This Climate Business podcast: Coffee prices and climate

Listen to the full episode here.  

Vincent
"Why have coffee prices gone so high?" 

Richard 
“Coffee is in uncharted territory. It's at its highest point ever. And it's going to continue to rise. Supply is at a low and demand is at record highs. Everywhere in the world wants to be consuming coffee. And the places that grow it have had major supply interruptions, namely Brazil and Vietnam. Both of them have had a terrible harvest. And so there's just less of it. And like very many things that we enjoy, it is commodified.” 

Vincent 
“We like to think we're pretty special here with our coffee, don't we?”  

Richard 
“Well, we have historically enjoyed fabulous coffee at very good prices. Alongside the supply and demand issue is another factor that's working against us at the moment, and that is the weak New Zealand dollar. The reality is our New Zealand dollar is weak. And prices are high.” 

Vincent
“It's a perfect storm. But speaking of storms, it really is a drought in Brazil that's driving this?" 

Richard 
"Yes, a drought in both Brazil and Vietnam initially, and then Vietnam had flooding. But yeah, you're right. So severe drought in Brazil has meant that the coffee, just the trees, so coffee is a cherry, it's a seed, and the production is devastated, actually.” 

Vincent 
“Is it too long a bow to stretch, to say that this is the beginning of climate change affecting coffee? Or is it just weather?" 

Richard 
"No, I don't think it's too long a bow. I don't necessarily think it's the beginning. I think we've seen signs of it in other countries. An example would be the outbreak of La Roya, which is a leaf rust that particularly affected El Salvador. Coffee, especially arabica, likes particular soil as well and disease-free soil is a hard thing to maintain as climate change continues. And so, yes, this is a direct result of climate change, but I would suggest that it's not the first instance that we've had of it. And I believe it will carry on. We can expect volatility. 

Vincent 
“There are lots of countries that grow coffee. Could the supply issue be addressed by expanding the number of orchards, farms and growers?" 

Richard 
"I think the main answer there is that Brazil is such a bigger producer. It's landmass is many times the size of small countries like Guatemala, which I think is a third of the size of New Zealand. El Salvador is roughly the size of Canterbury. Vietnam isn't a traditional coffee growing country, but that was expanded hugely after the Vietnam War. So between Brazil and Vietnam, it's just that they're such huge producers compared with the rest of the coffee producing countries that when they experience a shortage, coffee everywhere goes through the roof because there just isn't enough supply to satisfy the demand." 

Vincent 
"It's probably too early to say, but are these tariffs that Trump is putting on, are they going to have an effect as well?” 

Richard  
“Well, obviously, my answer to that is we don't know yet. What Trump is doing at the moment seems to be both attacking traditional allies and China, but if it continues to spread to a global trade war, we don't know how that's going to impact countries like New Zealand. Like a lot of the countries that we bring the coffee in from, a lot of our export earning comes from primary products. And so how this is going to impact us, we don't know.” 

Vincent   
“Crazy question. Given that we are warming up, we're seeing different of crops, like bananas and peanuts, being grown in Northland. Is it possible we could grow coffee here?"  

Richard 
"Yes, it is possible to grow coffee. I don't think it's going to be possible on a scale sufficient to satisfy our demand. And the other aspect of coffee growing is that it's very, very labour intensive. That could pose a real problem in terms of the cost of actually producing a bean that could be roasted.” 

Vincent
“As ethical consumers what would you like us to do?”  

Richard  
"My request is that you consider carefully what you're spending your hard earned dollars on. Look beyond the brand, consider the flavour of what you're buying, but also dig a little bit deeper and check whether what you're buying and who you're buying it from aligns with what you're about. We're so lucky in New Zealand there are so many coffee roasters that do a great product. And there are also lots of brands that really aren't anything to do with New Zealand anymore.” 

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