Global coffee harvest to fall short of demand as fertiliser costs stay elevated

The market is expected to record a deficit of 7.3m bags

The International Coffee Association sees production rising only 1.7% to 171.3m bags in the current season.

The global coffee market will record a deficit of 7.3m bags in the annual season that runs to September as increased global fertiliser costs and adverse weather last year hurt crops, the International Coffee Association (ICO) has said. 

This follows a deficit of 7.1m bags in the previous season when coffee consumption bounced back and economic growth improved as the world emerged from the covid pandemic, said the ICO in a monthly report.

The intergovernmental body sees production rising only 1.7% to 171.3m bags in the current 2022/2023 season despite top producer Brazil being in an "on-year" of its biennial crop cycle.

Although consumption is also seen growing 1.7% to 178.5m bags, this is modest compared to last season's 4.2% surge following the pandemic.

"Decelerating economic growth for 2022 and 2023, coupled with the dramatic rise in the cost of living, will have an impact on coffee consumption for coffee year 2022/23," said the ICO.

It also noted global exports of green or unroasted coffee beans fell almost 3% in April versus a year ago to 9.21m bags, bringing the cumulative total of exports for the first five months of the coffee year to 64.95m bags, down 6.4%.

Sustainability

Separately, Nestle is piloting a scheme to give cash to coffee farmers who grow beans sustainably as part of its plan to halve greenhouse gas emissions in its coffee business by 2030, the food giant has said.

The move comes as major consumer goods companies face increased reputational and legal pressure to clean up their supply chains globally.

Nestle, the world's largest packaged food company, has pledged to spend $1bn by 2030 on its plan to source coffee sustainably, which now includes efforts to boost farmer income. 

Around 125m people around the world depend on coffee for their livelihoods, while an estimated 80% of coffee-farming families live at or below the poverty line, according to non-profit organisations Fairtrade and Technoserve. 

• Reuters