Bloomberg Audio Studios, podcasts, radio news, Coffee Taste.
Every flavor, Old Coffee, buy Experts for experts. It's the world's most popular drink, but it's not getting any cheaper. Coffee Buyers are paying record prices for the Crown coffee prices and Robusta hiasins the nineteen seventies.
We are going to still consuming a cup of coffee every morning, almost no matter what the price is.
In Uganda, farmers received a record seven thousand shillings per kilo of robusta beans. That's around one dollar and eighty nine cents. But it's not all good news. This windfall comes at a time of a cost of living crisis and has made the farms an obvious target for criminals. They're using dogs to guard plantations, they're using bees.
This is two stop thieves from snatching those unharvested beans straight from the trees under the cover of darkness.
On today's Next Africa Podcast, we'll look at the impact the rising cost of coffee is having and whether this unprecedented crime wave is actually here to stay. I'm Jennifer Zabasajob and this is the Next Africa Podcast.
Bringing you one story each week from.
The continent, driving the future of global growth with the context only Bloomberg can provide. So joining us on the podcast this week is Mumby Guitao. She is a soft commodities reporter covering all things commodities globally.
Mumby, how are you? Thanks for joining us.
I'm very well. Thank you for having me.
Yeah, it's been a busy year for you, I think, to say the least, we were just talking about how it started off with coco for you. Now it's coffee maybe pink the picture for us right now, about what exactly is going on and what we should focus on when it comes to coffee right now.
It's been an interesting market for me. As you said, we started off with the cocoradi and then we've moved on to the coffee market. And it's important to know that these are all the luxurious things that everyone of us likes to have. Every once in a while, the coffee market has seen significant weather challenges, particularly in Vietnam. So we have two types of coffee. We have the
robusta and we also have the Arabica beans. The Arabica beans are what we consider the premium, smooth, flavored beans that are favored by the likes of Starbucks or probably your favorite coffee chain. And then we have the likes of robusta beans, which is considered cheaper and considered a little more acidic, but has a higher caffeine content. Now the shock that we've seen in supply is in robusta beans.
Vietnam is the largest producer of these beans, and earlier this year they had bad weather, so we've seen production in that country go down.
This year.
We started with robusta beans at about two seven hundred dollars and right now we are looking at five three hundred dollars, so that has been about an eight two percent increase introbusta beans. That has made coffee very expensive, especially the instant type or your blends that are used in espressos. So that's why you think probably the cost of your coffee go up this year.
And maybe not to put you on the spot, but I do remember when we talked about cocoa. You don't necessarily consume coco too much when it comes to coffee. I mean, is this a mumby favorite or are you just very interested in covering it?
I hate to say, but I'm more of a tea drinker. I'm trying to get into coffee just so that I know how to taste and identify good coffee. But I like my tea, But I'm now starting to get into coffee. But I'm not those coffee snobs that won't take a particular type of coffee.
And I think all of us know coffee is very precious to people, right and the taste and where it comes from. And so maybe you touched a bit there on some of the biggest growers globally, maybe you can tell us more about that where are these beans coming from that people are willing to spend a lot of money to get their cup of coffee.
Initially, as I mentioned, Vietnam is our biggest producer of robusta beans, but globally, Brazil is the biggest producer of both Arabica and Robusta beans, so cumulatively it's the biggest exporter and producer of coffee beans. But we also have the likes of Ethiopia, Uganda, Indonesia, India, Columbia, Honduras, which are also very important to the supply of coffee in the world. But most times we pay a lot of attention to what is happening in Brazil and what is happening in Vietnam, and.
So then what was the catalyst to where we are now, to where we're seeing prices future prices at levels we haven't seen in quite a while, and that's with both of these beans.
Yes, so initially it started with Robusta. That's where we saw the first shock. It was not widely anticipated that we would have lower production in Vietnam, but they had bad weather, they had dropt, and then that obviously led to a decline in production, and that's kept the market quite heated, and even this year, we're expecting the country to get even less production because they had dropped earlier
in the year. Now the world is now paying so much more attention to Brazil, where there's also dry weather and the trees that are meant to be flowering, but the rain is not coming down yet. So anything that is weather related causes the market to be on the edge, and the market is very sensitive to dry weather, to frost, to lots of rain. So that's why we are seeing the market rarely to thirteen year highs for Arabica and Robasta, to records that we've not seen since the nineteen seventies.
Wow, And I wonder, as somebody who's covering this closely, what's been your perspective and watching these prices continually tick up? It was it inevitable just given a lot of the weather related events that we've been seeing.
Some of it was inevitable because it's hard to predict the weather. I think that's one of the things that's very hard to predicting this life. So in one week we are looking at a frost, the other week we are looking at heat waves. The other week we are
looking at possible typhoons or drought. In one region, the weather has been oscillating between two extremes, and that's always very hard to predict how a crop will behave if it's in every coast and Ghana where we have coco, too much rain is bad, but very hot weather is also bad. So plants require such a delicate balance of just optimum weather, and if that is not available, then we have the supply shocks that we are seeing currently.
And before we go to the break, maybe you can explain how you're mentioning how this affects producers.
How does this then trickle down to the consumer.
Is it that a lot of these buyers are just increasing their prices because the supply is just so limited.
