FAO Releases Major Report on the Global Coffee Market in 2025
The Food and Agriculture Organization of the United Nations (FAO) has released a comprehensive report titled “Global Coffee Market and Recent Price Developments,” shedding light on critical challenges currently facing the international coffee trade. The report reveals that global coffee prices reached their highest levels in over 13 years by the end of 2024, driven by extreme weather, declining production, and rising transport costs.
Coffee, a lifeline for more than 25 million farming families, is one of the most traded agricultural commodities in the world. In 2023, the global value of coffee production stood at USD 23 billion, while international trade surpassed USD 26 billion. The industry as a whole generates over USD 200 billion annually.
For many low-income producing countries, coffee exports remain a vital source of foreign exchange. In 2023, coffee accounted for:
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33.8% of Ethiopia’s merchandise exports,
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22.6% in Burundi, and
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15.4% in Uganda.
In many of these nations, coffee earnings covered the majority of food import bills, underscoring its role in national food security.
Sharp Rise in Global Prices
Coffee prices rose by 38.8% in 2024 compared to 2023. Both Arabica and Robusta varieties experienced significant increases:
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Arabica: +58% year-on-year
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Robusta: +70% year-on-year
This has narrowed the historical price gap between the two varieties, a phenomenon not seen since the mid-1990s.
Climate-Driven Supply Constraints
Severe weather affected output in major producing countries:
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In Brazil, drought and frost reversed growth forecasts, leading to a 1.6% production decline.
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Viet Nam experienced a 20% drop in production, with farmers also delaying sales due to rising domestic prices.
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Indonesia’s production fell by 16.5%, with a 23% drop in exports caused by excessive rainfall.
Rising Shipping and Fuel Costs
The FAO report highlights that higher transportation costs have played a significant role in inflating coffee prices. According to the study:
A 1% increase in global shipping costs leads to a 0.44% increase in coffee prices within 10 months, with over half the effect occurring within the first 3 months.
These dynamics were further exacerbated by global oil price volatility, affecting freight rates and logistical expenses throughout the supply chain.
Effects on Consumers and Retail Prices
Despite the global surge in commodity prices, retail impacts were relatively moderate:
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+6.6% increase in U.S. retail coffee prices (December 2024 vs. 2023)
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+3.8% increase in the European Union
The demand for coffee remains inelastic, meaning that consumption patterns do not change significantly with price shifts. In both the U.S. and EU, coffee accounts for less than 1% of annual household spending.
Producer Incomes: Uneven Gains
Producers in key countries benefited from higher farmgate prices in 2024:
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+17.8% in Ethiopia
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+13.6% in Brazil
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+11.7% in Colombia
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+12.3% in Kenya
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+15.9% in Indonesia
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+5.8% in Viet Nam
However, increased input costs and logistical challenges limited the net benefits for many smallholder farmers.
FAO Recommendations for a More Resilient Market
To address long-term instability and safeguard livelihoods, the FAO recommends:
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Enhancing market transparency, including better forecasting of supply and demand.
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Supporting value-added processing at origin, such as roasting and packaging.
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Reducing tariffs on processed coffee to support producer countries.
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Fostering international cooperation between exporters and importers.
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Investing in climate-resilient farming and diversified cropping systems.
Conclusion
The FAO’s 2025 report paints a clear picture: without coordinated efforts to address climate risks, supply chain fragilities, and market inequality, the global coffee sector could face heightened instability. Yet, through strategic reforms and stronger international collaboration, a more sustainable and equitable future for coffee remains within reach.
