World coffee prices surged to a multi-year high in 2024, rising by 38.8% compared to the previous year’s average, according to the Food and Agriculture Organization (FAO) of the United Nations. This sharp increase was primarily driven by adverse weather conditions affecting major coffee-producing nations, leading to significant supply shortages.
A recent FAO analysis on global coffee market trends revealed that in December 2024, Arabica coffee, preferred in the roast and ground coffee sector, saw its price soar by 58% year-on-year. Meanwhile, Robusta, predominantly used in instant coffee and blending, experienced an even steeper increase of 70% in real terms. This marked a significant narrowing of the price gap between the two varieties, a phenomenon not observed since the mid-1990s.
Brazil and Viet Nam, which together account for nearly 50% of global coffee production, remain critical players in the international supply chain. Experts predict that coffee export prices may rise further in 2025, especially if major coffee-growing regions continue to face production challenges. The key factors behind the price surge include lower export volumes from Viet Nam, declining production in Indonesia, and adverse weather conditions in Brazil, all of which have significantly impacted global supply.
Viet Nam, one of the world’s largest coffee producers, recorded a 20% drop in coffee output during the 2023/24 season due to prolonged dry weather, leading to a 10% decline in exports for the second consecutive year. Similarly, Indonesia experienced a 16.5% year-on-year reduction in coffee production, primarily caused by excessive rainfall in April and May 2023, which damaged coffee cherries. As a result, Indonesia’s coffee exports fell by 23%.
Meanwhile, Brazil, the world's leading coffee producer, faced dry and hot weather conditions that prompted successive downward revisions to its 2023/24 production forecast. Initial projections of a 5.5% growth were later adjusted to a 1.6% decline.
Beyond weather-related challenges, rising shipping costs have also contributed to the global price hike. Consumers worldwide are feeling the impact, with early data from December 2024 indicating a 6.6% increase in coffee prices in the United States and a 3.75% rise in the European Union compared to the same period in 2023.
Despite rising costs, demand for coffee remains strong, with the European Union and the United States maintaining their positions as the world’s largest coffee importers. The global coffee industry generates over USD 200 billion in annual revenues, underscoring its vital economic role.
FAO Markets and Trade Division Director Boubaker Ben-Belhassen emphasized that high coffee prices should serve as an incentive to invest in technology, research, and development to enhance climate resilience in coffee production. Smallholder farmers, who account for 80% of global coffee production, are particularly vulnerable to climate-related challenges. Strengthening climate adaptation strategies is crucial for ensuring the long-term sustainability of the sector.
Global coffee production is valued at over USD 20 billion annually, while the total coffee trade is estimated at more than USD 25 billion per year. In key coffee-exporting nations such as Ethiopia, Burundi, and Uganda, coffee earnings made up a significant share of total merchandise exports in 2023—33.8% in Ethiopia, 22.6% in Burundi, and 15.4% in Uganda.
As 2025 unfolds, the trajectory of global coffee prices will largely depend on weather conditions and supply stability. With climate change posing a growing threat to coffee production, the industry faces increasing pressure to adopt sustainable practices that ensure long-term resilience.
