Food imports are getting more expensive – rising prices of coffee, tea and cocoa are to blame

According to the Food and Drug Administration. According to the Food and Agriculture Organization (FAO), global food imports will reach $2 trillion in 2024. The increase in its value is due in large part to the rising prices of our favorite hot beverages: coffee, tea and cocoa. A new FAO report also shows that global food security is threatened by climate change, including increasingly frequent drought episodes, geopolitical tensions and changes in trade strategies.

FAO food forecasts

A new edition of FAO’s biennial report on world food markets was released in November: Food Outlook. It contains an analysis of trends in the production of individual food commodities, as well as an overview of the factors affecting them. The report also considers the financial aspects of global food imports, particularly the development of price indices for individual products.

According to FAO data, grain production in 2024 will be slightly lower than the previous year. The 0.4 percent decrease is primarily due to lower corn yields caused by unfavorable meteorological conditions in South America, Europe and southern Africa. In contrast, wheat and rice production is rising, due to a wetter-than-normal season in many regions of the world (such as Australia). Projections for rice production in 2025 are particularly optimistic, which the report’s authors say could increase the level of available food, but at the same time boost ethanol production.

In the 2024/2025 season, FAO also predicts an increase in oilseed crop production, especially soybeans, which will increase in the United States, Brazil and Argentina. In contrast, the weather will reduce European and Canadian canola yields and sunflower seed yields in the Black Sea region. The drought will also negatively affect sugar production in Brazil, which will translate into an overall decrease in global supply of 1.1 percent. As consumption is expected to increase by 1.2 percent, mainly due to increased demand in Africa and Asia, sugar prices rose in September and October this year, although they are still lower than in the fall of 2023.

Meat production is also expected to increase (+1.3 percent), thanks to an increase in global demand for poultry and beef. Nonetheless, prices for meat and meat products will continue to rise, due in part to epidemics among livestock, including avian influenza. Even greater growth is forecast for milk and dairy production (+1.5 percent). And here the main factor is the expansion of herds, especially in Asia, in response to growing demand among wealthy urban citizens. Fish production, meanwhile, will increase by as much as 2.2 percent, linked to the recovery of stocks in Peru after the disaster caused by the impact of El Niño, as well as increased farming, especially in China, India and Vietnam.

Fertilizer market – problems and challenges

Traditionally, the FAO report also focuses on factors shaping the world’s fertilizer supply as an important component of food production. After a marked decline in production in 2022 and a significant increase in 2023, this year sees a stabilization of nitrogen fertilizer supply, a decline in phosphate production and an increase in potash production.

The supply of mineral fertilizers was positively affected by a reduction in fluctuations in the price of natural gas, the main raw material used in the manufacturing process – as a result, nitrogen fertilizer prices fell. In the case of phosphates, however, they remained high as a result of tariff barriers on exports from China, countervailing duties on exports from the US and Morocco, and the restructuring of leading producers.

The fertilizer market remains clearly influenced by political turbulence, with conflict in the Middle East, where 30% of the world’s urea comes from, posing a particular threat to supply. FAO experts additionally point to the problem of extremely energy-intensive ammonia production and the associated high_CO2 emissions. The priority now remains the decarbonization of the entire process, which is possible through the use of renewable energy sources and hydrolysis or electrolysis technologies.

The price of olive oil is rising

Special attention in the FAO report was given to olive oil – a specific product, as it is concentrated in one geographic region and comes from perennial plantations. Spain is the world’s largest producer of it (40 percent of the market), followed by Greece and Italy (10 percent each).

Starting in 2022. Oil prices have been rising consistently and have now reached historic highs. This trend is a result of the severe droughts and heat waves that have plagued southern Europe over the past three years – high temperatures damage the flowers of olive trees and limit fruiting. However, forecasts for the next season are optimistic, and experts expect production and use to increase. Olive tree cultivation remains a major challenge due to rising production costs and, above all, meteorological conditions that are difficult to predict, particularly temperature and rainfall anomalies. An additional problem is diseases and pests, the control of which requires the use of chemical plant protection products.

Increase in value of global food imports – regional differences

According to FAO forecasts, global food imports in 2024 will reach $2 trillion, a 2.2 percent increase over the previous year. The main driver of the increase is the prices of cocoa, coffee and tea, which are rising due to unfavorable meteorological conditions and impediments to international trade. The value of imports of these three products increased by as much as 22.9 percent year-on-year.

The price of cocoa reached a record high of $9.7/kg in April 2024. This is the result of drought and viral diseases emerging in the plantations of Côte d’Ivoire and Ghana, which together produce as much as 50 percent of the world’s cocoa. Also, the price of coffee rose to its highest level ever ($2.6/kg), double the average price of the past 10 years. Unfavorable meteorological conditions in Indonesia and Vietnam contributed to this.

Next year’s crop may also be lower due to a prolonged drought in Brazil, the world’s largest coffee producer and exporter. Drought in India and trade difficulties in the Red Sea, meanwhile, have been responsible for pushing tea prices up to $3/kg, nearly 15 percent higher than the average price over the past decade.

In addition to cocoa, coffee and tea, the higher value of global food imports was also influenced by rising prices for fruits and vegetables (5.8 percent over 2023). The overall balance partially offset the decline in the value of cereal and oilseed imports.

It is worth noting that as much as 66 percent of global food imports were generated by high-GDP countries, which spent more in 2024 precisely as a result of rising prices for cocoa, coffee, tea, fruits and vegetables. Higher middle-income (UMIC) and low-income (LIC) countries, on the other hand, are projected to see a decline in the total cost of food imports thanks to lower import costs for grains and oilseeds.

In conclusion, FAO analysts point out that after a period of steady decline in food price indices from mid-2022 to February 2024, prices began to rise steadily in March. In October, the FFPI index, which includes a standard basket of food products, stood at 127.4 points, the highest level since April 2023. The price indexes for vegetable oils, sugar and dairy products have apparently increased over the past six months.

Without water, there is no food

The FAO report emphatically underscores the impact of climate change, and in particular the droughts and heavy rainfall associated with it, on supply and thus on food prices worldwide. In the case of the aforementioned olive plantations, water scarcity is causing trees to begin to reduce fruiting – in 2023 alone, droughts in Spain led to a 40 percent drop in oil production.

The situation is similar for cocoa cultivation, whose shallow root system is extremely susceptible to drought. In West Africa, the problem is prolonged dry seasons and increasingly unpredictable rainfall cycles – water shortages, meanwhile, can reduce cocoa yields by nearly 60 percent. Not surprisingly, thousands of farmers have seen their yields drop significantly over the past two seasons.

High temperatures and lack of regular rainfall during the growing season also threaten coffee plantations – dehydrated plants are more susceptible to fungal diseases that reduce production and degrade the quality of the aromatic beans. By 2050. Up to 50 percent of coffee plantation acreage may not be suitable for further cultivation. Scientists warn that a similar fate could befall tea, cashews and avocados.

The World Resources Institute published an analysis in October 2024 that shows that competition for water could eventually affect rice, wheat and corn as well, crops that provide more than half of the world’s calories. Already, 33 percent of crops rely on water sources that are subject to high variability or serious threats. And according to preliminary projections, by 2050 there could be as many as 10 billion people in the world who will need to be fed.