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Nigeria is feeling the impact of the global coffee crisis as futures prices surge by over 30% due to severe supply disruptions caused by drought in Brazil, the world’s largest Arabica coffee producer.

In Nigeria, coffee prices have doubled in 2024, with popular brands like Nescafe and TopCafe experiencing significant hikes.

For instance, “Nescafe 3 in 1” spiked to N34,000 per carton in August, up from N28,000 in May, and a steep rise from N18,000 last year.

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The rainfall shortage in Brazil, which began in April, has led to a sharp decline in coffee production, sparking a global rush to secure supplies.

This has driven up coffee futures, with U.S. Coffee Futures and Arabica Futures both soaring by more than 30% in 2024, impacting markets worldwide, including Nigeria.

What You Need to Know: 

  • U.S. Coffee Futures and Arabica Futures reflect the global supply and demand for coffee.
  • Futures contracts are financial agreements to buy or sell an asset at a future date and set price.
  • In 2024, coffee futures surged due to supply shortages, leading to scarcity and price hikes.
  • The primary cause is a severe drought in Brazil, which has drastically affected coffee harvests.
  • Coffee plants require 60–90 inches of rainfall annually to thrive, but levels fell below 30 inches in key producing areas, causing significant crop losses.
  • In Nigeria, inflation has exacerbated the situation, pushing coffee prices even higher.

Coffee Price Hikes in Nigeria: 

Brazil’s supply disruptions have caused coffee prices to spike globally, with Nigeria feeling the pinch. According to a supermarket owner in Ikeja, Lagos, coffee prices have doubled this year.

“Nescafe Gold, which sold for N4,800 last year, now goes for N8,500,” she said. 

A wholesaler in Ikeja also reported that “TopCafe 3 in 1,” which was priced at N16,000 per carton last year, has surged to N26,000 in 2024. Similarly, Nescafe Classic, once N1,500 per tin, now sells for N2,500.

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A wholesaler from Alaba Market confirmed that coffee prices, which were already rising earlier in the year, saw further spikes between July and September.

“For instance, Nescafe 3 in 1 increased from N28,000 per carton in May to N34,000 in September, compared to N18,500 in 2023,” she explained. 

Business owners attribute the price hikes in Nigeria to a combination of factors, including inflation, higher raw material costs, increased import expenses, and the pricing strategies of companies.

Supply Disruptions in 2024: 

The sharp rise in coffee prices is largely due to extreme weather in Brazil, where drought conditions have severely impacted regions known for Arabica bean cultivation.

  • Coffee plants, which thrive in hot, humid climates with moderate rainfall, have been hit hard by the severe rainfall shortage in 2024, which fell far below the 30-inch threshold needed for healthy yields, leading to poor harvests and rising prices.
  • Historically, coffee prices have spiked during periods of supply disruption. In 2011, prices reached $2.99 per pound due to issues in Colombia.
  • After stabilizing, prices surged again to $2.39 per pound in August 2022. By September 2023, coffee futures had settled at $1.46 per pound, but the drought in Brazil triggered another rally in 2024.
  • In April 2024, trading volumes surged by over 3,199%, pushing prices higher. As of September 2024, coffee prices have exceeded the $2.39 per pound mark from 2022 and are approaching the 2011 peak of $2.99 per pound.
  • Experts are calling for improved agricultural practices to mitigate the impact of climate change on coffee production.
  • They recommend better irrigation systems and advanced rainfall forecasting to prevent future supply shocks and stabilize global coffee prices.

Nairametrics

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