World coffee prices surged by a significant 38.8 per cent in just one year — in 2024 compared to the previous year’s average — and can rise further in 2025, highlighted a new report by Food and Agriculture Organization (FAO) on March 14.
The prices reached a multi-year high in 2024, mostly driven by inclement weather that affected key coffee producing countries, the United Nations’ body said, warning that if significant production and supply disruptions happen in key growing regions, the prices can rise further in 2025.
Coffee is one of the most widely consumed beverages worldwide and ranks among the most traded commodities globally. Around 25 million farmers are dependent on its production for their livelihoods; in fact, smallholder farmers account for 80 per cent of global coffee production.
In December 2024, Arabica, the higher quality coffee favoured in the roast and ground coffee market, was selling at 58 per cent up on a year ago, while Robusta, used mainly for instant coffee and blending, saw a price surge of 70 per cent in real terms.
This marked a narrowing of the price differential between the two varieties for the first time since the mid-1990s, said the report.
Major coffee growing regions analysed in the report were Ethiopia and Kenya in Africa, Brazil and Colombia in South America, and Indonesia and Vietnam in Asia.
Producer prices of coffee beans in 2024 surged the highest in Ethiopia — by 17.8 per cent, followed by 15.9 per cent in Indonesia, by 13.6 per cent in Brazil, 12.3 per cent in Kenya, 11.7 per cent in Colombia, and 5.8 per cent in Viet Nam, compared to their level in 2023, as per FAO data.
Some of the major factors behind the recent price increase included limited export quantities from Vietnam, reduced output in Indonesia, and adverse weather impacting coffee production in Brazil.
In Viet Nam, prolonged dry weather caused a 20 per cent drop in coffee production in 2023/24, with exports falling by 10 per cent for the second consecutive year.
In Indonesia, coffee production in 2023/24 declined by 16.5 per cent year-on-year on the back of excessive rains in April-May 2023 that damaged coffee cherries. This led to exports dropping by 23 per cent.
Similarly, in Brazil, dry and hot weather conditions prompted successive downward revisions to the 2023/24 production forecast, with official estimates shifting from an anticipated 5.5 per cent year-on-year increase to a 1.6 per cent decline.
Brazil and Viet Nam together account for nearly 50 per cent of world coffee production.
“The high prices should provide incentives to invest more in technology and research and development in the coffee sector — which relies largely on smallholder farmers — to increase climate resilience,” said Boubaker Ben-Belhassen, Director of FAO’s Markets and Trade Division, adding that climate change is impacting coffee production in the longer term.
Apart from adverse weather conditions, higher shipping costs were also found to be one of the contributing factors.
Early data indicates that in December 2024, the increase in world prices translated into consumers paying 6.6 per cent more for their coffee in the United States and 3.75 per cent more in the European Union, compared to the same period in 2023, the report pointed out.