Roasters Forced To Adapt As Drought And Tariffs Drive Up Cost Of Coffee – CoffeeTalk

Rainy conditions have led to a significant increase in coffee prices, with Brazilian coffee beans being the most valuable due to their survival during severe drought. The loss of the Brazilian crop has cut production forecasts in Brazil and Vietnam, the world’s largest coffee growers. Global production is still expected to increase, but not as much as commodity market investors had expected. This has sent coffee prices up, largely because of continued high demand in Europe, the U.S., and China.

President Donald Trump’s current 10% tariffs cover most coffee-producing countries, including Brazil, Ethiopia, and Colombia, and are expected to drive up costs for Americans. American coffee roasters are rethinking their supply chains amid his chaotic tariff pronouncements. Colón, founder and roaster at Fuego Coffee Roasters, is considering opening a farm to grow coffee near the equator and in high altitudes. However, Puerto Rico, where Colón and her husband have roots, is not a serious option due to labor costs and concerns about crop-damaging hurricanes.

Global coffee green exports were down 14.2% from a year earlier, leading to the highest price ever for raw coffee in February. Inflation is driving up the cost of labor, fertilizers, and borrowing. Daria Whalen, a buyer for San Francisco-based Ritual Coffee Roasters, said that some of the recent rise in coffee prices might be from importers buying extra in anticipation of the tariffs. Colón believes prices will go still higher as import taxes begin being paid. With consumer confidence hitting a 12-year low, Colón could see a decrease in demand for her premium coffee.

Colón is committed to expanding her business by taking out a $50,000 loan to buy a custom coffee roaster from Turkey that will triple capacity. They are trying to increase sales by adding new wholesale clients like coffee shops and selling directly to homes via a beans-of-the-month-style subscription service. The Colóns have raised the wholesale price on a pound of roasted beans by 25 cents and are considering doing the same for pour-overs and espresso drinks at their two retail locations.

Colón is also seeking to cut costs by stacking up more bags of raw beans there to save as much as $500 on monthly storage costs in port cities. She has tried to cultivate relationships with farmers to minimize price spikes and control bean quality. Colón turned down a pitch from a Montreal coffee importer who suggested the U.S. dollar’s strength in Canada would allow her to save money by importing through their warehouse. She feared that tariffs on Canada could increase prices and that the coffee would have to cross an extra border, risking delays.

In conclusion, the challenges posed by climate, tariffs, and increased demand for coffee are forcing American coffee roasters to reevaluate their supply chains and make informed decisions about their coffee production.

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