Impact of Climate Change on Brazilian Coffee Exports and Markets in Iran and Iraq

Introduction

Climate change has significantly affected coffee production and exports in Brazil, the world’s largest coffee producer. Severe droughts, rising temperatures, and unfavorable climatic conditions have led to a decline in Arabica production and an increase in Robusta production. These changes have directly impacted global coffee markets, including Iran and Iraq, leading to price hikes and shifts in consumption patterns.

1. Changes in Coffee Production and Exports in Brazil
  • Decline in Arabica Production: Brazil accounts for 41% of global Arabica production, but recent droughts have caused a 30% decrease in output [[USDA, 2024]].
  • Increase in Robusta Production: Due to Robusta’s higher resistance to heat, its share of Brazil’s total production has grown from 30% in 2011 to 40% in 2024 [[OEC, 2024]].
  • Export Decline: In July 2021, Brazilian coffee exports dropped by over 28% due to production constraints driven by climate change [[OEC, 2024]].
2. Impact on the Iranian Coffee Market
  • Rising Prices: Reduced global Arabica production has pushed up international coffee prices, directly affecting Iran’s market. In 2023, imported coffee prices in Iran rose by 15-20% [[Donya-e-Eqtesad, 2023]].
  • Increasing Domestic Consumption: Despite rising prices, coffee consumption in Iran has surged by 40%, with annual imports reaching 50,000 tons [[Eghtesad News, 2023]].
  • Import Dependency: Iran has no domestic coffee production and is fully reliant on imports from Vietnam, Brazil, India, Indonesia, Colombia, and Uganda [[Tgju, 2024]].
3. Impact on the Iraqi Coffee Market
  • Market Structure: Iraq primarily depends on coffee imports, with minimal domestic production. The majority of its coffee supply comes from Brazil, Vietnam, and Colombia [[SpiceCenter, 2024]].
  • Growing Demand: Coffee consumption in Iraq is increasing, making the country a key export destination for Iranian coffee as well.
  • Supply Challenges: Fluctuations in global production and price hikes can affect coffee availability and affordability for Iraqi consumers.
4. Shifts in Consumption Patterns and Market Opportunities
  • Increasing Robusta Share: Climate-induced changes are driving more consumers toward Robusta, which is cheaper and more climate-resilient.
  • Investment Opportunities: With rising prices, investing in supply chain efficiency and direct sourcing from producing countries can help mitigate costs.
  • Growth of Local Brands: Coffee brands in Iran and Iraq have an opportunity to adapt to consumer preferences by offering new Arabica-Robusta blends.
Conclusion

Climate change is transforming Brazil’s coffee industry, with significant repercussions for markets in Iran and Iraq. Higher prices, shifting consumption trends, and increased competition in the supply chain are key outcomes of these developments. Businesses operating in this sector can leverage new sourcing strategies and innovative product formulations to navigate these challenges effectively.