The world coffee prices reached a multi-year high in 2024—increasing 38.8 per cent on the previous year’s average—mostly driven by inclement weather affecting key producing countries according to The Food and Agriculture Organization of the United Nations (FAO).
According to a FAO note on global coffee market trends, 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.
Coffee is one of the most widely consumed beverages worldwide and ranks among the most traded commodities globally. It sustains the livelihoods of some 25 million farmers and creates additional employment throughout the coffee value chain. For many low-income countries, coffee exports represent an important source of revenue, generating foreign currency reserves essential for securing access to global markets for the import of goods and services.
Rises in 2025 possible
FAO said that coffee export prices may rise further in 2025 if major growing regions experience further significant supply reductions.
Key factors behind the recent price increase include limited export quantities from Vietnam, reduced output in Indonesia, and adverse weather impacting coffee production in Brazil.
In VietNam, prolonged dry weather caused a 20 per cent drop in coffee production in the year 2023/24, with exports falling by 10 per cent for the second consecutive year. Similarly, 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. Exports dropped by 23 per cent.
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.
In addition, farmers withholding their produce amid rising domestic prices further tightened the supply situation, adding upward pressure on global coffee prices in late 2023 and early 2024.
Shipping costs are a factor
Higher shipping costs were also found to be one of the factors contributing to the increase in world coffee prices.
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 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.
FAO highlights the importance of market transparency and encourages cooperation among all actors of the value chain to support sustainable growth in the global coffee sector and protect the livelihoods of millions of smallholder producers worldwide.
Key Figures
- Brazil and VietNam together account for nearly 50 per cent of the world’s coffee production.
- Smallholder farmers play a vital role in the coffee industry, accounting for 80 per cent of global coffee production.
- Global coffee production amounts to over $20 billion annually.
- The value of the total coffee trade is estimated at over $25 billion per year.
- In 2023, world coffee production reached 11 million tonnes.
- In 2023, coffee export earnings accounted for 33.8 per cent of the total merchandise exports in Ethiopia, 22.6 per cent in Burundi, and 15.4 per cent in Uganda.
- In 2023, the largest coffee importers were the European Union and the United States of America.
- The global coffee industry generates over $200 billion in annual revenues.
