Why Coffee Is Getting More Expensive

On August 10, a magnitude 7.4 earthquake struck western Colombia, killing 319 people and tearing through provinces that grow about a third of the country's coffee. Yet when Germán Bahamón, head of the National Coffee Growers Federation, assessed the damage last Thursday, his warning was not about the quake; the harvest, he said, had largely escaped it. "Production will very likely be affected by the El Niño phenomenon," he said in an interview.

 

Colombia's coffee industry supports some 540,000 farming families, and the man who runs it is more worried about the weather than about an earthquake that flattened homes ten days earlier. That judgement says more about coffee prices than any chart. In July, a pound of ground coffee in American supermarkets averaged $9.32, according to the Bureau of Labor Statistics; the 2024 average was $6.32. A rise of nearly half in two years.

 

The raw material, meanwhile, has been getting cheaper for much of it. Arabica futures peaked at $4.41 a pound in February 2025, an all-time high, then fell below $3.00 early this year; the most traded December contract ended last week just under $3.30, well below the peak but climbing since midsummer. Behind the climb is a forecast the market cannot ignore: an El Niño that may become the strongest on record, arriving in the same season as what should be a record Brazilian harvest. Whichever wins will set coffee prices for the next year, and the answer to why a cup costs so much runs through everything in between: a supply chain concentrated in a handful of countries, a trade war that came and went, farmers who saw less of the windfall than you'd think, and a crop getting harder to grow where it has always grown.

 

Coffee prices are not at record highs, then. The market has become unusually volatile by historical standards, the retail price never followed futures back down, and the forces behind the 2025 spike are lining up again.

 

Two countries, half the supply

 

Brazil dominates arabica, the smoother bean in most roasted coffee. Vietnam dominates robusta, the hardier bean behind instant blends, trading around $3,700 a tonne in London. Together they grow roughly half the world's coffee, with Colombia, the top supplier of washed arabica, and Indonesia next. There is limited room for the market to diversify away from both at once.

 

In 2024, drought and extreme heat scorched Brazil's coffee belt during flowering, when the next crop is set, and Vietnam's robusta harvest was hit by drought followed by excessive rain, all on a market already running down inventories after several poor harvests. Green coffee roughly doubled in a year.

 

No single one of those events can be pinned on climate change; droughts have always visited Brazil, and El Niño predates the industrial era. Warming shifts the background conditions they occur in: hotter baselines, more volatile rainfall, flowering windows that no longer arrive on schedule, and pest and disease pressure creeping upslope. A 2022 study led by researchers at the Zurich University of Applied Sciences projected that the land most highly suitable for arabica could shrink by more than half globally by 2050 under a moderate warming scenario, with Brazil losing nearly 80% of its prime growing area, even as a few cooler regions on the edges of today's coffee belt gain. That is a projection about suitability, not disappearance. Across all of the scenarios modelled, today's major producing regions lose suitable growing area overall.

 

The El Niño wager

 

On paper, a surplus is coming. Brazil's crop agency Conab projects a 2026 crop of 66.7 million bags, up 18%, and private forecasters such as Marex and StoneX put it around 75 to 76 million. Numbers like that would normally sink the price.

 

Instead, futures have climbed since midsummer, and the reason is in the eastern Pacific. NOAA's Climate Prediction Center declared El Niño in June and in mid-August put the chance of a very strong event this autumn and winter above 90%. More striking, forecasters see roughly a two-in-three chance of the strongest El Niño since records began in 1950. NOAA cautions that impacts are likelier but not guaranteed, and that a record event could behave differently from its predecessors.

 

Strong El Niño years tend to bring drought to Southeast Asia, threatening Vietnam's robusta just as its October harvest begins and drying out Sumatra, where NOAA already observes suppressed rainfall. In Colombia, El Niño years typically mean heat and reduced rainfall in the coffee zone; the federation now expects output to fall 8% this year, to 12.5 million bags from 13.7 million in 2025, after heavy early-year rains. Brazil is the wild card. Much of the record crop is already being harvested, but the September and October flowering will set next year's, and forecasters are watching whether the rains arrive on time. If they arrive, supply keeps rebuilding and prices may soften; if not, the next shock lands before inventories have recovered from the last. Exchange-certified arabica stocks hit about 228,000 bags on Thursday, their lowest since late 2023 and under a third of a year ago.

 

A record Brazilian harvest and a potentially record El Niño are converging, and the market cannot decide which to believe.

 

Why the café price never came down

 

Green coffee is only one input among many: raw beans account for roughly 40% of the wholesale cost of roast and ground coffee, according to the Dutch bank ING; the rest is wages, rent, energy, packaging, freight and roasting, which do not track futures. Roasters, meanwhile, spent 2024 and 2025 absorbing a doubling of their raw material cost, hedging what they could. Part of today's shelf price therefore reflects an industry rebuilding margins surrendered as bean costs surged.

 

The lag is built in, too: industry analysts estimate a move in green coffee prices takes at least nine months to reach the drinker, because roasters hold months of stock, need more months to roast and pack it, and renegotiate with retailers quarterly. Pricing is also asymmetric: the shelf price rises like a rocket and drifts down like a feather.

