Vietnam, the world’s largest producer of robusta coffee beans, is facing a supply crunch that is driving up prices and threatening to make your morning latte even more expensive. Futures of robusta coffee beans, primarily used in espresso and instant coffee, have surged by around 50% in London this year, reaching their highest level in nearly two decades. Weaker harvests in Vietnam, where one-third of the world’s robusta beans are grown, have made it harder for farmers to cultivate their crops and for exporters to secure supply, leading to higher costs for coffee lovers. Farmers and middlemen predict that the cost of beans could climb to $5.89 per kilogram, up from the current level of around $5.13, according to Tran Thi Lan Anh, deputy director of Vinh Hiep Co., a major Vietnamese exporter. One kilogram of coffee beans can produce between 120 and 140 cups of coffee using a standard single shot. Thus, the cost of a pound of beans directly impacts the price of coffee at coffee shops. However, Lan Anh cautioned that it’s difficult to predict when prices will peak. Vietnamese robusta coffee farmers have fallen short of delivering between 150,000 and 200,000 tons of contracted beans since the 2023-2024 harvest in October, according to estimates from seven traders compiled by Bloomberg. This represents only 10% to 13% of the harvested crop. The culprit is the El Niño weather phenomenon, which brings warmer global temperatures every two to seven years. This year, El Niño has brought drier and hotter conditions to Vietnam, with temperatures in some provinces reaching a scorching 111 degrees. The drought has threatened Vietnam’s ability to meet coffee demand. Coffee beans require tropical climates to thrive, but optimal growing conditions include temperatures below 80 degrees during the day and consistent rainfall to maintain soil moisture. During a recent meeting in Ho Chi Minh City, Swiss food and beverage giant Nestle revealed that it had to source more beans from Brazil, Indonesia, and India to meet demand at its global factories. Intimex Group, Vietnam’s largest coffee exporter, also acknowledged that the country imported 200,000 tons of coffee beans last year – a trend that has continued into 2024. Nguyen The Hue, a coffee farmer in Gia Lai province, expressed concerns that the drought could lead to a shortage of new beans for sale in the upcoming season. He highlighted the lack of water for irrigation and the infestation of white mealybugs due to the hot weather. The drought, caused by El Niño, has severely depleted water resources, leaving many lakes used for crop irrigation critically low.
Robusta Coffee Bean Shortage Raises Prices, Threatening Your Morning Latte
