FAO report examines shocks in global coffee, cocoa and tea markets
The report, Price Dynamics in Global Beverage Markets: Trends, Drivers, and Consequences, finds that short-term movements in real prices are driven predominantly by changes in supply and demand, which account for more than 90 percent of observed price fluctuations
KAMPALA, July 15, 2026 – International prices of coffee, cocoa and tea have experienced significant fluctuations in recent years, exposing structural vulnerabilities in global commodity markets, according to a new report by the Food and Agriculture Organisation of the United Nations [FAO]. The report highlights the need to strengthen production systems, improve market transparency and promote a fairer distribution of value across supply chains to enhance market stability and protect livelihoods.
The report, Price Dynamics in Global Beverage Markets: Trends, Drivers, and Consequences, finds that short-term movements in real prices are driven predominantly by changes in supply and demand, which account for more than 90 percent of observed price fluctuations. It also notes that expectations about future market conditions can influence the behaviour of market participants, at times reinforcing price movements even before underlying shifts in supply or demand fully materialise. Broader macroeconomic conditions, by contrast, play a comparatively limited role in explaining short-term price volatility in these markets.
According to the report, recent price fluctuations reflect both the physical and economic characteristics of global beverage markets. Production is concentrated in a relatively small number of low- and middle-income countries and is largely undertaken by smallholder farmers, while most output is exported in raw form to high-income and emerging economies for processing and distribution.
The long distances between producers and consumers increase exposure to market disruptions and transport costs, amplifying the effects of global shocks on domestic markets. The report further finds that these shocks are not transmitted evenly across the value chain. Producers are generally more directly exposed to global price fluctuations, while the impact on consumer prices tends to be more limited.
“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. “The combination of concentrated supply and growing global consumption creates fertile ground for large swings in international prices. Weather-related shocks – including droughts, frosts and excessive rainfall – remain the primary drivers of price spikes. Plant diseases, rising input and labour costs, geopolitical tensions and shipping delays have added further pressure.”
Few producers for a growing number of buyers
The report shows that global production of coffee, cocoa and tea is concentrated in a relatively small number of countries. Brazil and Viet Nam account for nearly half of global coffee production, while five countries supply around 65 per cent of global coffee exports. Cocoa production is even more concentrated, with Côte d’Ivoire and Ghana accounting for more than two-thirds of global supply. Meanwhile, China produces more than half of the world’s tea.
This concentration makes international prices highly sensitive to localised shocks. Since short-term price movements are driven largely by supply and demand, disruptions in a handful of key producing countries can rapidly trigger substantial price fluctuations worldwide. Demand, meanwhile, is more geographically dispersed and continues to grow, particularly in emerging economies.
Recent market developments illustrate this trend. International coffee prices surged during 2021–2022 following droughts and frosts in Brazil and adverse weather in Colombia. Prices reached record highs in early 2025 amid climate-related production losses in Viet Nam and Indonesia. Cocoa prices rose sharply during 2023–2024 after declining production in Côte d’Ivoire and Ghana caused by adverse weather and plant diseases. Tea markets followed a different pattern, with prices increasing during the COVID-19 pandemic, driven mainly by stronger demand linked to increased home consumption and growing awareness of the beverage’s perceived health benefits.
Farmers benefit less from price booms than processors
The report finds that changes in international commodity prices are not reflected equally across the value chain. Producers are often more directly affected by price movements, while the effect on consumer prices is generally more limited. This reflects the structure of global value chains, where several stages separate farmers from final consumers and where much of the value is created through processing, distribution and retail.
Consequently, changes in global prices are not transmitted proportionately along the value chain. Price increases do not necessarily translate into higher incomes for farmers, while price reductions, particularly at the retail level, are only partially passed on to consumers, as illustrated by the chocolate market. At the retail stage, the impact of international price movements is generally limited because raw coffee, cocoa and tea account for only a small proportion of the final product’s cost. The extent of price transmission also varies across countries, reflecting differences in market structures, domestic and trade policies, and transaction costs.
With coffee, cocoa and tea supporting the livelihoods of millions of farmers worldwide, the report warns that shocks in global commodity prices have direct implications for household incomes, poverty, food security and government revenues, particularly in countries where these crops account for a significant share of export earnings.
Building more resilient, efficient, transparent and inclusive value chains
The report calls for coordinated policy action to address structural vulnerabilities and reduce the impact of future shocks.
At the production level, it recommends strengthening resilience through investment in climate-resilient farming systems, effective pest and disease management, and improved risk management tools to help stabilise production and farmers’ incomes.
It also stresses the importance of improving market efficiency and transparency. Better data on crop conditions, stock levels and trade flows can reduce uncertainty and contribute to more stable price formation.
Finally, the report calls for a more equitable distribution of value across supply chains. Enabling producers to move up the value chain through processing, certification and branding can increase their share of returns while promoting more inclusive and sustainable economic development.
Without such measures, the report warns, global beverage commodity markets will remain vulnerable to future shocks, posing continued risks to the livelihoods of millions of farmers, food security and economic stability in producing countries.
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