least 50% by mid-century.

Stenophylla grows at a mean annual temperature of 24.9 degrees Celsius (76.8 degrees Fahrenheit) – 1.9 degrees C (3.42 degrees F) higher than robusta coffee and up to 6.8°C (12.24 degrees F) higher than Arabica coffee, the researchers said.

The stenophylla rediscovery, Davis said, may help in the “future-proofing” of a coffee industry that supports the economy of several tropical countries and provides livelihoods for more than 100 million farmers. While 124 coffee species are known, Arabica and robusta comprise 99% of consumption.

“The idea is that stenophylla could be used, with minimum domestication, as a high-value coffee for farmers in warmer climates,” said Davis, head of coffee research at Britain’s Royal Botanic Gardens, Kew.

“For the longer term, stenophylla provides us with an important resource for breeding a new generation of climate-resilient coffee crop plants, given that it possesses a great flavor and heat tolerance. If the historic reports of resistance to coffee leaf rust and drought tolerance are found to be correct, this would represent further useful assets for coffee plant breeding,” Davis added.

Leaf rust is a fungal disease that has devastated coffee crops in Central and South America.

The study included flavor assessments involving 18 coffee-tasting experts. Stenophylla was found to have a complex flavor profile, with natural sweetness, medium-high acidity, fruitiness and good “body” – the way it feels in the mouth.

In December 2018, Davis and study co-authors Jeremy Haggar of the University of Greenwich and coffee development specialist Daniel Sarmu searched for stenophylla in the wild. They initially spotted a single plant in central Sierra Leone. About 140 km (87 miles) away in southeastern Sierra Leone, they found a healthy wild stenophylla population.

“Both locations were thick tropical forest, but stenophylla tends to occur on drier, more open areas: ridges, slopes and rocky areas,” Davis said.

Stenophylla had not been seen in the wild in Sierra Leone since 1954 and anywhere since the 1980s in Ivory Coast, Davis said. A few examples were held in coffee research collections.

Davis said stenophylla is threatened with extinction amid large-scale deforestation in the three countries where it has been known to grow in the wild: Sierra Leone, Guinea and Ivory Coast.

Unlike the red and occasionally yellow fruit of Arabica and robusta plants, stenophylla’s fruit are intense black. The coffee beans are inside the fruit.

“I think we’re hugely optimistic for the future that stenophylla can bring,” said Jeremy Torz, co-founder of the specialty coffee business Union Hand-Roasted Coffee in East London where part of the taste-testing was held.

(Reporting by Will Dunham in Washington; Additional reporting by Stuart McDill in London; Editing by Rosalba O’Brien)

Coffee, ketchup and Nike Air Max: it’s the COVID consumer economy

By Nick Carey, Richa Naidu and Siddharth Cavale

(Reuters) – Instant coffee, ketchup, Lululemon yoga pants and Nike Air Max sneakers are all in. Bottled water, pricey diapers and Burberry luxury trench coats are out.

Welcome to America’s pandemic consumer economy. And it’s like nothing we’ve seen before.

“Everything we knew about supply and demand, we can essentially throw out the window because consumer behavior has changed completely,” said Piotr Dworczak, assistant professor of economics at Northwestern University.

A Reuters analysis of a varied basket of goods shows how the COVID-19 crisis has upturned a decades-old consumer model for everything from clothing to food. This has given some companies surprising power to raise prices or withdraw discounts.

Many of the new trends can be attributed to one factor, according to retail specialists: working from home.

Almost overnight, a consumer-driven economy with clearly delineated work and home spending, changed profoundly. Rising demand for certain items, as well as global supply-chain disruptions, has driven up prices.

Americans are now shelling out significantly more than a year before for coffee, eggs, sliced ham, ketchup and cheese, for example, according to the Reuters analysis of the latest pricing data from Nielsen Co, the Brewers Association and StyleSage Co.

Yet it’s a complex picture, and some of the changes in behavior seem counter-intuitive during a time of deep economic uncertainty.

Demand and prices have also increased for more expensive, or “splurge”, items like $106 men’s Nike Air Max sneakers, $105 Lululemon yoga pants and even a $1,500 Louis Vuitton handbag.

