A new FAO report examines why coffee, cocoa and tea prices can fluctuate sharply. Supply and demand changes explain more than 90% of observed short-term price movements, while broader economic conditions play a smaller role. Production is highly concentrated: Brazil and Viet Nam produce nearly half of global coffee, while Côte d'Ivoire and Ghana provide over two-thirds of cocoa. This concentration allows disruption in a few countries to affect international markets quickly.
Smallholder farmers face direct exposure to global shocks, but price increases do not automatically deliver equal gains across the value chain. Raw crops form only part of the final retail cost, which includes processing, distribution and marketing. FAO recommends climate-resilient farming, stronger pest management and better market transparency. More local processing, certification and branding could also help producers capture a fairer share of value.