For three years, abnormally wet conditions have caused massive flooding in Colombia’s flatlands and damage to coffee crops, causing production last year to fall to 9.5 million 60-kilogram bags from 12 million in 2007.

Production is only part of the problem, as stockpiling can offset annual fluctuations in supply. Global coffee inventories have fallen to their lowest levels on record in the face of strong demand, combined with current weather issues. A decade ago, coffee-making countries had stored some 55.1 million 60-kilogram bags; last year, stocks fell to 13 million bags.

The industry’s supply-demand balance is so bleak that a scientist rocked trade forums last year by warning that the world is veering toward “peak coffee” – the point at which producers can no longer increase production to meet the world’s rising taste for the drink. And the squeeze is already being felt in grocery stores and cafés around the world.

In North America last week, Starbucks Corp. raised the price of a one-pound bag of beans by 17 per cent at its U.S. stores and 6 per cent in Canada. And J.M. Smucker Co., which sells the Folgers and Dunkin’ Donuts brands, announced its fourth increase in a year for a total hike of 38 per cent.

So what can we do to protect our morning eye-opener? The key to avoiding peak coffee is boosting sustainable productivity, and many countries are attempting to increase yields by replacing old coffee trees with disease- and pest-resistant varieties, as well as incentive programs.

In Colombia, for instance, the Coffee Growers Federation has established a loan program to encourage its 553,000 members to rejuvenate their fields by cutting back old plants and replanting with disease-resistant varieties. The challenge, however, is that it takes three years for a new coffee plant to produce a harvest, and many Third World farmers are unwilling to gamble that prices will remain high, especially when they can reap immediate returns from other crops.

And even as Colombian producers struggle to boost production, they are working to meet the changing demands of global coffee consumers, who increasingly want high-quality “specialty” grades and certifications like the “fair trade” socio-economic seal or the Rainforest Alliance environment program.

Canadian coffee drinkers are some of the most discriminating in the world in terms of demand for high-quality coffee. Canadian consumption has continued to climb through the recession, while it has been stagnant in major markets like the U.S. and Europe.

ACT’s current research session is focused on Climate Change Adaptation and Crops & Food Security. We will be applying our resources to developing policy and recommendations for all levels of government as they plan responses to this vital issue, and producing a report for decision-makers in early 2012.