Why Ugandan farmers will continue to revel in high coffee prices

As global coffee prices continue to rise, farmers are set to benefit for a longer period, with factors contributing to the surge still ongoing.

As of March 18, the farmgate prices for coffee in Uganda are as follows; Kiboko: Shs 7,800-8,500, FAQ: Shs 15,500-16,000, Arabica Parchment: Shs 13,500-14,500, and Drugar: Shs 19,000-20,000 (MAAIF).

Globally, prices for Mild Arabica, the most sought-after variety, average $409.52 per 100 kilograms. A recent study by the Food and Agriculture Organization (FAO) indicates no signs of a price decline shortly. Coffee farmers, especially smallholders, are poised to reap significant benefits, while consumers brace for higher costs.

“Unfavourable weather conditions in key coffee-producing countries, especially affecting Arabica, the preferred variety for roast and ground coffee, saw prices soar by 58 per cent compared to the previous year,” the report states.

“Meanwhile, Robusta, typically used in instant coffee and blending, experienced an even sharper rise of 70 per cent in real terms.”

The report also highlights that the price gap between Arabica and Robusta has significantly narrowed for the first time since the mid-1990s. Market analysts suggest that if production challenges persist in major coffee-growing regions, prices could rise further.

Last year, price increases averaged 40 per cent. Several major coffee-producing countries have reported significant declines in output due to extreme weather patterns. Vietnam, the world’s second-largest coffee producer, suffered a 20 per cent drop in production during the 2023/24 season due to prolonged dry weather, leading to a 10 per cent decrease in coffee exports for the second consecutive year.

Similarly, Indonesia experienced a 16.5 per cent decline in coffee production due to excessive rainfall in April and May 2023, damaging coffee cherries and causing a 23 per cent drop in exports.

In Brazil, the world’s largest producer of Arabica coffee, dry and hot weather conditions led to multiple downward revisions of its 2023/24 production estimates. Initially expected to grow by 5.5 per cent year-on-year, production instead declined by 1.6 per cent.

“Given Brazil’s dominance in the global coffee market, this supply contraction has contributed significantly to the current price spike.”

Beyond weather-related challenges, rising shipping costs have also played a role in pushing coffee prices higher. FAO’s analysis found that increased freight rates have had a direct and statistically significant impact on international coffee prices.

“The cumulative effect of a 1 per cent increase in shipping costs results in a 0.44 per cent rise in world coffee prices within ten months,” the report states.

In 2024, early data indicated that higher international prices had begun to affect consumers. By December, coffee prices in the United States had risen by 6.6 per cent compared to the same period in 2023, while in the European market, they increased by 3.75 per cent.

Despite price fluctuations, consumption patterns remain relatively unchanged as consumers are expected to absorb these higher costs rather than cut back on their coffee intake. This price surge presents a rare financial windfall for smallholder farmers, who constitute 80 per cent of the global coffee production force.

This trend has already been observed since late 2024, with coffee prices rising by 17.8 per cent in Ethiopia, 12.3 per cent in Kenya, 13.6 per cent in Brazil, 11.7 per cent in Colombia, 15.9 per cent in Indonesia, and 5.8 per cent in Vietnam. Uganda has also benefited from this positive trend.

Between June 2024 and January 2025, the country’s coffee exports reached 4.34 million 60-kg bags, generating $1.28 billion. During the 2023/24 financial year, 6.13 million bags were exported, valued at $1.14 billion—representing a 6.3 per cent increase in volume and a 35.3 per cent rise in value compared to the previous year.

This growth in export volumes and earnings signifies a rise in per capita income for individual farmers, as well as a promising boost to the country’s economic outlook, with coffee being one of Uganda’s major exports, second only to gold.

However, industry experts caution that while high prices bring short-term benefits to farmers, long-term sustainability remains a concern. Many smallholders lack the resources to invest in climate-resilient farming techniques, leaving them vulnerable to future production shocks.

Boubaker Ben-Belhassen, FAO’s director for markets and trade, emphasized the need for investments in research and technology to enhance climate resilience in coffee farming.

“The high prices should provide incentives to invest more in technology, research, and development in the coffee sector. Climate change is impacting coffee production in the longer term,” he said.

Coffee remains one of the most widely consumed beverages in the world and is among the most traded commodities globally. The industry generates over $200 billion in annual revenue and supports the livelihoods of approximately 25 million farmers.