By Judith Ganes-Chase
An escalating cost of production, labor shortages and climate change could hinder long term production growth. As it is already, gains in world coffee output have failed to keep pace with rising global consumption the past two decades, resulting in world coffee stocks reduced to cover the ongoing gap in supply.
Ill able to afford financing of stocks through this period, there has also been a shift in inventory from producer to consumer hands. Little coffee remains at origin. Up until now, the transfer of stock ownership has made the supply situation more transparent; roasters were more confident in their coverage than when the majority of the world’s coffee stocks had been sitting in producer hands. This is being put to the challenge now with a shortfall of mild Arabica coffee due to a combination of erratic weather and reduced fertilizer use. Harsh weather in Colombia and an increased incidence of broca have greatly reduced supply, and the realization that very little coffee remains at origin to cover this shortfall finally came into the market’s focus.
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