Crypto News: Supply Lines: Future of coffee

Sipping coffee from Cuba, Rwanda and other less common origins is a delight for many caffeine lovers in search of diverse flavors and aromas. But it also matters for the industry's future.

Some 40 countries grow coffee, but more than half of global production has long come from just two: Brazil and Vietnam. So when bad weather hits both — an increasing risk in a destabilized climate — supplies get threatened and prices soar.

Take this year's $9 lattes, as drought gripped both nations. A similar vulnerability has also played out in chocolate this year as cocoa prices spiked to a record because of bad weather and disease in Ivory Coast and Ghana, which make up the majority of global supplies.

Coffee importers and roasters realize this urgency and the need to climate-proof supplies. As Bloomberg's Ilena Peng and Tarso Veloso document in their story this week, companies are investing in diversifying their supply chains. There's more support for farmers in nations from Peru and Tanzania to Rwanda and the Democratic Republic of Congo.

Still, it's unlikely that retail prices will drop any time soon. That's because smaller producers lack the economies of scale boasted by Brazil and Vietnam, often relying on family farms that harvest by hand. Production efficiencies and the lower prices they bring are what led the industry to rely so much on just two countries in the first place.

Even so, consumers today are willing to pay more for top-end, small-origin coffees than they once were.

Shipping Rush

There's another interesting development in coffee. Traders have been racing to ship as much to Europe as they can to stock up on beans before the region's new deforestation rules kick in at the end of this year, Bloomberg's Mumbi Gitau reports.

Under the legislation, importers will have to prove that commodities don't contribute to destroying forest land. Coffee — a crop that is largely reliant on millions of small growers across a wide swathe of the globe — is especially vulnerable to the challenges of ensuring every bean is in compliance.

A lack of clarity on the details has also left many businesses inadequately prepared, risking supply disruptions. A new platform is slated to launch later this year that aims to provide a solution to the EU's traceability requirements.

—Agnieszka de Sousa in London

China buying | China is asking domestic traders to buy less foreign grains as ample supplies and weaker-than-expected demand weigh on prices and threaten its longstanding policy to support local growers. Beijing this week summoned top importers for meetings and suggested they halt purchases of barley and sorghum, according to people familiar with the matter. The move, ahead of a forecast bumper grains harvest this year, is the latest effort by China to ease domestic oversupply and bolster local prices. (Read the full story here).

The Biden administration has cleared the way for a type of GM wheat from Argentina, putting agriculture technology company Bioceres a step closer to its goal of bringing its drought-tolerant grain to global markets.
Pork and beef producers in developed markets are becoming more vulnerable to credit downgrades triggered by climate-related risks, according to Fitch Ratings.
Ghana is banning the export of some grains including rice, corn and soy to avert a drought-induced food shortage in the nation.
South Africa could replace coal and power-plant jobs by investing in citrus and marijuana plantations to produce hemp in its coal belt as the nation tries to wean itself off dependency on the dirtiest fossil fuel, a study showed.
A worsening drought across Brazil that has stoked record wildfires and threatened the country's power supply has also impacted global sugar supplies.
Tracking rising temperatures is becoming a better way of forecasting food inflation in India than the rain patterns economists have typically relied on, according to HSBC.
China has fined seven companies for their involvement in a tainted cooking oil scandal that caused a nationwide uproar over food safety last month.

The Biden administration is being warned that supply chain bottlenecks at two key Agriculture Department nutrition programs are jeopardizing access to food for as many as 719,000 senior citizens and 55,000 vulnerable tribal members, Bloomberg Government reports.
Bayer's Third Circuit win on preemption grounds in a lawsuit alleging its Roundup weedkiller causes cancer makes the US Supreme Court more likely to take the case given there's now a circuit split among federal appeals courts, according to Bloomberg Intelligence.
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