Coffee Supply Chain Issues
As the world re-opens and more people start frequenting cafes and coffee shops, it's become clear that Covid-19 has caused significant disruptions to the global supply chain.
From manufacturing lockdowns around the world resulting in raw material shortages to port lockdowns causing shipping delays of 8-12 weeks, the coffee industry has been hit hard.
Two of the world's largest coffee producers, Brazil and Colombia, have experienced their own unique challenges. Brazil, which is the largest producer of coffee beans, is currently in the midst of its worst drought in 91 years. This has resulted in a significant lack of rainfall and damage to coffee trees from frost, both of which may reduce coffee yields.
The water availability in the soil is already at critical levels, and the international coffee exchange has seen Brazilian arabica doubling in price in the last 12 months. One green coffee merchant has already cut its Brazil 2021/22 arabica coffee production estimate by 2 million bags, which is the smallest crop output in 14 years.
Colombia, the world's second-largest arabica producer, has also experienced a reduction in coffee supplies due to a -16% year-on-year drop in August coffee production. Anti-government and workers' rights protests in the country have further resulted in beans getting stuck at ports, causing prices to spike at origin by 18% and follow-on increases to destination by 43%.
Despite these challenges, the demand for coffee is set to break records this year, especially in the northern part of the world, where winter is approaching. Supermarkets have already increased prices on their shelves and are expected to rise even further in December 2021. However, prices may begin to cool down if Brazil's coffee-growing regions break their drought.
Moving forward through the coffee draught
As a coffee company, we have implemented numerous contingencies to mitigate the impact of these disruptions and ensure that we deliver orders in full and on time. However, ongoing service delays are still anticipated until recovery efforts conclude across the country.
To avoid the possibility of disappointment, we ask that you place orders a little earlier than normal and order a little extra stock than you would normally to ensure that you have no disruptions to your business.
Stay Safe, Stay Caffeinated
Green Commodities Pty Ltd
King Carlos® Coffee