Yes, it starts with the farmers. So when farmers realize that there's competition for their beings, they start to raise their prices, and even among traders, they also start to bit among each other. So it's the highest builder that gets the bins, that helps to fuel prices higher and higher every day. And I think that's good for the farmer, especially in an era where they've not been getting as
much money for their beans. But for the consumer that just means spending more dollars and more pounds for your cup of coffee. In the long run, I think the issue has been to ensure that farmers are fairly remunerated for their amount of work that they put in the fields. Tending to a coffee plantation is not easy, picking the cherries taking them to the washing station. So farmers have always been saying, we need a fair price, and maybe the rallying prices helps them get part of that fair price.
Stick with us Mumbai.
After the break, we'll talk more about how these rising prices are affecting farmers and growers on the ground in Africa.
We'll be right back and welcome back.
We still have Mumbaiker tow Bloomberg Soft Commodities reporter joining us to talk all things coffee and coffee crops. So maybe we were talking a little bit about the global producers before the break, but you mentioned some of the African producers and in particular how what we're seeing right now is affecting them. Can you dig more into that and where we're seeing this really have an impact on coffee farmers.
So when we saw earlier in the year that Vietnam was not giving as much supply as the world needed, a lot of attention started also to shift to Uganda, which is also coming up as a powerhouse in terms of coffee production. It's coffee production has gone up increasingly higher every single year and so it was very helpful for it to come and plug the short fall. But that did not mean that prices were going to fall
that much lower. So we saw farmers in Uganda and exporters in Uganda shipping a lot more coffee to Europe, to the Middle East, to the Americas, and that way they helped to ensure that the shortfall so from Vietnam was being fulfilled.
And in New Ganda there's an interesting picture that's being painted there. We actually talked to our reporter fred O Jambo, who is based in Kampala, and he told us in particular what the farmers there are having to resort to just as the prices continue to take up.
Farmers say that their farms are targeted because of the high prices and they resorted to guarding their farms to avoid being victims to the thefts of cherries from their farms. Some of the methods they are using employing logs others into a pierae, although this one is meant to enhance pollination of the prop but they added that it could scare away thieves who use the couple of darkness drop their crop, so they say they may fear to antigolize the bees.
Is the coursern. It takes a lot of money higher gods to God. But some of them have resorted to working up occasionally during the night scout around their farms which are at their backyards.
I think from my days when I was in Kenya, I used to see how excited coffee and tea farmers used to be when they get their pay, and I imagine that's the same case for Uganda farmers, they're seeing prices that they've probably not seen in their lifetime. They're getting a lot more money for their coffee, and that's incentivizing crime. So if you see that your neighbor is earning a lot more from coffee, and you probably do not own a coffee plantation, then you might be incentivized
to walking there in the middle of the night. Pluck a future is go drive them and then sell them to the highest speeder.
And we know that coffee beans, mambe are not the only only craft that's been targeted for food crime, especially globally. I mean, is there anything that we know just based on your own reporting, that people are doing to prevent this from happening.
You're right.
So early in the year we also covered about thefts of cocoa in the West Africa region. At the time, prices had also rallied to eleven thousand dollars a time, and that also incentivized the kind of theft that you're seeing in Uganda. I have seen most government as communities to form patrols to try and ensure security in their areas.
There's very little that a government can do apart from trying increase policing activities and patrols in the area, because remember some of these farms are not fenced, so they're very open, so they're open to any trust persons to come in and out. But I think community patrols and the government giving them access to more patrols that might be helpful for them.
And in Uganda were also seeing bees even getting into the next to helping esport thieves. What does all of this mean then there's this win fall here today for some of these African countries and especially you mentioned that you've is trying.
To be a powerhouse.
Is it possible considering the situation they're dealt with.
I think as long as we are still facing whether related challenges, farmers may continue to earn a lot more. It's hard for these prices to come off the highs that they're at without and significant supply rebound. Now we've been going from one year of bad weather, one year of bad weather, to another year of bad weather. So we've had consecutive years of bad weather so much that we are not replenishing the stocks that we are slowly tapping into. So for the seeable future, prices could stay high,
will they rarely continue? I think that's all dependent on the weather, whether it's favorable or not. But at least for now prices are likely to stay high.
And mumbe, just finally, what's the next commodity to watch for? Just considering, I mean, weather is affecting so many different crops. I mean, I wonder what you've got your eye on next.
My eyes are actually on sugar because Brazil is also the biggest producer of sugar, and we've seen fires in the region, dry weather in the region, and that's impacting sugar production. Just yesterday we saw prices go back to levels that we last so in April. So road sugar is an important one for us to what now. Africa is not the biggest producer of roach sugar. Actually it's
a net importer. So if prices of road sugar sad in other parts of the world, then Africa will probably have a higher import bill when it comes to importing sugar, and they'll have more expensive sugar going.
Forward, just at a time when they're hoping inflation to ease. Mumbig Guitar Bloomberg's oft Commodities reporter leb.
Be always great to get you on. Thank you so much for your reporting.
Thank you, and you can read all the latest on the price of coffee across Bloomberg News platforms. Now we'll also put a link to Fred's reporting in the show notes. Now here's a few other stories in the region that we're watching. Historic rainfall bucket it down in Central Europe, Africa, Hi, and the US Carolinas. This week, at least one thousand people have died in Africa.
And millions of people have been displaced.
Also, the South African Reserve Bank joined the Federal Reserve and other central banks globally cutting interest rates for the first time in years as inflation eases across their economies. And you can follow these stories across Bloomberg, including the Next African Newsletter. We'll also put a link to that in the show notes. This program was produced by Adrian Bradley. Don't forget to follow and review this show wherever you
usually get your podcasts. I'm Jennifer's Abasaja. Thanks for listening.