The surge in erratic weather is putting coffee production on increasingly shaky ground. Prominent earth system scientist Johan Rockström recently warned in a TED talk that reverberated across global agriculture circles of the "systemic shocks" climate change is already unleashing. “The planet is changing faster than we expected. We are seeing the planet in a situation where we underestimated risks,” Rockström said.
This particularly affects crops sensitive to climatic nuances, like coffee. Arabica and robusta thrive only within a narrow temperature band, and sudden shifts, like spikes in temperature or extended dry spells, can drastically reduce yields. The numbers tell the story: recent reports show a brutal combination of droughts and out-of-season cold snaps slashing coffee yields across major producing regions. As a result, arabica prices are now $2.50 per pound, nearly double what they were just a year ago.
In Brazil, the situation is particularly dire. Wildfires and extreme weather are hammering the country's coffee sector. NASA and Cemaden data paint a grim picture: droughts are now deeper, more frequent, and more prolonged, and average temperatures are climbing, including in Minas Gerais, the country's coffee powerhouse, which alone accounts for between 25% and 30% of Brazil's output. Production forecasts are being slashed, and the problem isn’t just quantity—quality is taking a hit, too. Brazil’s coffee farmers are caught in a tightening vise that raises alarm bells about how much worse it could get in future seasons.
Then, there is the looming specter of La Niña. The NOAA’s latest ENSO update has put a La Niña Watch in place, indicating a 71% probability of its return this fall and expected to persist through January-March 2025. La Niña typically cools the Pacific, scrambling weather patterns across the coffee belt. In a world already reeling from climate chaos, such cyclical disruptions could tip many coffee farmers into uncharted territory, with compounding effects on global coffee supplies and prices.
Buckle Up: Supply Chain Disruptions and Price Increases
Reduced coffee crop yields are tightening supply and driving up global coffee prices in 2024, a trend that impacts both smallholder and larger coffee producers as well as the rest of the value chain stakeholders for the good and the bad. Judith Ganes, a well-known commodities analyst, highlighted that right now and until heavy rains arrive the coffee “market is a ticking time bomb”.
The combination of adverse weather conditions and tight stocks are pushing prices to nearly double what they were a year ago. She writes in a LinkedIn post, “The rainy season ended earlier than usual (in Brazil); coffee trees in the heart of the coffee belt have been without soil replenishing moisture for 5 months/one week. The roots can tap into moisture for just so long to sustain the trees, which are defoliating with the main flowering period still ahead. While a stress flowering may still look prolific, it becomes doubtful the trees can sustain the fruit without the necessary stored carbohydrates to support the crop.”
In Brazil, the world's largest coffee-producing country, these extreme weather events have led to significant reductions in crop yields and are threatening some of the coffee land's suitability. Brazil's Minas Gerais region has seen rainfall drop to about 10% of normal levels during critical months, resulting in a projected 35% decrease in production. Added to this climate system imbalance, an August 2024 Nasdaq report underlines an important reduction in Vietnam’s coffee exports.
As Johan Rockstorm tells us: “Buckle up. We know for certain, 100% certainty, that this means more droughts, more floods, more heat waves, more human-reinforced storms, more disease during one generation's time. 2023, the warmest year on record, will be looked back upon as a mild year.”
Economic Impact on the Industry
These situations are forcing smallholder and larger producers, coffee buyers, roasters and retailers to reconsider their strategies as they grapple with rising costs and the need for greater resilience against certain and abrupt climate variability. As global demand for coffee continues to rise, these supply constraints related to climate shocks are likely to keep prices elevated for the foreseeable future. High uncertainty associated with high risks will continue to demand coffee industry action, regardless of the outcome.
Outlook for the Future: The Window Is Closing, but There’s Still Some Light
Brazil and South America, the heartlands of coffee production, are in the midst of a climate crisis with far-reaching economic consequences. This crisis is tied to a broader issue of global energy imbalance, and it is accelerating the push for exponential sustainability actions in the coffee value chain. The urgency of the moment cannot be overstated.
As Rockstorm puts it “...science is clear. The window is rapidly closing, but there is still some light in the window. We actually have evidence that we've reached a pivotal point, not only in terms of risk but also in terms of opportunity to transform the world towards a safe and just future for humanity. Linear change is no longer an option. The only option is exponential change. We know that the only currency that matters is speed and scale.”
Rockström’s words crystallize the challenge: the coffee industry must adapt and fast. The window may be closing, but there is still time—barely. The decisions made now will determine not just the industry's future but also its role in a rapidly changing planet where large-scale solutions—like a circular economy, carbon neutrality, and regenerative agriculture, among others—are not just necessary but possible.