Economists put this apparent discrepancy in behavior down to the fact that many people, unable to spend outside, have more cash in hand. Even many workers on furlough are receiving jobless benefits that match their wages under a federal stimulus plan.

“If I were to consider the consumer situation right now, in a strange way, they may have more disposable income, if they kept their job,” said Nirupama Rao, an assistant professor of business economics and public policy at the University of Michigan. “Of course we’re facing mass layoffs, but the bulk of people have maintained their wages and earnings.”

‘UNPRECEDENTED PRESSURE’

Shoppers paid roughly 8% more on average for JM Smucker’s instant coffees, including Folger’s and Dunkin’, at bricks-and-mortar stores in the four weeks to Aug. 8 versus a year before, according to Nielsen data analyzed by Bernstein.

They shelled out nearly 10% more for Kraft Heinz sauces and about 5% extra for Tyson Foods’ sliced hams.

Such inflation might make commercial sense, given the bump in demand for home staples. But some consumer experts complain retailers and big brands are cutting back on promotions and using their power to shore up profits during a health crisis that has led to millions losing their livelihoods.

“Brand manufacturers have been fattening their pockets with profits while putting unprecedented pressure on the consumer who has to pay those higher prices,” said Burt Flickinger, retail consultant at Strategic Resource Group.

JM Smucker said it did not raise prices of its instant coffees in the four weeks to Aug. 8, but did cut back on some promotions for in-demand products. Kraft Heinz declined to comment, but said during earnings in July that second-quarter prices went up as it pulled some offers and discounts for scarce products. Tyson did not respond to a request for comment.

Other industry experts point out that companies have had to grapple with costly production shifts to adapt to the new landscape. They note that before the pandemic, when costs were lower and there were more promotions and discounts, prices of Heinz sauces were declining.

Pre-COVID-19, tens of millions of commuters grabbed a coffee to-go en route to work. Suddenly, instead of 20-pound (9.1 kg) bags of coffee for restaurants, or large containers of ketchup, producers have had to switch to smaller, home-use packaging.

As ketchup, mayonnaise and vinegar sales surged, Kraft Heinz diverted resources to running these production lines around the clock, while suspending others. It added extra shifts for factory workers to make grocery-sized bottles.

Egg suppliers, like market leader Cal-Maine Foods Inc., have had to overcome a shortage of cartons.

“If you look at eggs, before they’d be powdered to send to restaurants and now they have to be put in cardboard containers to go to supermarkets,” said Daniel Bachman, senior U.S. economist at Deloitte. “It took a high price to induce the change.”

Yet consumer companies cannot take demand for granted and can be burnt by raising prices.

Prices for bottled water and disposable diapers have gone up, while demand has fallen for most of the pandemic. People are unwilling to pay out extra when they can drink their own water at home, and can opt for reusable or cheaper generic diapers at a time when there’s a lack of child daycare, some economists say.

“You’re at home anyway so you’re not sending your child off somewhere in a diaper that fails,” said Rao.

A $2,245 COAT, ANYONE?

Lockdowns have meant many Americans do not travel, eat out, or go to movie theaters. As they have not been commuting or taking kids to school, many are using less gas in their cars.

So they can now splash out on other things, perhaps.

Michael Collins, a professor at the University of Wisconsin’s consumer science department, calls this a “substitution effect.”

“It’s pretty clear people behave as if they have different pots of money,” he said. “Now I don’t eat out at all, so I have a couple of hundred dollars of new income not allocated to anything. I can substitute that money away from eating out and treat myself to other things.”

This effect could help explain the rise in demand and prices for the Air Max. Nike sold about 63% of their online stocks of the shoes in July, compared with only 10% a year earlier, according to apparel data company StyleSage which collects sales information from brand websites.

Air Max prices surged 10.5% on average versus a year before.

Prices for Lululemon’s yoga pants rose 7.2%, and about 45% of stocks were sold in July versus 15% the year before.

Meanwhile, the price of Louis Vuitton’s Neverfull MM Monogram handbag has risen 5% on its website since the start of May. In July, Louis Vuitton owner LVMH said sales momentum had picked up since June, even as its star label raised prices for a third time during the pandemic.

