Extreme Droughts Lead to Record-High Coffee Prices

Extreme weather, including intense droughts, in top coffee-growing countries such as Brazil and Vietnam has led to some of the highest coffee prices in decades.

As Reuters reported, prices for coffee futures reached a 47-year high of $3.3545 per pound for Arabica coffee on the Intercontinental Exchange, Inc. (ICE) and prices for this commodity rose by around 71% in 2024.

“In the case of Arabica coffee, it is concern about a poor crop in Brazil, the most important producer country, next year due to drought,” said a spokesperson for Germany-based Commerzbank, as reported by Reuters.

Although Arabica coffee is more popular among consumers, Robusta coffee is also seeing record prices, with the cost reaching $5,694 per metric ton in late November. According to the U.S. International Trade Commission, Arabica makes up about 60% to 70% of coffee produced, while Robusta makes up about 30% to 40%.

In September 2024, scientists reported that wildfires and deforestation in the Amazon rainforest were driving the worst drought on record in Brazil. The forest loss means trees are unable to absorb rainfall and release it back into the atmosphere, preventing further rainfall and leading to desertification of formerly green areas.

The drought from land destruction, coupled with wildfires made worse by slash-and-burn agriculture, can both worsen drought and destroy croplands and crop yields, with coffee being particularly vulnerable to reduced yields, Inside Climate News reported.

In June 2024, VOA News reported that Vietnam was experiencing its worst drought in about 10 years, and coffee output was expected to decline by 10% to 16%.

“The drought dried up this whole area and the surrounding areas, and the water shortage is so severe that compared to last year, the harvest of coffee cherries is very low,” said Doan Van Thang, a coffee farmer in the Gia Lai province, as reported by VOA News. “We lost a lot of the output. It’s very small, very low this year.”

According to the National Oceanic and Atmospheric Administration, coffee plants grow best in tropical, humid environments with rich soil and temperatures ranging from around 64 degrees to 70 degrees Fahrenheit. A previous Intergovernmental Panel on Climate Change (IPCC) report estimated that rising temperatures and decreasing rainfall could lead to a decrease in the amount of land able to grow coffee in Central America be 38% to 89% by 2050.

In response, companies are already discussing price increases and even downsizing coffee products. In November, Nestle S.A. announced plans to increase the cost of its coffee products and reduce the size of its coffee bags in response to higher coffee bean prices, Yahoo! Finance reported.

The challenges to coffee yields raise concerns for small-scale growers, especially as climate change worsens extreme weather events like heat waves and drought.

“Coffee is the canary in the coal mine for climate change and its effect on agriculture,” Elizabeth Shapiro-Garza, associate professor of environmental policy and management at Duke University, told The Canadian Presse. “If you like your cup of coffee in the morning, climate change is absolutely going to be affecting the quality, the availability and the price of that cup of coffee.”