Are coffee prices set to rise again?

By Donna Eastlake

- Last updated on GMT

Are coffee prices set to rise again? GettyImages/Henrik Sorensen
Are coffee prices set to rise again? GettyImages/Henrik Sorensen
Poor growing conditions in Brazil threaten coffee supplies. So, is another price hike on the horizon for this already-pricey commodity?

Coffee is one of the most valued and valuable commodities in the world, with a global revenue of 461.20 billion USD this year alone, according to market insight firm, Statista. However, as with other high-value commodities, including sugar​, cocoa​ and butter​, climate change is placing coffee production under threat.

Why are coffee supplies under threat?

Brazil is by far the largest coffee producer in the world, accounting for one third of global production. It’s also comfortably the largest supplier of coffee to the EU, exporting over 980,000 tonnes to the bloc annually, according to the European Coffee Federation. But this supply is at risk, with drought conditions in the region threatening crops.

“It is the dry season in Brazil, but extreme and unusual heat this winter has reduced soil moisture reserves to dangerously low levels,” Jon Davis, chief meteorologist at supply chain risk management firm, Everstream Analytics, told FoodNavigator.

And it’s not just drought affecting coffee crops in the region. Changing temperatures, both higher and lower, are also cause for concern.

“In Brazil we see the impact frost has on the crop,” Paul Rooke, executive director of the British Coffee Association, told FoodNavigator. “In some years it can have a more significant effect than others, and the challenge is maintaining production if those lower temperatures and frosts become more frequent and/or more widespread.”

And it appears that these conditions are only increasing, placing the entire future of the coffee industry in Brazil, in jeopardy.

“The frequency and severity of extreme weather events are increasing in Brazil,” says Davis. “Brazil has been impacted by these extreme weather events more than most other areas due to a combination of recent climate trends - more extreme and frequent weather events in the coffee growing areas of the country – as well as the cyclical impact of the El Niño oscillation in the Pacific Ocean, which further amplifies these events.”

Coffee beans - GettyImages-alvarez
Changing weather conditions in Brazil are placing coffee crops under threat. Will this result in another price rise? GettyImages/alvarez

Will coffee growing challenges in Brazil push prices up?

Coffee prices have risen sharply in recent years, with the price of Arabica beans reaching a thirteen-year-high of 2.59 USD per pound, on 28 August 2024, according to Trading Economics. And these elevated prices are expected to remain due to adverse weather conditions.

Although it's important to recognise existing price increases have already – in part – occurred due to factors unrelated to changing weather patterns.

“The price rises we have seen in the past 18 months have been heavily influenced by cost increases which are not related to the production area,” says the British Coffee Association’s Rooke. “Global energy and staffing availability are additional factors. Coffee roasting is a high energy process.”

This means coffee producers have been facing multiple stresses through the production process, which has in turn impacted cost. Unfortunately, the current economic climate means it's unlikely these additional stresses will improve in the near future.

Coffee barista - GettyImages-microgen
Coffee is enjoyed in homes and coffee shops across the globe. But will weather conditions in Brazil place supplies under threat? GettyImages/microgen

What can be done to protect the future of coffee production?

This is, as with all things affecting the future of food and beverage production, a difficult question to answer. However, what we do know is that the growing of Arabica coffee in Brazil is complex, owing to the very specific requirements of the crop.

“Coffee is a crop that needs particular things,” says Everstream Analytics’ Davis. “A specific elevation, specific soil, and specific weather conditions during the season. There are not that many areas in the world that have this unique combination of agronomic variables.”

But that’s not to say nothing can be done to protect the crop's future, just that it presents very specific challenges. Coffee producers across the globe are working to mitigate the effects of climate change and find alternatives to the current growing systems.

“Across the industry there are a wide range of initiatives being undertaken both by individual businesses and bodies such as Global Coffee Platform, which are looking at climate mitigation practices,” says the British Coffee Association’s Rooke. “These would cover areas such as shade coffee production, carbon sequestration projects, soil and water conservation projects. The key is being able to understand how and why the successful projects are successful and how they might then be replicated on a wider scale.”

Additionally, organisations such as World Coffee Research are working to identify varieties of coffee bean, which are best suited to the changing climate, as well as developing popular varieties to cope with the changing conditions.

Coffee farm - GettyImages-wsfurlan
Suppliers and manufacturers across the coffee industry are working on initiatives to protect the future of coffee crops and coffee farmers. GettyImages/wsfurlan

Suppliers and manufacturers are also turning to technology to help futureproof coffee production, with the hope of reducing costs at all stages of production.

“There are currently many organisations and projects looking at how digitalisation can play a role in future coffee production,” says Rooke. “From the standpoint not only of reducing costs but also in terms of a better transfer of information and access to agronomic and diagnostic tools which will allow producers to react more effectively to challenges which emanate from the growing season.”

Similarly, many brands are implementing their own sustainability practices, in order to not only protect future coffee supplies, but also to protect the farmers supplying it.

“We have a long history that sees us go to extraordinary lengths to ensure a sustainable future for coffee worldwide, from cherry to the cup,” said a spokesperson for Nespresso. “It is why we took a different approach than the rest of the industry and created our own unique programme of AAA Sustainable Quality coffee, working together with The Rainforest Alliance to protect the future of quality coffee and the farmers that grow it.”

And, of course, the new European Union Deforestation Regulation (EUDR)​, will play a significant role in the future of coffee production. But while many coffee growers are opposed to the new legislation, it’s hoped that a more holistic approach will ensure the futures of farmers and manufacturers.

“Whilst there has been considerable focus in the last two years on the introduction of deforestation legislation, there is the potential for this legislation to drive a more collective industry approach to delivering a deforestation free and a carbon positive coffee offering, which delivers adaptation and mitigation.”

Related topics Market trends Beverage Sustainability

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