 

Then there were the tariffs. In 2025 the United States imposed a 50% tariff on Brazilian imports, and Brazilian shipments to the US fell 46% in August of that year alone, at the exact moment supply was tightest. Green coffee was exempted that November. In February 2026 the Supreme Court struck down the programme under which the levy had been imposed. And when Washington returned this June with a proposed 25% tariff on Brazilian goods under Section 301, coffee was excluded again on July 16, this time including instant. Bill Murray, president of the National Coffee Association, said in July that tariffs had contributed to "highly visible price inflation on popular products". The exemption stands, but the episode showed how quickly trade policy can pile onto weather, and how long its costs linger.

 

The farmer's share

Two years of high prices have not made farmers rich. Some growers in Brazil and Vietnam who had sold forward at pre-rally prices simply walked away, defaulting on or renegotiating contracts to capture the spot price, leaving the trading houses that had bought forward with the losses. Those who honoured their contracts watched the rally pass them by. And even farmers who sold at the top often had higher prices on fewer bags, since the weather that lifted the price had cut their yields, while input costs rose and, in some origins, the exchange rate took back the rest. Bahamón made the point last week: with the peso at its strongest since October 2018, growers are losing roughly 700,000 pesos, about $229, per 125-kilogram load before a bean is picked.

 

A record Brazilian crop, if it lands, could put downward pressure on prices while farmers' costs remain elevated, handing growers a lean year straight after a boom most never fully captured. Repeated cycles can contribute to farm abandonment, make coffee a hard sell to the next generation, and shape future supply. And adaptation takes capital, for irrigation, replanting or shade, which smallholders after a whipsaw decade do not have and often cannot borrow.

 

What adaptation actually costs

 

Adaptation is under way, but none of it is cheap or simple. Shade and agroforestry can cool canopies and improve soils, though yield effects vary and establishment takes years. Irrigation defends against drought but is expensive and, in stressed basins in Brazil and Vietnam, strains water supplies. Robusta tolerates heat better and Brazil is planting more of it, but it earns less and drinks differently. Moving production uphill or into new regions can work, but poorly managed expansion adds pressure on forests and biodiversity, the risk the EU's incoming deforestation regulation is designed to address. The law applies to large and medium operators from December 30 this year, to the smallest from mid-2027, and demands plot-level geolocation plus proof that beans were not grown on land deforested after 2020. Brussels eased the rules last December for the smallest producers in low-risk countries, but most major origins, Brazil and Colombia among them, are rated standard risk, so much of that simplification does not apply to them; some smallholder origins may find the burden easier to escape by selling outside Europe than to meet. A regulation written to protect forests could end up pushing cost and risk onto the growers least equipped to carry either.

 

Large buyers are increasingly going beyond certification logos. Nestlé reported in June that 53% of Nescafé's green coffee now comes from farmers adopting regenerative practices, up from about 20% in 2023, and distributed over 20 million plantlets last year. Starbucks, which buys around 3% of the world's coffee, passed 100 million climate-resilient trees donated to farmers in March and has pledged 50 million more, alongside six rust-resistant arabica varieties it gives away free. Whether any of it is big enough for the exposure is another matter. Starbucks' own $100 million farmer loan fund was fully depleted by May 2025, a detail that says as much about the scale of need as the size of the fund. For years companies measured climate risk in annual reports; in coffee it now runs through the supply chain itself, and securing supply in a destabilised climate is starting to look like a permanent cost of doing business. The industry is still deciding who pays it: the buyer, the farmer, or the person holding the cup.

 

Adaptation is not a corporate programme with an end date; it is a recurring cost of supply, and it has not yet been priced in.

 

Where this leaves the price

 

Coffee is more expensive because the wholesale price spiked to a record and the retail price kept the gains, because tariffs, currencies and freight piled on at the worst moment, and because roasters are building margins. The structural cause is the crop itself, which is becoming harder to produce predictably, in a supply chain concentrated enough that trouble in two or three countries shows up in every supermarket.

 

The price of a bag now depends on rainfall in Minas Gerais, harvest contracts in Vietnam, a regulation in Brussels and a warming stretch of the Pacific. The question in the headline will be asked again next year, and the answer starts with the rains due in Brazil next month. Ten days after an earthquake flattened parts of his industry's heartland, the head of Colombia's coffee federation named the bigger threat to the harvest. It was the weather.

 

Sources: NOAA Climate Prediction Center ENSO discussion (Aug 13, 2026); FNC Colombia and the Bahamón interview (Aug 21, 2026); NCA trade-consultation remarks (Jul 8, 2026); ING coffee cost analysis (Mar 2025); US Bureau of Labor Statistics (Jul 2026); ICE futures and certified-stock data (Aug 2026); Conab, Marex and StoneX crop estimates; Nestlé Nescafé Plan 2030 Progress Report (Jun 2026); Starbucks (Mar 2026); Grüter et al., PLOS ONE (2022); EU Regulation 2023/1115 as amended by Regulation 2025/2650 and Implementing Regulation 2025/1093.