FAO Calls for Transparency to Stabilize Soaring Coffee Prices Amidst Climate Extremes

Arabica and Robusta Prices Surge Simultaneously

The FAO’s latest report highlights a dramatic 38.8% global coffee price increase in 2024—marking the highest spike in years. Interestingly, this surge is not primarily driven by rising demand or financial speculation, but by extreme weather events severely affecting the world’s major coffee-producing countries.

Prolonged droughts in Vietnam, unseasonal heavy rains in Indonesia, and intense heat and dryness in Brazil—three nations that together account for a substantial share of global coffee supply—have drastically reduced coffee output. These supply shocks have led to sharp price increases, impacting both consumers and the entire value chain.

Specifically, in December 2024, Arabica coffee—known for its high quality and widely used in roasted blends—saw its price surge by 58% year-on-year. Meanwhile, Robusta—commonly used in instant coffee—rose by as much as 70% in real terms. Notably, the historical price gap between Arabica and Robusta, which has persisted since the mid-1990s, has significantly narrowed, signaling a uniform supply shortage across both types.

This trend suggests that the coffee market is facing not only short-term disruptions but potentially structural changes, should climate change continue to disrupt future harvests.

In Vietnam, extended drought during the 2023/24 crop year led to a 20% drop in production and a second consecutive year of 10% decline in exports. As the world’s largest Robusta exporter, Vietnam’s production slump directly influenced Robusta prices.

In Indonesia, unseasonal heavy rains during April and May 2023 damaged coffee cherries, resulting in a 16.5% decrease in output compared to the previous year. Consequently, exports plummeted by 23%.

In Brazil, hot and dry weather forced a downward revision in production forecasts from a 5.5% increase to a 1.6% decline, significantly affecting global Arabica supply.

Beyond declining output, rising transportation costs have further pushed up coffee prices globally. Preliminary data shows that by the end of 2024, consumers in the United States paid 6.6% more for their cup of coffee, while those in the European Union faced a 3.75% year-on-year increase.

FAO Warns of Prolonged Price Rises, Urges Transparency Across the Value Chain

Given these turbulent developments, the FAO predicts that global coffee prices could continue to rise in 2025 if extreme weather conditions persist. Yet the solution lies not only in short-term crisis management, but also in building long-term transparency and resilience throughout the global coffee supply chain.

Mr. Boubaker Ben-Belhassen, Director of the FAO’s Markets and Trade Division, emphasized:

“High coffee prices should be viewed as an opportunity to invest in technology, research, and development—particularly to enhance climate resilience in a sector largely dependent on smallholder farmers.”

It is worth noting that 80% of the world’s coffee is produced by smallholder farmers—those most vulnerable to climate shocks and market volatility. Meanwhile, a lack of transparency and coordination within the supply chain leaves farmers with limited access to information, reduced adaptive capacity, and a diminished share of rising profits.

As a result, the FAO calls for improved market data transparency and stronger collaboration among all actors in the value chain—from growers, processors, and exporters to retailers—aiming for a more sustainable, equitable, and stable global coffee industry.

The climate-driven spike in coffee prices is not only a wake-up call for policymakers, but also a reminder to the global community of the fragility of an essential commodity that supports the livelihoods of millions of smallholder families.

FAO’s call for transparency and value chain cooperation is a timely response—not only to mitigate the current price crisis but to build a more secure future for coffee, a crop deeply embedded in global culture and economies.