FAO Reports Nearly 40% Price Hike in 2024 Due to Supply Chain Disruptions
17 March 2025, New Delhi: Global coffee prices soared to their highest levels in years, surging by 38.8% in 2024 compared to the previous year, according to a report by the Food and Agriculture Organization of the United Nations (FAO). The sharp rise is primarily attributed to adverse weather conditions affecting key coffee-producing regions. FAO’s analysis of global coffee market trends reveals that by December 2024, Arabica prices had risen by 58% year-on-year, while Robusta—commonly used in instant coffee and blends—experienced a staggering 70% price hike in real terms. This price surge has narrowed the gap between the two coffee varieties for the first time since the mid-1990s.
Weather-Driven Supply Shortages
FAO warns that coffee prices could escalate further in 2025 if major producing regions continue to suffer from supply constraints. Several factors have contributed to the recent price spike, including reduced exports from Viet Nam, lower production in Indonesia, and weather-related disruptions in Brazil. In Viet Nam, prolonged dry conditions led to a 20% decline in 2023/24 coffee production, with exports falling by 10% for the second consecutive year. In Indonesia, excessive rainfall in April-May 2023 damaged coffee cherries, causing a 16.5% drop in production and a subsequent 23% decline in exports. In Brazil, unusually hot and dry weather prompted downward revisions in the country’s 2023/24 production forecast, shifting from an initially projected 5.5% growth to a 1.6% contraction.
Impact on Consumers and the Industry
Higher shipping costs have also played a role in driving up global coffee prices. By December 2024, consumer coffee prices had increased by 6.6% in the United States and 3.75% in the European Union compared to the same period in 2023. Boubaker Ben-Belhassen, Director of FAO’s Markets and Trade Division, emphasized the need for greater investment in technology and research to enhance the resilience of coffee farming. “The current price levels should serve as an incentive to strengthen climate adaptation strategies in the coffee sector, which is largely dependent on smallholder farmers,” he stated. FAO continues to support coffee-producing nations in implementing climate-resilient techniques that also contribute to biodiversity conservation.
FAO further underscores the importance of market transparency and calls for enhanced cooperation across the coffee value chain to ensure sustainable growth and protect the livelihoods of millions of smallholder producers worldwide. Brazil and Viet Nam contribute nearly 50% of global coffee production, while smallholder farmers account for 80% of global coffee production.
Global Coffee Industry
The global coffee industry generates over $200 billion in annual revenue, with coffee production valued at more than $20 billion per year and total trade estimated at over $25 billion. In 2023, world coffee production reached 11 million tonnes. Coffee export earnings represented 33.8% of Ethiopia’s total merchandise exports, 22.6% in Burundi, and 15.4% in Uganda in 2023. The European Union and the United States remain the world’s largest coffee importers. As climate change continues to disrupt coffee production, global markets must adapt to maintain stability in supply and pricing.
Also Read: Trump’s Tariff Threat: Implications for India’s Agricultural Trade
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