Thus, the world of coffee, inflation and geopolitics • Business • Forbes Mexico

0
9


The coffee boils and not only in the cups. Production falls in Brazil, consumption is triggered in the United States and prices reach historical maximums.

Between droughts, pests and commercial tensions; The great Latin American producers play their future in a volatile market. From Brazil to Guatemala, coffee is not just a drink, it is an economic pulse that beats hard in each grain.

Brazil: downward coffee and rising prices

Brazil, the world’s largest coffee producer, faces a reduction in its harvest due to adverse climatic conditions.

Droughts and frosts have impacted production since 2021 and the National Supply Company (CONAB) foresees by 2025 a harvest of 51.8 million bags of 60 kg, 4.4% less than the previous year.

“After five months without rain in the main producing areas, it is most likely that production in 2025 will be significantly reduced, especially that of Arabica and that the country fails to replace its stocks,” Marcio Ferreira, president of the Coffee Exporters Council (Cecafé) of Brazil, told Efe.

The Brazilian Association of the Coffee Industry (ABIC) expects prices to remain high, exceeding 4 dollars per pound in the coming months, although they could stabilize in 2026 if the conditions improve.

The prices have been pressed for the increase in demand by some European countries, which decided to increase their coffee purchases this year to advance to the entry into force of the European antidephorestation law, the president of Cecafé explained to Efe.

The domestic market has also suffered the consequences: the price of coffee has risen 89% in the last year, which affects the popularity of the Luiz Inacio Lula da Silva government.

Meanwhile, the country has increased its exports to Vietnam and Indonesia to compensate for the fall in these markets and has raised robust coffee sales to the United States.

Colombia: expansion in the US and new markets

Colombia, third world producer of soft Arabica coffee, keeps the United States as its main market, since it represents 40% of its exports.

“History shows that the United States has been, is and will be the number one client of Colombian coffee, because consumers have decided so,” the General Manager of the National Federation of Coffee Growers (FNC), Germán Bahamón told Efe.

The FNC, Guild founded 98 years ago and brings together 560,000 coffee families, has diversified the Colombian coffee market to take it to all continents but without losing sight of the US market, where it seeks to close the gap between wholesale import and the final consumer in EU, betting on brands like Juan Valdez and my God!

1.3% of American gross domestic product (GDP) comes from the economic activity generated by coffee. “A dollar of coffee imported by the United States becomes 43 dollars of economic activity,” Bahamón said.

Colombian coffee has experienced significant diversification, with a growing presence in Türkiye and the Middle East, in addition to a growing interest in the Chinese market.

New York: upward consumption despite prices

EU is the second largest coffee market after the European Union. According to the National Coffee Association, daily coffee consumption reached its highest point in twenty years in 2024.

The consumption trend has gone up in recent years. According to a Drive Research survey of early 2024, 73% of American adults drink coffee daily and although most prefer to do it at home, about half (51%) buy this drink in a cafeteria at least once a week.

Starbucks continues to lead the market with a turnover of 36,000 million dollars, and American coffee imports increased to 22.3 million bags, with Brazil (32%), Colombia (20%) and Honduras (7%) as main suppliers.

The economic impact of coffee in the United States is estimated at 343.2 billion dollars, with more than 2.2 million related jobs.

“The world demand for coffee is still robust,” said Mark Smucker, CEO of JM Smucker, who has the Folgers and Café Bustelo brands.

And in the meantime, prices have risen significantly: the smallest black coffee vessel exceeds 3 dollars and Cappuccino, 5 dollars; In addition, it has become fashionable in cocktails such as the ‘Espresso Martini’, which costs $ 15.

Mexico: drought and commercial threats

The production of coffee in Mexico has been hit by drought and has affected key states such as Chiapas, Veracruz and Oaxaca.

In Veracruz, the harvest has been delayed one month, and prices are expected to remain high. Internationally, the industry faces the possible imposition of 25% tariffs by former president Donald Trump, which could affect 53% of Mexican coffee exports aimed at the US.

“High prices are due to drought in Vietnam and now also to drought expectations in the next harvest of Brazil, which begins in April 2025,” said Fernado Celis, of the National Coordinator of Coffee Organizations.

Do not miss: Nuevo León state police abate eight alleged hitmen in confrontation

Honduras: Climate change and challenges for coffee growers

Honduras, the largest coffee producer in Central America and the fifth in the world, faces challenges due to the climatic crisis.

The rust and fungus ‘Eye de Gallo’ have affected the quality and quantity of the harvest, while the high cost of fertilizers complicates the profitability of producers, mostly small farmers.

Despite the difficulties, the Honduran coffee industry remains vital for the country’s economy, since it represents more than 5% of GDP and generating more than 2,000 million dollars in foreign currency.

Guatemala: Record costs and EU dependency

In Guatemala, coffee is still a key piece of the economy, with the US buying 41% of its exports. The cost per quintal has reached historical levels, from $ 174 in 2022-2023 to $ 233 in the 2023-2024 season.

The total export production in 2024 was 4.07 million quintals, far from the record of 4.78 million in 2021.

This panorama shows the complex network of challenges and opportunities facing coffee in Latin America.

While Brazil and Colombia try to maintain their domain in a market affected by droughts and rising costs, countries such as Mexico, Honduras and Guatemala fight against the climatic crisis, prices volatility and dependence on the US consumer.

With EU importing more than 22 million bags per year and a global demand increasing, coffee remains a bill of billions of dollars, but with an uncertain future.

With EFE information.

Subscribe to our YouTube channel and do not miss our content

Follow the information about the world in our international section


LEAVE A REPLY

Please enter your comment!
Please enter your name here