Drought in Brazil sets coffee prices soaring worldwide; orange, corn exports also affected
Market watchers are anticipating a sharp rise in the price of coffee beans worldwide as Brazil, the largest exporter of coffee, grapples with one of the worst droughts in decades.
The average price of a cup of coffee in the United States is up by 17 percent, at $4.50, from its price in 2016, according to a report in the Wall Street Journal published on April 30.
The worst affected will be the consumers of high-end coffee, experts have said. The premium for high-end coffee over cheaper beans has surged to the highest since 2016 due to the drought-stricken crop in Brazil, a Bloomberg report mentioned.
The prolonged dry weather spell has led more than 100 cities in Brazil to ration water. Along with the coffee producers, those involved in the sugarcane plantation have also been hit hard. Besides, Brazil’s orange crop production has also dropped by 31 percent this year due to the lack of rainfall.
Brazil recorded a drop in coffee production last year as well. However, the problem is more acute this time. Experts predict that the drought is very likely to cause food inflation in the country. This can push several parts of the population into hunger in the country, which is already grappling with the spread of Covid-19 cases.
The dry spell comes at a time when moisture is crucial for coffee crops. This is the period when soil stores water to cope with the effects of a dry season. The current dry weather is not just causing damage to this season’s crop but also ruining the outlook of the farmers’ next season’s produce, Aljazeera reported.
Scientists and activists in the country blame deforestation for the present drought condition. Last year, Amazon deforestation surged to a 12-year high under President Jair Bolsonaro. Last month, the president also drew criticism for approving a 24 percent cut to the environment budget for 2021 compared to the previous year’s level. This came just a day after he pledged to double the budget for environmental enforcement at a summit organised by US President Joe Biden.
Source: CNBC TV18