- Bad weather is severely affecting Brazil, and Vietnam’s coffee output.
- Coffee prices are soaring as global supply decreases from the South American countries.
- As Brazil and Vietnam take a hit, East African coffee producers stand to gain as prices increase.
Coffee output in Brazil and Vietnam has taken a hit owing to bad weather affecting global supply, a scenario that could turn the tide in favour of the bean producers from East Africa.
At the moment, Brazil, which is the world’s largest coffee supplier, is facing worsening drought that is expected to further affect the optimum production of the crop in this year.
Since April 2024, rainfall in Brazil has been below the required amount, which has in turn severely affected the flowering of coffee trees and therefore, overall production.
According to the ICE, there is a drastic decline in arabica coffee stocks which are reported to be at a four-month low. The ICE report places inventory for Arabica at just over 795,870 bags in stock as of October 3, which is a record low. The same goes for robusta coffee stocks, which are reported to have hit a four-month, according to the International Coffee Organization.
As the world’s largest and second largest coffee suppliers, the reduced output in Brazil and Vietnam respectively is projected to affect the global supply and in turn, increase demand for East African coffee.
Key coffee producers in East Africa are Kenya, Uganda, and Ethiopia, and sector experts say these countries can expect increased sales at higher prices. In return, farmers in these East African economies can expect higher prices for their produce and experience an uptick in the countries’ export revenues.
There was a similar situation in 2021 when frost slashed Brazil’s production and in effect, prices in East Africa went up. Increased prices have already started being felt with Kenya reporting a steady increase in coffee prices since the last auction in October 2024.
A 50-kilogramme bag of Kenyan Arabica coffee used to sell for $241, but market data has the price up selling for $256 at the last auction. Similar price increases are seen in Ethiopia and Uganda, the largest coffee exporters in East Africa.
Across Ethiopia, producers in the country earned a record $1.43 billion from coffee exports in the 2023/24 fiscal year after exporting over 298,500 tonnes according to the Ethiopian Coffee and Tea Authority.
Likewise, in the latest auction, Uganda is also reported to have recorded its highest foreign exchange earnings from coffee exports in over 30 years, the Uganda Coffee Development Authority said. The country earned $1.14 billion from coffee exports in the 2023/24 season, up from $846 million previously. Uganda exported 6.13 million bags of coffee during the period, an increase from 5.76 million bags in the prior year.
With Brazil’s output expected to tank, East African exporters are likely to see continued demand growth, boosting revenues across the region.
Read also: The bitter pill of cocoa’s value chain in Ghana and Ivory Coast
Bad weather affecting Brazil coffee output
Brazil is by far the world’s largest coffee producer accounting for about a third of the world’s coffee. Brazil coffee plantations cover some 27,000 square kilometres and 90 percent of these exports are the high demand Arabica.
The plantations stretch from the southernmost plains of Paraná all the way through to the more famous São Paulo state. Across Minas Gerais, a state bigger than Kenya, Arabica coffee plantations stretch for miles and miles. Minas Gerais is home to 50 per cent of Brazil’s entire coffee crop and produces more than 65 per cent of Brazil’s total Arabica production.
However, with the ongoing drought in Brazil along with wildfires, production for the start of the 2025/2026 season is severely affected. The report is confirmed by the Center for Advanced Studies on Applied Economics at the University of Sao Paulo’s agribusiness school.
In a normal harvest cycle, reports from the university say that by mid-August, the coffee trees would have been bright green and ready for flowering for the next crop which typically starts in the second half of September, but not this year.
“Instead, over half the plantations are wilted…this includes the majority of branches on which new fruit would normally develop into juicy red cherries carrying beans for the next harvest,” reads the report in part.
The report says they expect mass defoliation of both trees and branches and as a result, the coffee trees will not produce even a fraction of their normal harvest. Other than the draught, reads the report, as of August this year, Brazil was also hit by an intense cold front which is bound to affect the Arabica production.
The cold front caused new frost damage especially to farms where early flowering had already begun for the next harvest. “It’s a disaster. There is no other word for our current situation,” the report quotes a Brazilian coffee grower in the Campos Altos region in Minas Gerais.
“This past harvest I got less than half of what I normally would get, even in the harvest after the 2021 frost I got more. When you look at these fields, it is very obvious to anyone who knows coffee that the next harvest is going to be even worse.”
The market report from the university says they are closely monitoring how Brazilian coffee plants develop in the face of adverse climate conditions. However, says the report, already they are seeing the plants’ flowers have stopped blooming, as a result, the flowers will fail to turn into beans or at best, they will produce fewer or lower-quality beans.
Felippe Serigati, coordinator of the Master’s Program in agribusiness at the Getulio Vargas Foundation, told the press; “It could result in a smaller coffee harvest. Since the market tends to anticipate these movements, we’ve already seen the price of Arabica coffee in New York and Robusta in Europe trading at higher levels.”
As of August o this year, the International Coffee Organization’s Composite Indicator Price, which combines the price of several types of green coffee beans, reported that prices averaged $2.38 per pound, that prices is more than double, up nearly 55 percent from the same month one year ago.
While coffee prices haven’t reached the record highs the world saw in the late 1970s, when severe frost destroyed more than 70 per cent of Brazil’s coffee plants, Serigati says, they are seeing prices soaring in recent years and if the weather conditions do not change, prices will only go higher.
