Varginha, Currency, Herb: how changing weather patterns created a Brazil coffee shortage which damages the local economy

Coffee plants are sensitive to weather. A cold year in one of the world’s largest coffee-producing areas is causing high costs, and the forecast suggests this will continue to be a problem.

Sadly, recent trends likely associated with changing climates have affected the reliability of the coffee economy in Varginha. The region experienced a consistently cold (Austral) winter season in 2021, damaging the crop and leading to a coffee shortage.

Figure 1: A systematically colder-than-average July/August in 2021, which featured a number of drops below an Arabica-threatening threshold of 5°C, caused production in the Varginha region to drop by 25% this year.

In figure 1 we can see the actual temperature in the region in late July 2021. In the two-and-a-half-week period, the temperature was systematically colder than the 10 year average, and saw two cold snaps during which the mercury dropped beneath a temperature threshold of 5°C – very dangerous for Arabica plants. The result was a 25% drop in productivity in the region compared with the previous year. The balance of supply and demand is at the heart of economics. With the decrease in production, the cost of Arabica has soared to a 12-year peak in the West due to the shortage. However, the majority of the cost of a cup of coffee to a western consumer consists of tariffs, taxes and transport costs; the increase in price does not often propagate back to the farmers and plantation operators in Brazil.

Figure 2: ECMWF ensemble forecast for precipitation in the Varginha area in the coming Austral winter season, showing drier than usual conditions with very little ensemble spread i.e. high confidence.

Unfortunately, the outlook for the coming (Austral) winter season implies that the crop will struggle again this year. In figure 2 we can see that the majority of ECMWF ensemble members predict very little rain throughout the winter months, and that the mean rainfall throughout March is also predicted to be less than the 10-year mean.

Figure 3: Daily median temperatures and ensemble spread for the coming Austral autumn- and winter season, showing that the previous season has already been significantly colder than usual, as well as a high degree of confidence that the next 4-5 months will be systematically colder than the long-term average.

Figure 3 similarly shows that the majority of ensemble scenarios predict a colder than average season. Although possibly milder than that of 2021, figure 4 shows that there is a non-zero chance of overnight frosts throughout June.

Figure 4: Ensemble members (scatter points) and their statistical properties (box plots) from ECMWF forecasts for June 2022. Mean temperatures are expected to be colder, and although not guaranteed, the chance of dropping below the critical 5°C threshold at night cannot be ruled out.