Shares of Keurig closed last week at $51.70 per share, making this acquisition price a 78% premium to the stock’s most recent close.
Shares of Keurig were up as much as 75% in pre-market trade last week.
But the burgeoning coffee empire is still failing to address a much bigger problem: A warming planet that is slowly devastating coffee crops worldwide.
Global temperatures are forecast to rise by at least two degrees Celsius over the next few decades, and it’s likely that many of the major havens for coffee production will suffer as a result. A recent report in the journal PLOS One predicts that pressure from climate change will drive down supplies, forcing coffee prices up.
Where our java comes from
Americans love coffee. But most of the java we drink comes from places around the globe where warming temperatures and altered weather patterns are decimating coffee crops. A combination of coffee rust, a fungal infection that attacks the leaves of the coffee plant, and invasive species like the coffee berry borer are slowly destroying coffee plantations across the globe.
The PLOS report found that the number of coffee-growing regions in Africa — where Goldilock’s mix of just-right temperature, altitude, and soil moisture allow the plant to be grown in bulk — could be reduced by between 65% and 100% in the next seven decades.
On a recent visit to a coffee farm in Costa Rica, considered one of the havens for consistently smooth and fruity, complex coffee, I saw firsthand the problems that plague the current industry. At the frm we visited, the vast majority of coffee came from Coffea arabica plants, a species which accounts for roughly 75% of the world’s coffee. Here’s a shot of the many rows of coffee plants, which are interspersed with corn and other crops to help cycle nutrients through the soil:
It is thought that the first place where C. arabica plants were farmed was in the southwestern highland forests of Ethiopia. Today, coffee plants are rarely found in that region. Instead, the crop is grown all over the world, from Africa and South America to Southeast Asia and the Caribbean.
A global threat to coffee
Unfortunately, since nearly all the coffee we drink started with just a few wild Ethiopian plants, the current coffee crop is far from genetically diverse. In fact, experts estimate that all the coffee currently farmed has less than 1% of the diversity of wild Ethiopian plants.
This is a big problem: It means coffee plants — wherevere they are grown — are highly susceptible to changes in the climate.
One example of these changes is the emergence of the coffee berry borer, a small species of beetle native to Africa. It is thought to rank among the most harmful pests to coffee crops worldwide and is considered the single most economically important coffee pest in the world.
Together with a pesky fungus known as coffee rust, the borer is devastating coffee crops. Higher temperatures have expanded the range where the pest can survive, thrive, and reproduce.
Here’s a photo of an adult coffee borer beetle (Hypothenemus hampei) on a damaged coffee bean:
All of these threats to coffee will put many pressures on the industry, and it’s left to see how the growing industry will cope.
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