Coffee is about to get more expensive. Prices for the Robusta variety have reached unprecedented high levels, and this has contributed to driving up the price for Arabica as well. The chart below shows wholesale coffee prices in US dollars per kilogram for the last 25 years. Arabica prices are now topping US$6/kg, and Robusta pries are hovering near US$5/kg. Arabica prices have peaked before, in early 2011 and in mid-2022, but Robusta prices had not crossed US$3/kg before.
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Arabica and Robusta are the most important coffee varieties, with market shares roughly in a 60/40 split. The world market for coffee beans is thought to be worth about US$34 billion in 2023. Arabica and Robusta have different attributes. Arabica beans contain between 0.8 and 1.4 percent caffeine, while Robusta beans contain between 1.7 and 4.0 percent caffeine. Arabica is thought to have a smoother and sweeter taste that is preferred my coffee connoisseurs. Robusta has a stronger and more bitter taste. Robusta plants tend to resist pests and diseases much better than Arabica plants.
What is driving the spike in prices is a coffee shortage while Brazil is struggling through one of the country's worst droughts, and output in Vietnam is also suffering from adverse weather conditions. Minas Gerais is Brazil's largest Arabica coffee-producing area and received rainfall well below the historic average. This is attributed to dry El Nino conditions. Brazil is by far the largest coffee producer in the world. Brazil produces about one third of world output of coffee beans, and more than twice the amount of coffee than the second-largest producer Vietnam. Other major coffee-producing countries are Colombia, Indonesia, Honduras, Ethiopia, Peru, India, Uganda, and Guatemala.
There is hope that conditions will improve. The United States Department of Agriculture (USDA) Foreign Agriculture Service monitors worldwide production on their web site for Coffee. The USDA predicts that coffee production in Brazil will recover from the drought conditions, and Brazil will be able to grow its share of the international coffee market.
But what is driving the surge in Robusta prices? There appears to be growing demand for Robusta. One reason is that coffee roasters incorporate Robusta into more of their blends, instant coffees, and espressos. But international trade routes from Vietnam are also impacted as coffee shipments usually pass through the Red Sea but are more often rerouted now due to ongoing regional conflicts. Higher shipping costs also contribute to rising prices.
Experts forecast significant growth in Robusta production. Robusta beans are not only used to make coffee, but they are also used increasingly in the pharmaceutical and food industries. Robusta beans are used in coffee-flavoured energy bars and other snack foods, while the pharmaceutical industry uses Robusta beans in various health supplements and skincare products.
While demand for coffee beans continues to grow, climate change poses a great risk for coffee cultivation. Arabica plants are cultivated under very specific environmental conditions, which will deteriorate as the climate changes. This in turn requires cultivation to adapt to these new conditions (moving to higher altitudes), or moving to more climate-resilient bean species (primarily Robusta). Robusta has a larger genetic variety than Arabica. Climate change is also contributing to the spread of leaf rust, a parasite that affects Arabica plants. There remains a grave danger that climate change may lead to a significant decrease in coffee supply during the second half of the century.