Global coffee prices surged nearly 40% in 2024 due to supply disruptions caused by adverse weather conditions in key producing countries. According to a new study by the Food and Agriculture Organization of the United Nations (FAO), coffee prices reached a multi-year high, rising by 38.8% compared to the previous year’s average.
Sharp Increase in Arabica and Robusta Prices
According to FAO’s market analysis, in December 2024, Arabica—the most sought-after coffee variety—was 58% more expensive than a year earlier. Meanwhile, Robusta, primarily used for instant coffee production, saw a 70% price hike. This resulted in the smallest price gap between the two major coffee varieties since the mid-1990s.
Outlook for 2025: Prices May Continue to Rise
FAO experts predict that export coffee prices may continue to rise in 2025 if major producing regions face further supply reductions.
Key factors contributing to the price surge:
- Vietnam’s Export Decline: Prolonged drought led to a 20% drop in coffee production, with exports shrinking by 10% for the second consecutive year.
- Reduced Output in Indonesia: Excessive rainfall in 2023 damaged coffee cherries, causing a 16.5% decline in production and a 23% decrease in exports.
- Weather Conditions in Brazil: Hot and dry weather prompted a downward revision of coffee production forecasts. Instead of the expected 5.5% growth, production is now projected to shrink by 1.6%.
Additional Factors: Rising Transportation Costs
Beyond supply constraints, increasing transportation costs also contributed to rising coffee prices. In December 2024, this led to higher consumer coffee prices:
- In the U.S. – up 6.6%.
- In the European Union – up 3.75%.
FAO: High Prices Should Encourage Industry Development
“High coffee prices should serve as an incentive for investment in technology, research, and sustainable agricultural practices, which are crucial for small-scale farmers,” said Boubaker Ben-Belhassen, Director of the FAO Markets and Trade Division. He emphasized that climate change has long-term implications for coffee production.
FAO supports coffee-producing nations by helping farmers implement climate-resilient cultivation methods that also promote biodiversity restoration.
Global Coffee Market: Key Facts
- Leading Producers: Brazil and Vietnam account for nearly 50% of global coffee production.
- Role of Small Farmers: Approximately 80% of the world’s coffee is produced by smallholder farms.
- Economic Significance:
- Global coffee production is valued at over $20 billion annually.
- The global coffee trade exceeds $25 billion per year.
- In 2023, global coffee production reached 11 million tons.
- The largest coffee importers: the European Union and the U.S.
- The coffee industry generates over $200 billion annually.
FAO emphasizes the importance of market transparency and international cooperation to ensure the sustainable growth of the global coffee sector and protect the livelihoods of millions of small-scale farmers worldwide.