Global coffee prices soared to their highest levels in years, driven by extreme weather conditions affecting key coffee-producing nations. In 2024, coffee prices increased by 38.8 percent compared to the previous year, with both Arabica and Robusta experiencing significant price surges. Arabica, known for its high quality, rose by 58 percent, while Robusta, widely used in instant coffee and blends, saw a 70 percent price jump. This price increase marked a rare narrowing of the gap between the two coffee varieties, a trend not seen since the mid-1990s.
Coffee remains one of the most widely consumed beverages worldwide and is among the most traded commodities. It supports the livelihoods of millions of farmers and provides employment opportunities along the supply chain. In many low-income nations, coffee exports are a crucial source of revenue, providing foreign exchange reserves essential for trade and economic stability.
Potential Price Increases in 2025
Forecasts indicate that coffee prices may continue to rise in 2025 if major growing regions face further production challenges. Several factors have contributed to recent price hikes, including reduced exports from Vietnam, lower yields in Indonesia, and unfavorable weather conditions in Brazil.
Vietnam, a major coffee producer, experienced prolonged dry spells that led to a 20 percent decline in production during the 2023/24 season. Exports also fell by 10 percent for the second consecutive year. Similarly, Indonesia’s coffee production suffered a 16.5 percent drop due to excessive rains in early 2023, causing a 23 percent decline in exports.
Brazil, the world’s largest coffee producer, revised its 2023/24 production estimates downward due to prolonged dry and hot weather. Initially expecting a 5.5 percent increase in output, estimates were later adjusted to reflect a 1.6 percent decline. Adding to the supply crunch, Brazilian farmers held back their coffee stocks in response to rising domestic prices, creating additional pressure on global coffee markets.
Rising Shipping Costs
Beyond production challenges, rising shipping costs have also contributed to the increase in global coffee prices. As a result, consumers in major coffee-importing regions have seen notable price hikes. In December 2024, coffee prices rose by 6.6 percent in the United States and by 3.75 percent in the European Union compared to the same period in 2023.
Higher prices present an opportunity for investment in the coffee industry. Experts emphasize the need for increased funding in technology and research to enhance climate resilience in coffee production. The sector, which is largely dependent on smallholder farmers, requires innovative approaches to mitigate the effects of climate change and ensure long-term sustainability.
The Importance of Market Transparency
Market transparency and cooperation among stakeholders are essential to support sustainable growth in the coffee industry. Ensuring the stability of the sector is crucial for millions of smallholder farmers who contribute significantly to global coffee production.
Key Industry Insights
- Brazil and Vietnam together produce nearly half of the world’s coffee supply.
- Smallholder farmers contribute 80 percent of global coffee production.
- The global coffee industry generates over $200 billion in annual revenues.
- Coffee exports are crucial to the economies of several countries, accounting for significant portions of their total merchandise exports. In 2023, coffee made up 33.8 percent of Ethiopia’s exports, 22.6 percent in Burundi, and 15.4 percent in Uganda.
- The largest coffee importers are the European Union and the United States.
- In 2023, global coffee production reached 11 million tonnes, with a total trade value exceeding $25 billion annually.
As climate change continues to pose challenges for coffee production, the industry must adapt to ensure sustainable growth and long-term stability.
