Global Coffee Harvest Boom Brings Mixed Fortunes

The global coffee market is facing a familiar dilemma: too much supply, too little reward for those who grow it. While coffee drinkers may soon see cheaper prices on shelves, farmers across Brazil, Vietnam, and Colombia are watching their margins vanish as the cost to produce each pound of coffee outweighs what they can sell it for.

In short: yes, coffee prices are falling—ICE futures have dropped to $1.05 per pound, while farmers in Colombia and Brazil need at least $1.40–$1.50 just to break even. Retailers like Starbucks could see profit margins rise by up to two percentage points, but many growers are struggling to cover production costs.

Why Is There So Much Coffee This Year?

Global coffee production is surging. After years of challenges including disease outbreaks in Central America, key producers are bouncing back. Colombia, a leading Arabica producer, has replanted 40% of its coffee trees in recent years. Those new trees are now maturing, and the country expects to harvest around 8.5 million bags this year—a 20% increase from 2023. Production could rise further to 9.5–10 million bags next year.

Brazil and Vietnam, the world’s largest producers of Arabica and Robusta respectively, are also forecasting strong yields. The combined effect is a significant increase in global supply.

What’s Happening With Coffee Prices?

The surge in supply is driving prices down. ICE coffee futures have been in decline for five years and recently fell to $1.05 per pound. That’s well below the cost of production. Farmers in Colombia and other Central American countries typically need $1.40–$1.50 per pound to cover costs, while Brazilian producers require around $1.20. With prices stuck at $1.05, many are operating at a loss.

Experts warn that the oversupply could push futures below $1.00 per pound in the first quarter of next year. That would mark a new low and further strain farming operations.

Who Benefits—and Who Suffers?

The primary beneficiaries of this surplus are coffee retailers and importers. With lower wholesale prices, companies enjoy better profit margins. Analysts suggest Starbucks could see its operating margins improve by up to two percentage points thanks to the cheaper bean prices.

But for coffee farmers, the situation is dire. Many are unable to cover the costs of production, let alone make a living. Some fear that prolonged financial pressure may lead farmers to reduce inputs or abandon pruning and maintenance, which could trigger smaller harvests—and price spikes—in the future.

What Happens If Farmers Cut Back?

There’s growing concern that struggling farmers might intentionally reduce care for their trees to lower output in hopes of boosting prices. But this strategy carries risks. Neglecting coffee plants can lead to disease, lower long-term yields, and eventually, a sharp drop in supply. When that happens, prices could rebound dramatically, disrupting the market and creating new challenges for roasters and retailers.

Frequently Asked Questions

Why are global coffee prices falling in 2024?

Global coffee prices are falling primarily due to a significant increase in supply. Major producing countries like Brazil, Vietnam, and Colombia are all expecting large harvests this year, with Colombia alone projecting an output of 8.5 million bags—an increase of 20% from 2023. This oversupply has pushed ICE coffee futures down to $1.05 per pound.

How much does it cost to produce a pound of coffee?

Production costs vary by region. In Colombia and other Central American countries, farmers typically need around $1.40–$1.50 per pound to break even. In Brazil, the cost is approximately $1.20 per pound. Current futures prices at $1.05 per pound are below these thresholds, meaning most farmers are losing money on each pound sold.

Who benefits from the current coffee surplus?

Coffee retailers and importers benefit the most from lower coffee bean prices. With reduced input costs, companies enjoy higher profit margins. For example, Starbucks is expected to see a potential two-percentage-point increase in operating margins due to the cheaper cost of green coffee.

Could coffee prices go below $1.00 per pound?

Yes. Industry experts warn that if the oversupply continues, ICE coffee futures could fall below $1.00 per pound in the first quarter of 2025. Such a drop would set a new low and further challenge coffee-growing economies.

What happens if farmers reduce coffee production on purpose?

If farmers cut back on care or inputs to reduce yields, it could initially lead to lower supply and potentially higher prices. However, neglecting coffee trees also increases the risk of disease and long-term yield loss. A future supply crash could then trigger sharp price rebounds, disrupting the market.

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