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Coffee In Crisis: Global Supply Shortage Looms

Posted in Coffee Business on February 13, 2016
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Demand for coffee is booming at a staggering rate. According to the International Business Times China is adding four new shops per day, and in Europe over 2,000 outlets have opened in just two years, with Britain hosting more than 20,000 coffee shops for the first time.

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That sounds like great news for coffee lovers, however supply of quality beans is not moving in line with this staggering increase in demand. A new plant takes close to nine years before beans suitable for roasting are produced. That means a significant and sustained period of long term investment is needed to bring supply back in line with demand. Last year supply was already 4.6% below demand.

Eat Out reports that the situation is currently being exacerbated by a drought in Brazil, one of the world's largest coffee producers, impacting their contribution to supply. In Brazil, supply is also being curtailed by increasing numbers of farmers opting to move to higher paid positions in the cities, rather than continue growing.

The weakening global economy is also likely to hurt investment in new production, with Africa News noting that government assistance may be needed to boost production, particularly in Ethiopia, if the supply shortfall is to be closed.

Unfortunately for consumers who have just discovered the wonders of artisan coffee and switched from tea or cheap instant, they will be hit the hardest as competition for the small supply of premium beans is set to increase. In the short term we can expect significantly higher prices for the best coffee for many years to come due to a surge in demand paired with a lack of investment in new production.

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