Climate change impact and soaring coffee prices globally have led to declines in supplies from South American countries. Severe weather has significantly impacted coffee production in Brazil and Vietnam. With Brazil and Vietnam facing production setbacks, African coffee producers are likely to benefit from rising prices.
With an estimated 2 billion cups of coffee consumed annually and projections indicating about 200 million bags being produced each year, this creates a significant opportunity for Africa, which benefits from soaring coffee prices and favorable climatic conditions in contrast to the extreme weather patterns affecting Brazil and Vietnam (the 2 leading coffee producers globally).
African coffee, known for producing some of the finest beans in the world, has a promising future.
Coffee exports have long been major revenue generators for many African countries. However, over the past year, extended droughts have severely impacted Brazil and Vietnam, the world’s two largest coffee producers. Scientists attribute these droughts to the El Niño weather phenomenon and global warming, which have led to substantial crop losses and disruption in coffee supplies.
The prices of coffee in Ethiopia, Africa’s largest coffee producer, experienced a dramatic surge of 200 percent between 2023 and 2024, rising to 4.5 USD (352 birrs) per kilogram, according to daily trade data from the Ethiopian Commodity Exchange (ECX).
This follows a 206 percent increase between 2020 and 2023 when the price jumped from 25 birrs (0.5 USD) to 85 birrs (1.53 USD).
In neighboring Uganda, coffee prices also saw significant growth, climbing 63 percent between 2023 and 2024. The price per kilogram rose from 2.77 USD to 4.53 USD, according to the Ugandan Coffee Development Authority (UCDA).
According to the National Bureau of Statistics (NBS), the average price of 1 kg of brown coffee beans in Nigeria reached N2,444.81 ($1.59) in July 2024, marking a staggering 262.98 percent increase compared to the same month in 2023.
Ethiopia contributes 3 percent of the global coffee bean supply, with its 2022 output reaching approximately four million bags of coffee. Following Ethiopia, Uganda stands as the second-largest coffee exporter, generating nearly $595 million in annual coffee sales.
The global state of soaring coffee prices
The global coffee market is projected to reach $248 billion in 2025 at a 5.4 percent annual increase according to Grand Review Research.
Coffee prices are soaring as global supply from South American countries declines. Severe weather has significantly impacted coffee production in Brazil and Vietnam. With Brazil and Vietnam facing production setbacks, African coffee producers are likely to benefit from rising prices.
The World Bank’s beverage price index rose 18 percent in December 2024, driven by soaring coffee prices amid renewed supply concerns.
Despite a 6 percent decline in Q3 2024, the index remains 91 percent higher than last year. After a 58 percent increase in 2024, the index is expected to drop 9 percent in 2025 and 3 percent in 2026 as coffee and cocoa production recovers.
Coffee prices remain highly sensitive to global supply risks. While improved weather in East Asia has alleviated some pressure on Robusta prices, Brazil’s Arabica production is facing significant shortfalls for the current (2024-25) and potentially the next season.
Arabica prices are expected to drop 8 percent in 2025, with stabilization in 2026. Similarly, Robusta prices are projected to fall by a comparable 8 percent in 2025, followed by an additional 7 percent decline in 2026.
Challenges facing the coffee industry in Africa
As coffee plantations in Asia continue to grow rapidly in response to global demand, Africa is experiencing a troubling decline in its coffee production.
This downturn is driven by several factors, such as the encroachment of real estate development on fertile land, high transportation costs, poor farming practices, low access to funds, deforestation and the devastating effects of pests and diseases on coffee crops according to the International Institute of Tropical Agriculture (IITA) reports.
In Africa, many coffee farms are significantly smaller compared to those in Asia and Latin America, which may explain why the region accounts for only 12 percent of global coffee production.
Transportation costs further impact the industry, as the distance from local farms to buyers is often vast. Additionally, unpredictable torrential rains can make the journey even more challenging.
Soaring Coffee Price, opportunity for African coffee investors
African investors have a significant opportunity to capitalize on the processing and packaging of ready-to-drink coffee, which would enable them to capture a larger share of the value chain and reap substantial profits.
For decades, Africa has primarily exported raw coffee beans rather than processed, ready-to-consume coffee. As a result, many African nations receive only a small portion of the global coffee revenue, with multinational processors and major retailers in Europe and America capturing the lion’s share of the profits.
Secondly, African coffee beans are traditionally processed using dry processing, the oldest method of harvesting and preparing beans for export. This natural approach, which involves hand-cleaning and sun-drying the beans, gives African coffee a distinct advantage in the international market.
Experts note that because this method avoids chemical additives, it provides African coffee producers with a significant opportunity to capture a huge share of the global market.
Africa’s coffee export revenue has recorded a significant 80 percent increase between 2019 and 2022 as global demand surges. This is projected to continue as other regions experience a decline due to climate change’s impact on Brazil and Vietnam.
Outlook for Africa in 2025?
Experts predict that the global value of coffee will rise by as much as 20 percent in 2025, driven by the effects of climate change, rising production costs, and the growing need to innovate within the supply chain.
With the ideal climate and soil conditions for coffee cultivation, sub-Saharan Africa has a unique opportunity to significantly boost production and meet the growing global demand, offering farmers a chance to expand their sales and tap into new markets.
