165 - The Brewing Cost of Climate Change

Why Coffee Prices are rising

Author

The Climate Mentor
October 26th, 2025 • Estimated Reading Time: 4 minutes

Climate shock to supply

Global coffee prices have surged once again, underscoring the mounting vulnerability of agricultural commodities to climate volatility.

The benchmark arabica futures on the Intercontinental Exchange have risen sharply over the past weeks, driven by severe droughts and erratic rainfall in Brazil - the world’s largest producer - and unseasonal heat across Colombia and Vietnam.

Line chart showing global coffee futures prices (USD per pound) from 2016 to 2025, highlighting a sharp surge since 2021 as droughts in Brazil, shipping disruptions, and climate volatility tightened global supply.

Coffee Prices Reach New Highs as Climate and Supply Pressures Mount

These climatic anomalies, once seen as cyclical, are increasingly structural.

Prolonged dry spells in Minas Gerais and excessive humidity in key Central American regions have disrupted flowering and harvesting cycles, reducing yields and jeopardising bean quality.

The Intergovernmental Panel on Climate Change (IPCC) has long warned that suitable land for arabica could shrink by up to 50 per cent by 2050. Recent events suggest that this transformation may be unfolding faster than anticipated.

Economic Ripple effects

The consequences extend far beyond the plantation.

Coffee is one of the most traded commodity , and its price volatility reverberates through a complex global chain - from rural cooperatives to multinational roasters. As costs rise, major brands face a dilemma: absorb the shock to protect market share, or pass it on to consumers already fatigued by inflation.

Tariffs and shipping disruptions have compounded the pressure.

Flowchart illustrating the upstream, midstream, and downstream stages of coffee production—from planting and harvesting cherries to milling, roasting, packaging, and delivery—highlighting the multiple points where climate shocks can disrupt the process.

From Bean to Cup: The Global Coffee Supply Chain

Exporters in Brazil and Vietnam are contending with higher freight costs and trade bottlenecks that amplify price swings. Meanwhile, speculative trading has intensified, with investors viewing agricultural commodities as a hedge against broader market uncertainty.

Brewing future

The long-term viability of the coffee sector now hinges on adaptation.

Producers are experimenting with shade-grown cultivation, irrigation technologies, and climate-resilient hybrids developed through selective breeding. Yet these measures demand capital and institutional support that many developing economies struggle to provide.

For consumers, the price of a cappuccino may serve as a quiet indicator of a deeper economic realignment - one in which climate change is not a distant environmental concern but an active driver of global trade and inflation.

Bar chart and world map showing total coffee consumption by country in 2021, led by the United States, followed by the Philippines, Vietnam, Japan, and Germany. The data highlights the global nature of coffee demand and the economic exposure of both producers and consumers to rising prices.

The World’s Coffee Capitals: U.S. Leads Global Consumption

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