SMART NEWS

Caffeine Junkies, Rejoice! Coffee Just Got Cheaper

A global surplus of coffee is causing bean prices to bottom out

Correspondent

December 30, 2015

If you’re obsessed with (or barely functional without) your morning cup of joe, you’re not alone— 59 percent of Americans drink a cup of coffee every day, according to the National Coffee Association. And now, that daily cup is poised to become more affordable. As Marvin G. Perez reports for Bloomberg News, coffee prices are falling fast.

Thank the weather in Brazil for the declining price of coffee, writes Perez: A rainy season in the country led to better Arabica coffee growth, which has helped coffee supplies rise and prices fall. It’s part of a bigger global trend toward cheaper food triggered by high inventories, favorable weather, cheap gas and currency declines, Perez notes.

A recently released report from the United States Department of Agriculture predicts that 2016 will be a record year for global coffee production. The United States is estimated to import 500,000 more bags of coffee this year, totaling 24.0 million, due to higher consumer demand, most likely attributed to the falling prices and increased supply of beans.

The weather-fueled price drop demonstrates just how vulnerable coffee crops are to the elements. Climate change could make this a signficant issue in the future. Earlier this year, researchers predicted that temperature fluctuations will cause drought, pests and other climate-sensitive factors that will affect crop yields, and eventually even cause some tropical highlands to lose their capacity for producing the higher-quality Arabica coffee. And changing climate could make the price of coffee skyrocket overall once rising temperatures disrupt the market supply.

Dwindling prices are likely temporary—and they could spell bad news for fair trade coffee growers now. When prices fall, growers get less money for the commodity regardless of how it’s produced. Though the specialty coffee market is growing, producers and buyers are still trying to figure out ways to shield fair trade growers from fluctuating commodity prices.

Will premium coffee prices fall because of the global drop? Probably not: As Alice Culp reports for the South Bend Tribune, consumers are still willing to pay a premium for a cup of coffee that comes with a side of social awareness. Either way, though the future might be troubled, 2016 is shaping up to be a banner year for caffeine junkies.