If you love coffee, you might have noticed that prices are climbing. At a rapid, unprecedented rate. Maybe your go-to bag of beans costs a little more. Perhaps you’ve heard talk of rising costs in the industry.

It’s important to state that this isn’t a small, temporary shift – it’s a big moment for coffee, and it’s affecting everyone from farmers to roasters to coffee drinkers like you. 

So, what’s going on? Why is this actually good news for coffee farmers? And what does this mean for you?

The big reasons behind rising coffee prices

1. Climate change is hitting coffee hard

Coffee plants are fussy. Arabica, in particular, needs just the right temperature, altitude, and rainfall to thrive. But as the climate changes, extreme weather is making it harder to grow coffee. 

For example, Brazil has faced severe droughts and frosts in recent years, drastically reducing yields. Many other origins around the world are also experiencing erratic rainfall, which affects both the quantity and quality of their coffee beans. With less coffee available, prices naturally rise.

2. Demand is growing faster than supply

More people than ever are drinking coffee, with speciality coffee booming as more drinkers seek better-quality, ethically sourced beans.

Emerging markets, particularly in Asia, are seeing a surge in coffee consumption as more people embrace the coffee culture we’ve become accustomed to. Countries like China and India, with their massive populations, are becoming major players in the global coffee market.

With that in mind, coffee production is cyclical, with alternating years of high and low yields. When a low-yield year coincides with other challenges, such as extreme weather or logistical bottlenecks, the result is a significant supply shortage. 

This means competition for the best lots is fiercer than ever – pushing prices even higher.

3. Brazil and Vietnam are producing less

Brazil and Vietnam are two of the biggest coffee producers in the world. Which means the rest of the industry tends to follow in their footsteps. So, when their crops struggle, the whole coffee market feels it.

In Brazil, as previously stated, extreme weather events have devastated Arabica crops, while rising production costs and currency fluctuations have squeezed farmers’ profits. Vietnam, the leading Robusta producer, has struggled with labour shortages and logistical bottlenecks – made worse by the pandemic.

While we don’t sell Robusta, because it’s become more expensive, more roasters are happy to pay extra for Arabica coffee as it’s a big leap in quality for a smaller jump in price.

These disruptions have reduced yields, tightened supplies, and forced buyers to compete for limited stocks. This has made good coffee even harder to come by and has driven prices up worldwide.

4. The cost of growing and transporting coffee is up

For producers, coffee isn’t just about growing beans. Farmers have to pay for labour, equipment, and fertilizer. Once the coffee is harvested, it has to be transported, often across the world. 

The global coffee supply chain has faced unprecedented disruptions in recent years, as a result of the pandemic, geopolitical tensions effectively blocking the Suez Canal, severe drought restricting transit through the Panama Canal, and more. This leads to a significant increase in transportation costs. 

We’ve also seen labour shortages, wage increases (a good thing for workers), shipping delays, and increased transportation costs. These factors, mixed with inflation, have made every step more expensive.

5. Market speculation is driving prices higher

Coffee is traded as a commodity and its price is influenced by speculation, currency fluctuations, and global economics. For instance, when the Brazilian real weakens against the US dollar, Brazilian farmers may hold back their coffee to sell at a better price later, reducing immediate supply and driving up costs.

Additionally, investors and traders often speculate on future price movements, which can lead to volatility in the market. These fluctuations can lead to price increases, especially during periods of uncertainty. Right now, we’re seeing huge uncertainty in the market and lots of predictions being bet on.

What this means for farmers

The good news is that, on the whole, high prices mean farmers are being paid more for their work.

Historically, coffee farmers have been some of the most underpaid workers in the global supply chain. Because the traditional coffee trade – we call it ‘Big Coffee’ – has long prioritised its own low costs and high margins, driving prices paid to farmers down to unsustainable levels. 

Many smallholder farmers worldwide have lived in poverty as a result, earning far below a living wage. 

But now, everyone buying coffee is led by the high commodity-market price to pay farmers significantly more than even the Fairtrade base price. And this will make its way into the pockets of farmers, their families, and communities. 

That said, it’s important to note that many farmers worldwide are seeing less abundant harvests as a direct result of climate change, already impacted by crop disease, pests, and erratic weather conditions. 

Less coffee to sell means they’re making even less money than they were before, regardless of these higher prices. It’s vital that we as the coffee industry collectively act to do everything we can to mitigate the effects of climate change.

How does this affect Pact?

We source directly from the farmer to completely skip the commodity market. But the commodity market price still dictates the price we pay, to some extent. 

Before this year, we regularly paid farmers around three times the commodity market’s average. But when the market is at a historic high (like right now), we’re not going to stand in a farmer’s way to make a potentially life-changing sum.

Instead, we’re paying them at least what they can make on the commodity market right now, and in many cases, even more. 

We’ll continue to pay them truly premium prices for truly outstanding coffee when the market inevitably drops again, and ‘Big Coffee’ companies revert to paying as little as possible.

What this means for you

As a coffee drinker, this means you’ll see prices rise. 

The price of green (unroasted) coffee has risen significantly – by 80% since November 2024 – due to all of these reasons we’ve mentioned in this article. Inflation also means energy, wages, transport, and packaging have become more expensive, and this all has an impact on the final cost of roasted beans.  

In order to continue bringing you the best coffee and staying true to our values of fairness and quality, we’ve had to make the difficult decision to adjust the prices of our coffee.

We know price increases are never welcome, but this means we can keep giving you truly superb coffee while staying true to our values.

Your support helps secure a fairer future for farmers and guarantees you the best coffee, always freshly roasted and ethically sourced.