Global Coffee, Cocoa and Tea Prices Driven 90% by Supply and Demand, New Report Finds
International prices of coffee, cocoa and tea have experienced sharp fluctuations in recent years, largely driven by supply and demand imbalances rather than broader economic conditions, according to a new report by the Food and Agriculture Organization of the United Nations (FAO).
The report, ‘Price Dynamics in Global Beverage Markets: Trends, Drivers, and Consequences’, finds that more than 90 percent of short-term price movements are explained by changes in supply and demand, while macroeconomic factors play only a limited role. It also notes that market expectations can amplify price swings before actual changes in production or demand occur.
FAO says global beverage markets are particularly vulnerable because production is concentrated in a handful of countries and largely depends on smallholder farmers. Most coffee, cocoa and tea are exported as raw products to higher-income countries for processing, making supply chains susceptible to weather disruptions, transport costs and geopolitical shocks.
“In recent years, global beverage commodity prices have risen much faster than those of other agricultural commodities,” said Boubaker Ben-Belhassen, Director of FAO’s Markets and Trade Division. He attributed the volatility to concentrated production, growing global demand, extreme weather events, plant diseases, rising input and labour costs, geopolitical tensions and shipping delays.
The report shows that Brazil and Viet Nam produce nearly half of the world’s coffee, while Côte d’Ivoire and Ghana account for more than two-thirds of global cocoa production. China produces over half of the world’s tea. Such concentration means disruptions in a few producing countries can quickly trigger sharp increases in global prices.
Recent market trends reflect this pattern. Coffee prices surged in 2021 and 2022 following droughts and frosts in Brazil and poor weather in Colombia, before reaching record highs in early 2025 due to climate-related production losses in Viet Nam and Indonesia. Cocoa prices also climbed sharply in 2023 and 2024 after adverse weather and crop diseases reduced harvests in Côte d’Ivoire and Ghana. Tea prices, meanwhile, rose during the COVID-19 pandemic as demand increased with higher at-home consumption.
The report also finds that farmers often benefit less from rising prices than processors and retailers. While producers are directly exposed to global price changes, consumer prices tend to increase more gradually because raw commodities account for only a small share of the final retail price. As a result, gains from higher international prices are not evenly distributed along the value chain.
FAO warns that continued price volatility threatens the livelihoods of millions of farmers, particularly in countries that depend heavily on coffee, cocoa and tea exports. It recommends investments in climate-resilient farming, improved pest and disease management, stronger market transparency and better access to processing, certification and branding to help producers capture a larger share of the value generated by these commodities.
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