Coffee prices may surge in 2025, FAO warns

The Food and Agriculture Organisation has stated that coffee export prices may rise in 2025 if major growing regions experience further significant supply reductions.

According to FAO, world coffee prices reached a multi-year high in 2024, increasing 38.8 percent on the previous year’s average, mostly due to inclement weather affecting key producing countries.

In a statement obtained on Saturday from the UN food body’s website, key factors behind the recent price increase include limited export quantities from Vietnam, reduced output in Indonesia, and adverse weather impacting coffee production in Brazil.

“In Vietnam, prolonged dry weather caused a 20 per cent drop in coffee production in the 2023/24, with exports falling by 10 per cent for the second consecutive year. Similarly, in Indonesia, coffee production in 2023/24 declined by 16.5 per cent year-on-year on the back of excessive rains in April-May 2023 that damaged coffee cherries. Exports dropped by 23 per cent.

“In Brazil, dry and hot weather conditions prompted successive downward revisions to the 2023/24 production forecast, with official estimates shifting from an anticipated 5.5 per cent year-on-year increase to a 1.6 per cent decline.

“Higher shipping costs were also found to be one of the factors contributing to the increase in world coffee prices,” FAO stressed.

The statement noted that early data indicates that in December 2024, the increase in world prices translated into consumers paying 6.6 per cent more for their coffee in the United States and 3.75 per cent more in the European Union, compared to the same period in 2023.

“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,” said Director of FAO’s Markets and Trade Division, Boubaker Ben-Belhassen.

Ben-Belhassen added that climate change is impacting coffee production in the longer term.

“FAO supports many of the coffee-producing countries to help farmers adopt climate-resilient techniques that also contribute to restoring biodiversity loss.

“FAO highlights the importance of market transparency and encourages cooperation among all actors of the value chain to support sustainable growth in the global coffee sector and protect the livelihoods of millions of smallholder producers worldwide,” the FAO director averred.