Consumers face higher prices as global coffee costs surge 38.8%

The ongoing severe climate conditions affecting key coffee-growing countries – Brazil and Vietnam have led to a significant price increase due to reduced production according to the United Nation’s food body.

The UN’s Food and Agriculture (FAO) in a December note on global coffee market trends said the price of Arabica coffee, known for its higher quality and preferred in the roast and ground coffee market, had risen by 58 percent compared to the previous year.

Meanwhile, Robusta, commonly used in instant coffee and blends, experienced a 70 percent increase in price in real terms.

According to the report, global coffee generates over $200 billion in annual revenue, with production valued at approximately $20 billion. Brazil and Vietnam together account for about 50 percent of the world’s coffee supply.

In Vietnam, extended dry weather led to a 20 percent decrease in coffee production for the 2023/24 season, with exports dropping by 10 percent for the second consecutive year.

Meanwhile, Indonesia experienced a 16.5 percent year-on-year decline in coffee production for the same period, driven by excessive rainfall in April and May 2023 that damaged coffee cherries. As a result, exports fell by 23 percent.

In Brazil, persistent hot and dry conditions caused multiple downward revisions to the 2023/24 production forecast, with initial expectations of a 5.5 percent year-on-year increase shifting to a 1.6 percent decline.

Read also: Coffee farmers miss out from global price windfall

In Nigeria, prices of instant coffee drinks have surged dramatically in 2024, with leading brands such as Nescafe and TopCafe seeing significant price increases. For example, the price of “Nescafe 3-in-1” jumped to N34,000 per carton in August, up from N28,000 in May, marking a sharp rise from N18,000 in 2023.

Price hike an opportunity for African farmers

The FAO has warned that coffee export prices could continue to rise in 2025 if major coffee-producing regions face additional significant supply disruptions.

Key drivers behind the recent price hikes include limited export volumes from Vietnam, decreased production in Indonesia, and unfavorable weather conditions that have negatively impacted coffee harvests in Brazil.

Africa’s coffee export revenue has recorded a significant 80 percent increase between 2019 and 2022 as global demand surges.

This is projected to continue as other regions experience a decline due to climate change’s impact on Brazil and Vietnam. This provides an opportunity for Nigeria and other coffee-producing African countries to scale up production to meet global demands.

Boubaker Ben-Belhassen, director of FAO’s markets and trade division, emphasized that the high prices should catalyze increased investment in technology, research, and development within the coffee sector—particularly as it relies heavily on smallholder farmers.

He highlighted that such investments are crucial for enhancing climate resilience, noting that climate change is having a long-term impact on coffee production.