"Global Coffee Prices Surge to Multi-Year Highs Amid Climate Challenges and Supply Disruptions"

Global coffee prices soared to their highest levels in years in 2024, rising by 38.8% compared to the previous year’s average, primarily driven by adverse weather conditions affecting key coffee-producing countries, according to a report by the Food and Agriculture Organization of the United Nations (FAO). 

Price Surge in Arabica and Robusta 

A FAO note on global coffee market trends indicated that by December 2024, the price of Arabica, a higher-quality coffee often used in ground and roasted blends, had increased by 58% year-on-year. Meanwhile, Robusta, mainly used in instant coffee and blending, witnessed an even sharper surge of 70% in real terms. 

This sharp increase in Robusta prices led to a narrowing of the price gap between the two varieties for the first time since the mid-1990s. 

Impact on Global Markets and Livelihoods 

Coffee remains one of the most consumed beverages globally and ranks among the world’s most traded commodities. It supports the livelihoods of approximately 25 million farmers, most of whom are smallholders, and generates employment opportunities across the entire coffee value chain. 

For many low-income countries, coffee exports are a vital source of revenue, contributing essential foreign currency to facilitate access to global markets for the import of goods and services. 

📈 Potential Price Increases in 2025 

FAO has warned that coffee export prices may rise further in 2025 if major coffee-producing regions face additional supply disruptions. 

Key Factors Behind the Price Surge 

1. Vietnam: Prolonged dry weather in 2023/24 caused a 20% decline in coffee production and a 10% drop in exports for the second consecutive year.
2. Indonesia: Excessive rains in April-May 2023 damaged coffee cherries, leading to a 16.5% drop in production and a 23% fall in exports.
3. Brazil: Dry and hot weather prompted successive downward revisions to the 2023/24 production forecast, shifting from an expected 5.5% increase to a 1.6% decline.

 Additionally, farmers in these regions have been withholding their produce due to rising domestic prices, which further tightened supply and contributed to the upward pressure on global coffee prices in late 2023 and early 2024. 

🚢 Higher Shipping Costs Also a Factor 

Increased shipping costs were also identified as a contributing factor to the global rise in coffee prices. Early data from December 2024 showed that these price increases translated into consumers paying: 

• 6.6% more for coffee in the United States.
• 3.75% more for coffee in the European Union compared to December 2023.

💡 Encouraging Investment in Climate Resilience 

Boubaker Ben-Belhassen, Director of FAO’s Markets and Trade Division, emphasized that these high prices should provide an incentive for greater investment in technology and research and development (R&D) in the coffee sector. Since the sector is heavily reliant on smallholder farmers, increased investment can help build resilience against climate change, which continues to threaten global coffee production. 

“The high prices should encourage investments in technology and R&D to increase climate resilience in the coffee sector,” said Ben-Belhassen. 

🌱 FAO Advocates for Sustainable Growth and Market Transparency FAO also underscored the importance of market transparency and collaboration among all actors in the coffee value chain to ensure sustainable growth in the global coffee industry and protect the livelihoods of millions of smallholder producers. 

📊 Key Statistics and Market Insights 

• Brazil and Vietnam together account for nearly 50% of the world’s coffee production.
• Smallholder farmers contribute around 80% of global coffee production.
• The global coffee trade is valued at over $25 billion annually.
• Global coffee production generated more than $20 billion in 2023.
• In 2023, coffee accounted for:
  • 33.8% of Ethiopia’s total merchandise exports.
  • 22.6% of Burundi’s total exports.
  • 15.4% of Uganda’s export earnings.
• The European Union and the United States remained the largest coffee importers.
• The global coffee industry generates over $200 billion in annual revenues.

🌍 Outlook for 2025: Uncertainty and Potential Supply Challenges As climate challenges persist and global shipping costs remain elevated, FAO projects that global coffee prices may continue to rise in 2025 if supply from major producing regions remains constrained. The coffee sector is now at a critical juncture, where addressing climate change impacts and improving supply chain efficiency can help stabilize prices and protect the livelihoods of millions dependent on the industry.

Follow & Subscribe:
👉 Agri-Food Update on LinkedIn for the latest updates and insights.
🌐 Visit us at www.agri-food-update.com for more information!