Early in the morning, a coffee farm has a distinct scent that includes fermenting fruit, humid earth, and a hint of sweetness. It’s simple to romanticize. What has been happening to those farms over the past few years, however, is more difficult to ignore. Harvests are declining. The weather is acting strangely. Additionally, the cost of a pound of Arabica on the futures market has almost doubled in just the last 12 months. The red volcanic soil of Brazil’s Minas Gerais region, the highland farms of Ethiopia, and the mountain villages of Honduras, where entire family economies revolve around a single crop, are all places where something has changed, not just commodity trading rooms in New York or London.
The price of Arabica coffee on the “Coffee C” futures market increased by 91% between July 2024 and June 2025, hitting levels not seen in decades. On a Bloomberg terminal, that figure sounds dramatic. Because the price increase isn’t an indication of abundance, it means something more complicated on a smallholder farm in southern Brazil: a mixture of short-term windfall and long-term dread. It is an indication of scarcity. Brazil, which produces about one-third of the world’s coffee, has been severely impacted by production shocks, consecutive droughts, and unpredictable rainfall. In 2025, the nation anticipates a 4.4% decline in production, with a 12% decline in Arabica output. The markets took notice. Now everyone is listening.
| Category | Details |
|---|---|
| Topic | Global Coffee Market & Climate Change |
| Key Commodity | Arabica & Robusta Coffee |
| Top Producing Countries | Brazil (~33%), Vietnam, Ethiopia, Honduras, Colombia |
| Price Surge (2024–2025) | Arabica prices rose 91% on ICE Futures “Coffee C” market |
| Projected Land Loss by 2050 | Up to 50% of suitable growing area could disappear |
| Farmers Affected Globally | Estimated 25 million+ smallholder farming households |
| Ethiopia’s Coffee Dependency | 5% of GDP, 60% of goods export earnings |
| Honduras Coffee Share | 4% of GDP, 22% of export earnings |
| Key Regulation | EU Deforestation Regulation (EUDR), deadline end of 2025 |
| Reference Website | International Coffee Organisation — ico.org |
This is where climate science has been pointing for some time. Coffee is located in vulnerable tropical zones, where climate change has already started to slow agricultural productivity, according to an IPCC report from 2023. Almost all commercial coffee is grown in the so-called “coffee belt,” which is a narrow loop of equatorial land between the Tropics of Cancer and Capricorn. More than 55% of the world’s production is Arabica, which is especially picky. It requires temperatures in the range of about 18 to 22 degrees Celsius. Robusta is coarser, more bitter, and less appreciated, but it can withstand higher temperatures. Coffee is not benefiting from the math of rising temperatures. Up to half of the world’s currently suitable coffee-growing area may become unviable by 2050, according to research. Half. Current temperature trajectories already point to that direction of travel, so it’s not a far-off abstraction.
When you stroll through Ethiopia’s farming areas, the strain is evident in ways that statistics are unable to adequately convey. Coffee supports about two million smallholder farmers and contributes about 5% of Ethiopia’s GDP and 60% of its goods export earnings. The actual geographic range of coffee-growing regions is already changing; higher altitudes are becoming more feasible as lower ones become too dry and warm. Farmers are traveling uphill, occasionally onto previously uncultivated land, and occasionally pushing awkwardly near the boundaries of forests. The European Union’s Deforestation Regulation, or EUDR, is scheduled to go into effect by the end of 2025 and requires verified evidence that coffee hasn’t contributed to forest clearance, which creates its own set of issues. Compliance is manageable for major producers in Brazil or Colombia who have invested in traceability technology. It’s a completely different story for an Ethiopian smallholder who depends on a network of local intermediaries.
Honduras provides an additional perspective on the same issue. About 120,000 households rely on coffee, which accounts for 4% of the nation’s GDP and over a fifth of its export revenue. Since the EU receives more than half of those exports, EUDR compliance is an existential issue rather than a bureaucratic annoyance. Furthermore, Honduras has been experiencing climate shocks more frequently. In 2020, hurricanes Eta and Iota devastated about 7,500 hectares of coffee plantations and caused supply chain disruptions in 60% of the nation’s municipalities that grow coffee. It took a while to recover. It’s possible that the next storm will arrive before the recovery is finished.
It’s important to comprehend this larger economic structure. From farmer to cup, the coffee supply chain is more complicated than that. It passes through retailers, logistics firms, exporters, traders, and roasters, all of whom add margin and absorb or pass on price changes in accordance with their contractual positions. At the most vulnerable end of this chain are smallholder farmers, who grow about 60% of the world’s coffee. Of them, about 44% are impoverished. Due to their reliance on intermediaries, they frequently absorb the losses when yields decline rather than reaping the benefits when prices rise. They also frequently lack access to financial instruments that would enable them to hedge against price volatility.
As all of this is happening, it’s difficult to ignore the fact that those with the least influence within the system are suffering the most direct repercussions. Consumer prices are rising—by December 2024, Arabica had already increased by more than 60% year over year—and specialty coffee companies are quietly concerned about their capacity to find reliable, premium beans as the market becomes more competitive. Retailers are adjusting their pricing tactics. Some are starting to consider inferior blends or different sources. In the coming years, coffee drinking as a daily ritual might not undergo significant change. However, there is increasing pressure on the economics beneath that cup.
Another layer is added by the sustainability dimension. Every year, coffee production causes about 100,000 hectares of deforestation. That figure is small when compared to palm oil or cattle ranching, but the forests being invaded—the cloud forests of Costa Rica and the tropical highlands of Uganda—are disproportionately rich in biodiversity. Additionally, washing coffee alone can use up to 130 liters of water per kilogram of coffee cherries, producing wastewater that, if left untreated, contaminates streams and lowers oxygen levels in nearby water systems. These environmental costs are rarely seen on a café menu.
The gap between urgency and implementation is becoming a more prominent topic of discussion at events such as London Climate Action Week. Deadlines for compliance are drawing near. Temperature curves keep rising. In the meantime, the futures market continues to rise as producers hold back supply in anticipation of future price increases, resulting in feedback loops that increase volatility. Three very different economies—Brazil, Ethiopia, and Honduras—are dealing with variations of the same fundamental issue: a crop that is actually getting more difficult to grow consistently in the locations where it has always been grown.
It’s still unclear if market pressure, adaptation investment, and regulation will come together quickly enough to stabilize the situation. Climate-resilient cultivars, shade-grown systems, and higher-altitude farming are all being investigated; these are genuine initiatives, not token gestures. However, time is of the essence. The land is getting warmer. Additionally, the cost of that warming is being discreetly transferred to those least able to absorb it, somewhere between the futures market and the smallholder farm.