Published on: 2026-07-14
Source: United Nations – United Nations –
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July 14, 2026 Economic Development
Droughts, floods, plant diseases, and other shocks in producing countries increasingly cause sharp fluctuations in global prices for coffee, cocoa, and tea. The effects of these phenomena are felt by farmers, processors, trading companies, and millions of consumers worldwide. This is stated in a new report by the Food and Agriculture Organization of the United Nations (FAO) “Dynamics of Prices in Global Beverage Markets: Trends, Driving Forces, and Consequences.”
The study’s authors note that the main cause of sharp price spikes for these popular goods remains weather anomalies – droughts, frosts, and heavy rains. They call for strengthening agricultural production, increasing market transparency, and achieving a fairer distribution of income throughout the value chain. This will make markets more resilient and better protect the income sources of millions of farmers.
Supply and Demand
According to the report, more than 90 percent of short-term price fluctuations are explained by changes in demand and supply. At the same time, the expectations of market participants regarding the future situation also play an important role. Sometimes it is precisely these expectations that push prices up or down even before real changes in production or consumption become apparent.
Senior economist of the FAO Markets and Trade Division and one of the report’s authors, El-Mamun Amrukh, notes that a whole range of factors influence price dynamics. “According to the report, these are primarily weather phenomena, the spread of pests and diseases, logistics problems, as well as changes in energy prices,” he says. “For example, in the past couple of years, weather conditions have affected coffee production. Droughts have been observed in key growing regions, leading to a reduction in supply and, consequently, a sharp increase in global coffee prices.”
Concentration of production
As noted in the study, price dynamics are determined not only by the weather but also by the characteristics of the market organization itself. The production of coffee, cocoa, and tea is concentrated in a relatively small number of low- and middle-income countries and is mainly carried out by small farmers. At the same time, most of the harvest is exported in unprocessed form to wealthier countries, where the products are processed and put up for sale.
The authors of the report remind that almost half of the world’s coffee production is supplied by Brazil and Vietnam, and about 65 percent of the world’s exports come from five countries – Brazil, Vietnam, Colombia, Uganda, and Indonesia.
Cocoa production is even more concentrated: over two-thirds of the global volume is supplied by Ivory Coast and Ghana. More than half of the world’s tea is produced in China.
Due to such a high concentration, even local problems in several countries can cause noticeable fluctuations in global prices. If the harvest is threatened in one of the key regions, the consequences are quickly felt far beyond its borders.
Dependence on transportation costs
At the same time, demand for coffee, cocoa, and tea is much more widely distributed and continues to grow, especially in emerging economies. The significant distances between producers and consumers make the markets more dependent on transportation costs and logistical disruptions, amplifying the consequences of global shocks.
Price spikes
The study also showed that the effects of price fluctuations are felt differently at various stages of the supply chain. Manufacturers usually face them directly, whereas for end consumers the price changes are often less noticeable.
Since coffee, cocoa, and tea are sources of income for millions of farming families, sharp price changes directly affect income levels, poverty rates, food security, and government budgets, especially in countries where the export of these crops plays an important role in the economy.
According to El-Mamoun Amruk, understanding the causes of price fluctuations is necessary for developing effective government policy that will make the industry more resilient and preserve income sources for millions of farmers.
Understanding the causes of price fluctuations and their consequences is crucial for developing policies that will enhance the efficiency of the sector
“These price fluctuations have a significant impact on those who produce these goods, primarily small farmers. They account for more than 60 percent of global production of these crops, mainly coffee and tea,” he notes. “Therefore, understanding the causes of price fluctuations and their consequences is crucial for developing policies that will improve the sector’s efficiency and thereby ensure sustainable livelihoods for millions of farmers.”
FAO Recommendations
The report contains a call for coordinated actions to address structural issues that make the market vulnerable to external shocks.
First and foremost, the authors recommend investing in agricultural methods that are more resilient to climate change, improving pest and plant disease control, and developing risk management tools that will help stabilize production and farmers’ incomes.
Equally important is to increase market transparency. More comprehensive information about crop conditions, production volumes, stockpiles, and trade flows will help reduce uncertainty and make pricing more predictable.
According to El-Mamun Amruk, this will help farmers make more informed decisions already at the production planning stage. “It is especially important to provide data on inventory levels,” the expert specifies. “This is crucial for small farmers and producers so that they can properly allocate their limited resources.”
In addition, the FAO considers it necessary to strive for a fairer distribution of income along the entire value chain. If producers are able not only to cultivate raw materials but also to engage in their processing, certification, and promotion of their own products, their income will increase, and the development of the industry will become more sustainable and inclusive.
The authors warn that without such changes, the global coffee, cocoa, and tea markets will remain vulnerable to new shocks. This will continue to threaten the well-being of millions of farmers, food security, and the economic stability of producing countries.
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