Why the Coffee prices are rising and the effects that this will have on the economy?

Coffee is the most consumed beverage in the world. Over two billion cups of coffee are used by people on daily basis all around the world. In the past few years, coffee prices are rising steadily. Many factors are the reason for the rise of coffee prices such as less production, greater demand, and droughts. As the usage of coffee is increasing all over the world the major producer countries are unable to fulfil the demand for coffee due to their inappropriate weather for harvesting.

The biggest factor behind the rise of coffee prices is climate change. Brazil and Vietnam are the world’s biggest coffee producers. Coffee plants need moderate weather to grow but both of these countries are facing severe weather conditions. Vietnam is facing heavy rainfall and storms which have destroyed a huge amount of their crops including coffee harvest. On the other hand, Brazil is facing drought due to less rainfall. Excess of both rainfall or dryness is affecting the production of coffee. The production of coffee is much less than its present demand so the price of coffee has a big rise in the market.

The harvest of coffee plays an important role in the economy of the world’s top coffee producer countries. Almost ten million people are making their living by producing coffee in developing countries. Coffee is mainly produced in developing countries while industrial countries are the major consumers of it. In Brazil where the world’s largest part of coffee is being produced almost 25 million farmers are earning their livelihood through coffee harvest. In the past few years, the price of coffee was low and the consumption of coffee was fluctuating so, the farmers and producer countries were selling it at a low cost all over the world.

Since 2019 due to COVID 19, the consumption of coffee was reduced somehow because the restaurants were closed. The less consumption of coffee affected the economy of many countries including the US state. But now the COVID 19 is quite a under control due to vaccination and the world is heading towards the normal situation, the consumption of coffee is also increasing. In this situation, the rise in coffee price is compensating the loss of the coffee producer countries.

As Brazil and Vietnam are already facing weather issues that are resulting in less production of coffee, the high prices of coffee can help them to maintain their economy. Coffee is also playing a vital role in the consumption of many other products such as milk, whitener, sugar, cream, flavours, etc. So, the decrease in coffee production can also affect the usage as well as the economy of these products. Coffee has now become a must-have beverage for people. So, the price rise cannot affect the consumption of coffee but it can help the producer countries to meet the loss in their economy.