South African's can expect coffee prices to increase soon
No one wants to hear about higher prices in January, when there is so much stress on people returning to work and sending kids to school, but we can expect South African coffee prices to increase soon.
Brazil and Vietnam are major producers of coffee beans. We import from both and both have had bad weather — drought and heavy rains in the case of Vietnam — which have affected production.
If one looks at South Africa’s coffee imports by volume, we have imported, on average, about 24 000 tonnes a year over the past five years. Brazil and Vietnam accounted for 54% of imports. Other suppliers of coffee to South Africa include Uganda (8% of imports), Tanzania (7%), Colombia (4%), Guatemala (4%), Ethiopia (3%) and Honduras (3%).
Trade Map data shows these countries make up 84% of South Africa’s coffee imports.
While other countries have relatively stable production, the largest producers, Brazil and Vietnam, have had bad seasons. The consequence is lower production, which has increased coffee prices globally.
More worrying is that the coffee bean production forecasts for 2025 are not looking good either. The weather problems in Brazil and Vietnam could persist, keeping coffee prices elevated for some time.
Some have asked why South Africa doesn’t import more from other African coffee producers. This is a fair question. But there are two things to consider.
First, coffee is a globally traded commodity (like maize and wheat) and its prices are interlinked globally. So, the factors considered when deciding where South Africa imports from would be the coffee variety and the distance costs.
Second, it is difficult to overemphasise Brazil’s and Vietnam’s prominence in, and influence on, the global coffee market. Brazil accounts for 39% of global production, Vietnam 16%, and Colombia 8%. Thus, these three countries account for two-thirds of global production, which explains their effect on global prices.
Ethiopia (5% of global production) and Uganda (4%) are the only African countries featured in the top 10 global coffee producers. To be clear, I am using the 2023-24 production season data here but the numbers have not changed much over the past few seasons.
Therefore, regardless of where South Africa imports coffee from, we will not escape the upside cost pressures that coffee shops will soon pass on to consumers.
We are not only facing production constraints. Another critical factor in the increase in prices is the growing demand for coffee in China. In its recent report, the US agriculture department states that China’s coffee consumption has surged almost 150% in the last 10 years and is forecast to reach 6.3 million bags (60kg) in 2024-25.
This increase in Chinese demand at a time when global coffee production is under pressure will further add to the upside price pressures.
Due to these factors, importing countries such as South Africa are going to have to contend with increasing prices in the coming months.
Wandile Sihlobo is an agricultural economist.