Brazil, the world’s largest coffee producer, is grappling with a severe coffee shortage as stockpiles rapidly deplete and prices soar to record highs. By mid-2025, coffee inventories in Brazil are expected to fall to just 1.2 million 60-kilogram bags, a 26% drop compared to the previous year, according to Nasdaq. This shortage has driven Arabica coffee prices to more than $4.30 per pound, the highest level seen in decades.
The crisis is rooted in a combination of factors, including extreme weather conditions, a surge in global demand, and ongoing supply chain disruptions. Brazil’s 2025/26 coffee harvest is projected to decrease by 4.4% to 51.8 million bags, with Arabica production suffering the most—a 12.4% decline, mainly due to drought and high temperatures affecting the flowering phase. On the other hand, robusta production is expected to increase by 17.2% to 17.1 million bags, thanks to strong yields in Espírito Santo.
The impact is being felt beyond Brazil. As coffee consumption rises globally, particularly in emerging markets like China, the world’s coffee supply is becoming more strained. Brazil’s dual role as both a major producer and consumer of coffee has compounded supply chain issues. Retail coffee prices within Brazil surged 37.4% in 2024, while exports reached a record 50.5 million bags, nearly a 29% increase from the previous year.
Climate change has exacerbated the crisis, with Brazil experiencing its driest weather since 1981, severely damaging coffee crops and lowering yields. Similarly, Vietnam, another leading coffee producer, has seen a 20% drop in robusta production due to drought.
The economic implications are widespread, with 3.5 million Brazilians employed in the coffee industry and export revenues of $8 billion in 2024. However, rising costs for essential inputs like fertilizer and labor are putting pressure on farmers already dealing with diminished productivity.
With no immediate relief in sight, analysts predict that coffee prices will remain high at least until mid-2026, when better harvests could help stabilize the market. For now, Brazil’s coffee crisis highlights the vulnerability of global supply chains to climate change and economic pressures.
Sources: Nasdaq, CONAB