There are some limits, though.

Demand for a Burberry woman’s trench coat has declined, with only 3% of online stocks sold in July versus 14% a year earlier.

It’s a snip at $2,245, down 3.5%.

Nike and Burberry did not respond to requests for comment, while LVMH declined to comment beyond its July remarks. Lululemon said it hadn’t raised prices on some of its core yoga pant styles, including Align and Wunder Under, but had seen a significant rise in demand for yoga products since April. The strong July sales reflected its “Warehouse Sale” offer that month, it added.

HOW LONG WILL IT LAST?

Much remains uncertain.

The U.S. epidemic and its economic consequences are moving targets, and it is unclear when – or even if – American life and consumer behavior will revert to “normal”.

The University of Michigan’s Rao said food producers had been reluctant to invest in permanent changes to retool factories. “They’re hindered by the fact there’s so much uncertainty as to how long this will last.”

Indeed, consumer demand, as well as brands’ pricing power, could change in the coming weeks and months as many Americans feel more financial pain.

The government’s first round of COVID-19-related benefits expired on July 31, leaving about 30 million unemployed Americans without the $600 weekly boost that sustained their households and promoted some discretionary spending.

With the money spigot turned off, analysts say recessionary spending behavior should take hold, with consumers cutting back.

The University of Wisconsin’s Collins said loan forbearance on mortgages, credit cards and student loans since the spring had also helped consumers.

“Eventually that will all end, and people could start to tighten up again.”

(Reporting By Nick Carey, Richa Naidu and Siddharth Cavale; Additional reporting by Silvia Aloisi; Editing by Vanessa O’Connell and Pravin Char)

Vietnam braces for typhoon Khanun after floods kill 72

A boy paddles a boat past a flooded village's gate after a heavy rain caused by a tropical depression in Hanoi, Vietnam October 16, 2017.

HANOI (Reuters) – Vietnam braced for typhoon Khanun on Monday after destructive floods battered the country’s north and center last week, killing 72 people, the disaster prevention agency said.

Last week’s floods were the worst in years, the government and state-run Vietnam Television said, with thousands of homes submerged. Another 200 houses collapsed and several towns remain cut off by the floodwater.

The floods also damaged more than 22,000 hectares (54,300 acres) of rice.

Farmers harvest rice on a flooded field after a heavy rainfall caused by a tropical depression in Ninh Binh province, Vietnam October 14, 2017.

Farmers harvest rice on a flooded field after a heavy rainfall caused by a tropical depression in Ninh Binh province, Vietnam October 14, 2017. REUTERS/Kham

Vietnam is the world’s third-largest exporter of rice and the second-biggest producer of coffee, although the floods have not affected the Southeast Asian nation’s coffee belt.

Eighteen people from the hardest-hit province of Hoa Binh in the north were buried by a landslide, but only thirteen bodies have been found, Vietnam’s disaster agency said.

The government has said it is fixing dykes, dams and roads damaged by last week’s flood and is preparing for typhoon Khanun, which is expected to cause heavy rain in northern and central Vietnam from Monday.

It has also warned ships and boats to avoid the approaching typhoon.

Vietnam is prone to destructive storms and flooding due to its long coastline. A typhoon wreaked havoc across central provinces last month.

Floods have also affected nine out of 77 provinces in Thailand, Vietnam’s neighbor to the west. Three people had been killed in flooding since last Tuesday, Thailand’s disaster agency said on Monday.

The Thai capital, Bangkok, was hit by heavy rain at the weekend, with gridlocked traffic bringing parts of the city to a standstill. Bangkok has often been described as the “Venice of the East” because of its many waterways.

However, the floods prompted criticism of Bangkok’s city government, with some social media users accusing authorities of not managing water levels in canals properly.

The city government defended itself, saying it was working closely with the irrigation department. Thailand suffered its worst flood in five decades in 2011, with hundreds of people killed, industrial estates engulfed and key industries crippled.

 

(Reporting by Mai Nguyen in HANOI; Additional reporting by Amy Sawitta Lefevre and Panarat Thepgumpanat in BANGKOK; Editing by Amy Sawitta Lefevre and Paul Tait)