The Food and Agriculture Organization of the United Nations (FAO) has warned that growing volatility in global coffee, cocoa and tea prices is threatening the livelihoods of millions of farmers, as climate-related shocks, concentrated production and unequal global value chains continue to fuel sharp fluctuations across international commodity markets.
According to FAO’s most recent report, Price Dynamics in Global Beverage Markets: Trends, Drivers, and Consequences, more than 90% of short-term price movements have been caused by shifts in supply and demand. Broader macroeconomic conditions have had little effect on short-term price volatility, even if market expectations might exacerbate price swings before supply or demand changes completely materialise.
According to the FAO, coffee, cocoa, and tea production remains heavily concentrated in a small number of producing countries, making global markets particularly vulnerable to localised disruptions, while processing, branding, and retail operations, which generate a large portion of the value, are primarily conducted in wealthier economies.
Boubaker Ben-Belhassen, Director of FAO’s Markets and Trade Division, indicated that “global beverage commodity prices have risen much faster than those of other agricultural commodities in recent years.”
“The combination of concentrated supply and growing global consumption creates fertile ground for large swings in their international prices.
“Weather-related shocks droughts, frosts, and excessive rainfall remain the primary triggers of price spikes. Plant diseases, rising input and labour costs, geopolitical tensions, and shipping delays have added further pressures.”
Boubaker Ben-Belhassen
In addition, the report emphasises how global markets are especially vulnerable to localised disruptions due to the geography of manufacturing. Only five nations provide almost 65% of the world’s coffee exports, while Brazil and Vietnam together produce almost half of the world’s coffee.
The production of cocoa is even more centralised. More than two-thirds of the world’s cocoa supply is produced by Ghana and Côte d’Ivoire combined, making global chocolate markets particularly susceptible to unfavourable weather or disease outbreaks that only affect a small number of producing countries.
China produces more over half of the world’s tea, following a similar pattern.
Due to the concentration of production and the ongoing expansion of demand in both developed and emerging economies, relatively minor disruptions in major producing nations can swiftly lead to considerable rises in global pricing.
This vulnerability is demonstrated by recent market developments. In 2021 and 2022, coffee prices skyrocketed due to crop damage caused by droughts and frost in Brazil and decreased production in Colombia due to unfavourable weather.
Early in 2025, prices surged once more to all-time highs as a result of production losses in Indonesia and Vietnam due to climate change.
However, the FAO report also stated that in 2023 and 2024, cocoa prices rose to previously unheard-of levels due to severe weather and plant diseases that drastically decreased harvests in Ghana and Côte d’Ivoire.
Tea markets, on the other hand, saw price increases during the COVID-19 pandemic due to increasing household demand and growing interest in beverages thought to offer health advantages.
These price swings have become more significant for farmers as well as for national economies, export profits, and government income in nations in Africa, Latin America, and Asia that rely significantly on the export of beverage crops.
FAO Pushes for Fairer Food Value Chains
While international commodity prices often receive widespread attention, the FAO report argues that the benefits of price increases are distributed unevenly throughout global supply chains.
During commodities booms, farmers, who bear the majority of the production risk, sometimes only get a small portion of the profits. In contrast, processing, manufacturing, branding, distribution, and retail operations capture a large portion of the economic value later in the chain.
According to the FAO report, decreases in commodity prices are not entirely reflected in lower prices paid by consumers, nor do rises in international prices translate proportionately into higher farmgate costs.
One of the best illustrations of this imbalance is seen in chocolate. Raw cocoa beans only make up a small portion of the ultimate retail price of chocolate products, despite the fact that cocoa prices have increased significantly in recent years. A significantly greater portion of the consumer price is accounted for by manufacturing costs, packaging, marketing, transportation, and retail margins.
Despite providing the raw ingredients that support the global beverage sector, these dynamics make producing nations susceptible to market shocks.
FAO report warns that price swings “have direct implications for household income, poverty levels, food security, and government budgets, especially in countries where these crops represent a substantial share of export earnings.”
Recognising these challenges, the FAO is urging governments, development partners and private sector stakeholders to pursue coordinated reforms aimed at strengthening resilience throughout beverage commodity value chains.
Among its recommendations is increased investment in climate-resilient farming systems capable of withstanding droughts, excessive rainfall and other weather-related shocks that are becoming more frequent as climate change intensifies.
In order to stabilise agricultural output and safeguard farmers’ earnings during times of market volatility, the organization also promotes more robust pest and disease control initiatives in addition to better risk management instruments.
Another key component of the report’s recommendations is increasing market openness. Improved knowledge of crop conditions, production levels, stock availability, and international trade flows would lower uncertainty, enhance price discovery, and help companies and governments react to new threats more skilfully.
The report’s most important argument is that producing nations should engage in domestic processing, certification programs, branding, and value addition in order to increase their involvement in higher-value stages of global supply chains.
By taking such steps, farmers and producing countries would be able to lessen their reliance on the export of raw commodities while capturing a greater portion of the value generated by coffee, cocoa, and tea.
The results have important ramifications for African farmers in particular. While numerous East African nations continue to grow their coffee and tea industries, Côte d’Ivoire and Ghana continue to be the leading producers of cocoa worldwide.
In addition to generating jobs and lowering exposure to unstable global commodities markets, strengthening domestic processing capacity and enhancing resilience against climate-related shocks could help these economies retain more value domestically.
FAO comes to the conclusion that global beverage markets will continue to be extremely vulnerable to supply disruptions, climate shocks, and growing disparities across international value chains in the absence of consistent investment and concerted policy action.
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