Dry spell could whet coffee price

Coffee prices could rise if a drought in Brazil, the world’s biggest coffee producer, continues to put pressure on supply, the New Zealand Specialty Coffee Association says.

Dry weather is hurting production of Arabica and robusta beans across Brazil’s coffee belt.

The association’s president, Karla Gichard, said this had the potential to make coffee more expensive here.

But coffee beans were one of many inputs that went into making a coffee and prices would need to increase dramatically in order to have an impact on the cost of a cup, she said

Other costs could have a far greater influence on the price of coffee.

Coffee is the world’s second most valuable traded commodity, behind petroleum and last week Arabica coffee, the variety favoured by Starbucks, reached its highest price since February 2015.

Predicting what impact adverse growing conditions in Brazil would have on New Zealand’s coffee market was impossible to know, Gichard said. ‘‘It’s crystal ball gazing.’’

Coffee beans cost roughly $40 to $50 per kilogram, and one kilogram will usually produce 40 to 60 double espresso shots, she said.

So if coffee went up by $1/kg it would add 2 cents to the cost of a flat white.

Other costs such as utilities, rent, wages and milk were more likely to impact coffee prices in New Zealand, she said. Coffee was generally traded in US dollars which, given the high New Zealand dollar, gave local roasters more purchasing power.

New Zealand had one of the highest number of coffee roasters per capita, which was good for consumers, she said.

‘‘That competition itself helps keep the prices down.’’

Gichard, who is also the chief executive of Ozone Coffee Roasters, said Ozone imported a lot of coffee from Brazil and would be affected if pressure came on coffee production.

But it also imported coffee from other countries, reducing its exposure to one market.

Close relationships with Brazilian coffee farmers also helped during times of crisis, she said.

Research was also going into developing more resilient strains of coffee.

Climate change would affect coffee production in some parts of the world but that would just mean other coffee producing regions would develop, Gichard said.