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Global coffee, cocoa & tea markets experience large fluctuations
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Thursday, 16 July, 2026, 08 : 00 AM [IST]
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Rome, Italy
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International prices of coffee, cocoa and tea have recently experienced large fluctuations, exacerbated by structural vulnerabilities, according to a new report from the Food and Agriculture Organization of the United Nations (FAO), highlighting the need to strengthen production systems, improve market transparency and support a more balanced distribution of value across the value chain to enhance market stability and protect livelihoods.
Drawing on new evidence, the report Price Dynamics in Global Beverage Markets: Trends, Drivers, and Consequences finds that short-term real price movements are driven predominantly by changes in supply and demand conditions, which account for more than 90 percent of observed price dynamics. At the same time, expectations about future market conditions can shape market participants’ behaviour, at times reinforcing price movements even before underlying supply or demand shifts fully materialise. The findings further suggest that broader macroeconomic conditions play a comparatively limited role in explaining short-term price fluctuations for these products.
Recent price fluctuations are shaped by both the physical and economic characteristics of these markets. Production is highly concentrated in a small number of low- and middle-income countries and 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, thereby amplifying the effects of global shocks on domestic markets. In this context, the report finds that shocks to global beverage markets do not transmit fully or evenly across the different stages of the value chain. Producers tend to be more directly exposed to global price shocks, whereas the impact on consumer prices is generally more muted.
"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 their international prices. Weather-related shocks – droughts, frosts, and excessive rainfall – remain the primary triggers of price spikes. Plant diseases, rising input and labour costs, geopolitical tensions, and shipping delays have added further pressures."
Data from the report show that global production of coffee, cocoa and tea is concentrated in a relatively small group of countries. Brazil and Viet Nam account for nearly half of global coffee production, while five countries supply about 65 percent of total coffee exports. Cocoa production is even more concentrated, with Côte d’Ivoire and Ghana providing over two-thirds of global supply, while China produces more than half of global tea output.
In light of the report’s findings, this concentration makes global prices highly sensitive to localised shocks. Because short-term price movements are driven mainly by supply and demand conditions, disruptions in a few key producing countries can quickly translate into large international price fluctuations. Demand, by contrast, is more geographically dispersed and continues to expand, particularly in emerging economies.
Recent price developments for these commodities illustrate how localised shocks translate into global price fluctuations. International coffee prices surged in 2021–2022 following droughts and frosts in Brazil and poor weather in Colombia, and reached historic highs in early 2025 amid climate-related production losses in Viet Nam and Indonesia. Cocoa prices rose sharply in 2023–2024 after output declines in Côte d’Ivoire and Ghana due to adverse weather and plant disease. Tea markets showed a different pattern, with price increases during the COVID-19 pandemic driven primarily by stronger demand associated with increased at-home consumption and perceived health benefits.
The report finds that changes in international prices are not reflected evenly across the different stages of the value chain. In many cases, producers are more directly exposed to price movements, while the impact on consumer prices tends to be more limited. These patterns suggest that price transmission is shaped by the structure of global value chains, where multiple stages separate farmers from final consumers and where a significant share of value is generated in processing, distribution, and retail.
As a result, global price changes are not transmitted one-for-one along the value chain. Increases do not fully translate into higher prices for farmers, and price declines, especially at the consumer level, are only partially transmitted, as illustrated by the case of chocolate. At the retail level, the impact of international price changes is generally more limited, in part because raw coffee, cocoa and tea account for only a small share of the final product costs. The extent of this price transmission varies across countries, reflecting differences in market structure, domestic and trade policies, and transaction costs.
With coffee, cocoa and tea sustaining the livelihoods of millions of farmers worldwide, the report warns that shocks to global prices “have direct implications for household income, poverty levels, food security, and government budgets, especially in countries where these crops represent a substantial share of export earnings.”
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