Climate Change and Tariffs Spike Coffee Prices: Your Morning Brew Could Cost More!

ROCHESTER, N.Y. (AP) — Reneé Colón, with her vibrant purple-and-pink hair, ascends a small ladder within a section of a warehouse she rents, feeding Brazilian coffee beans into her aging roaster.

These beans are particularly valuable, having weathered a year when environmental adversities hampered global coffee production, causing the cost of raw beans to double within a few months.

“Regrettably, we’re seeing coffee becoming increasingly rare,” remarked Colón, the founder and chief roaster at Fuego Coffee Roasters. “The significant reduction in the Brazilian harvest is a telling example,” she added.

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EDITOR’S NOTE: This narrative is a joint effort by the Rochester Institute of Technology and The Associated Press.

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Harsh heat and drought conditions have slashed production forecasts for some of the largest coffee producers worldwide. Although global production is predicted to rise, it will not meet the initial expectations of commodity market speculators, leading to a spike in coffee prices driven by robust demand from Europe, the U.S., and China.

Coffee prices reached a peak in February but have sustained high levels, posing a dilemma for roasters like Colón on how much of the increase to absorb or pass onto customers.

By early March, the cost of the beans that Colón was processing had surged to $5.50 per pound, a significant climb from the price in September. This price point was for a mix of mid-grade beans, with specialty coffees — which are cultivated in specific climates to enhance flavor and slow growth — commanding even higher prices.

Current tariffs under President Donald Trump, which are set at 10%, impact most coffee-producing nations, including Ethiopia and Colombia, and are likely to push prices even higher. Amidst erratic announcements concerning tariffs — including a threatened 46% duty on certain imports which was later stalled — American coffee roasters are reassessing their supply chains.

“With all the fluctuations in the coffee market, perhaps we should start our own farm,” Colón contemplated. However, establishing a coffee farm in rural New York isn’t feasible given the optimal coffee-growing conditions near the equator and at high altitudes. Even Puerto Rico, where Colón and her husband have familial ties, isn’t a viable option mainly due to high labor costs and increasing risks of crop damage.

Colón dismisses the idea of sourcing coffee from Hawaii and California, criticizing it as either subpar, overpriced, or both.

In February, the global export of green coffee dropped by 14.2% compared to the previous year, as reported by the International Coffee Organization. This reduction led to the highest ever price for raw coffee in February, surpassing the record set in 1977 after a severe frost devastated 70% of Brazil’s coffee crops.

According to Daria Whalen, a buyer for Ritual Coffee Roasters based in San Francisco, rising prices are not solely due to climate factors. Inflation is also increasing the costs of labor, fertilizers, and borrowing.

Whalen recalled the uncertainty during her trip to Mexico in April to finalize contracts amidst Trump’s fluctuating tariff policies. This situation mirrored her experience in Colombia a month prior, where tariff threats loomed over coffee prices before being retracted.

“It felt like a roller coaster day because by the end, the tariffs we feared didn’t materialize,” Whalen explained.

Some recent spikes in coffee prices may stem from importers stockpiling in anticipation of tariffs. Colón anticipates further price increases once import taxes take effect, which could dampen demand for her premium coffee products.

“It’s challenging for us because it drives up prices, difficult for consumers who have to pay more, and harsh on the farmers who may face significant losses,” Colón observed.

Nevertheless, she remains committed to expanding her business. In December, she and her husband secured a $50,000 loan to purchase a custom coffee roaster from Turkey to triple their production capacity. They aim to boost sales by acquiring new wholesale clients like coffee shops and initiating a direct-to-home bean subscription service.

The Colóns have increased the wholesale price of a pound of roasted beans by 25 cents and are considering a similar price adjustment for pour-overs and espresso drinks at their two retail outlets.

At one of their cafes, named Melo, a couple mentioned they rarely check the price of their coffee on the receipt. For them, visiting the cafe is a special indulgence.

“We know we could find cheaper coffee elsewhere,” said Rob Newell, a high school biology teacher, holding his infant daughter next to his wife, also a teacher. “Perhaps it’s because we’re new parents, but staying at home all day can give you cabin fever,” he added.

To reduce costs, Colón is considering utilizing additional space in her roasting warehouse to store more bags of raw beans, potentially saving up to $500 monthly on storage fees in coastal cities.

She has been working to establish stronger connections with farmers to mitigate price volatility and ensure consistent bean quality. During a spike in coffee prices in February, she secured a one-year contract with a Colombian farmer that helped avoid the worst of the price increases.

Like many small business owners, Colón has had to navigate the complexities of tariffs. In January, she declined an offer from a Montreal coffee importer who suggested that the strong U.S. dollar in Canada could save her money by importing through their warehouse. She was concerned that tariffs on Canadian imports could raise prices further, and the additional border crossing might cause delays. Additionally, the fluctuating dollar value added to her hesitancy.

“I prefer simplicity over complexity,” she concluded.

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