World coffee prices surged to a multi-year high in 2024, climbing 38.8% compared to the previous year’s average, largely due to adverse weather conditions affecting key coffee-producing nations, the Food and Agriculture Organization of the United Nations (FAO) announced on Friday. The agency warned that prices could rise further in 2025 if supply constraints persist.
According to an FAO report on global coffee market trends, Arabica coffee, favored for roasted and ground coffee, saw a 58% year-on-year price increase by December 2024. Meanwhile, Robusta, primarily used in instant coffee and blends, experienced a 70% real-term price surge. This trend significantly narrowed the price gap between the two coffee varieties for the first time since the mid-1990s.
The FAO attributed the sharp price increases to reduced coffee export volumes from major suppliers, particularly Vietnam, Indonesia, and Brazil. In Vietnam, prolonged dry weather contributed to a 20% drop in coffee production for the 2023/24 season, while exports fell by 10% for the second consecutive year. Similarly, Indonesia’s coffee production declined by 16.5% year-on-year due to excessive rainfall during April-May 2023, which damaged coffee cherries, leading to a 23% drop in exports.
Global coffee trade and economy at risk from rising prices
Brazil, the world’s largest coffee producer, faced successive downward revisions in its 2023/24 production forecast as prolonged hot and dry conditions led to a shift from an initially projected 5.5% year-on-year increase to a 1.6% decline. These production setbacks have intensified supply constraints, further driving up prices in global markets.
FAO’s Markets and Trade Division Director, Boubaker Ben-Belhassen, emphasized that high coffee prices could encourage greater investment in research, technology, and climate resilience initiatives. “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,” he noted.
FAO report highlights key factors behind price hikes
FAO continues to support coffee-producing nations in adopting climate-adaptive farming techniques that also promote biodiversity conservation. Brazil and Vietnam collectively account for nearly 50% of global coffee production, with the industry generating over $20 billion annually. The total value of global coffee trade is estimated at more than $25 billion per year.
In 2023, global coffee production reached approximately 11 million tonnes, with coffee export earnings representing 33.8% of Ethiopia’s total merchandise exports, 22.6% of Burundi’s, and 15.4% of Uganda’s. The largest coffee importers remain the European Union and the United States, with the industry contributing over $200 billion to global revenues. As weather patterns continue to impact coffee yields, analysts anticipate further price volatility in the coming months. – By MENA Newswire News Desk.
