The context
Global warming: droughts, floods, plant diseases… coffee, cocoa and oranges are under pressure.
Price surge: poor harvests keep coming, putting processors’ supply chains in difficulty.
Adaptation : producers, industrialists and public authorities are moving forward with adaptation plans to revive weakened production.
The year 2024 was marked by spectacular increases in the markets for tropical raw materials, such as coffee, cocoa and Orange juice. “These price surges are essentially linked to climatic accidents and phytosanitary problems which have hit crops in the main production areas”summary Philippe Chalmin, professor of economic history at Paris-Dauphine University and founding president of CyclOpe, a European research institute on raw materials markets.
For orange juice, yellow dragon disease has seriously affected crops. In three years, this bacterial disease has caused yields in American orchards to plummet. Over a long period, Florida’s production has fallen tenfold, with Brazil now supplying 90% of the world’s concentrated orange juice. However, in the state of São Paulo and throughout the Brazilian “citrus belt”, the level of contamination would have increased from 38 to 44% between 2023 and 2024.
Although global orange juice consumption is stagnant, this contraction in supply has pushed prices to previously unseen heights. “The world price of orange juice has tripled in two years, and it has already increased by 85% over the past year”alert Arnaud Jobard, directeur commercial de Suntory Beverage & Food France. Clearly, the price of Brazilian orange juice concentrate would have gone from 2,000 $ per ton to 7,000 $ in eighteen months, when the pure juice would have increased in price from 580 $ per ton, to 1 350 $ over the same period.
Robusta takes offRobusta coffee (January 2025 futures contract), ICE Futures Europe quote, last daily price, in $/t
Arabica is on fireArabica coffee (March 2025 futures contract), ICE Futures US quote, last daily price, in cts$/lbs
Cocoa rebounds after spectacular Easter riseCocoa (December 2024 futures contract), ICE Futures Europe quote, last daily price, in $/t
Orange juice reaches new heightsConcentrated orange juice (January 2025 futures contract), ICE Futures US quote, last daily price, in $/lbs
A crisis that will last
And the situation is not about to get better. According to estimates published in September by the Brazilian interprofessional association of citrus producers and juice manufacturers, Fundecitrus, the future harvest would be down 30% compared to last year, at 215.78 M boxes ( 1 box = 40.8 kg). “After four consecutive small harvests, the 2025 campaign promises to be the worst in thirty-six years for the citrus belt of São Paulo and the west-southwest of Minas Gerais”announces the Brazilian inter-professional association.
Experts say this tension is likely to continue, because these diseases are persistent and difficult to eradicate. Some agronomic projects aim to develop disease-tolerant orange varieties, but this will take time. The Suntory group has thus established a partnership with Cirad (Centre for international cooperation in agricultural research for development) to carry out an experiment in Guadeloupe, from April 2025, then in Brazil in October 2025.
Coffee has also seen a significant price spike in recent months. “In five years, the prices of arabica have doubled and those of robusta have tripled with significant consequences for processors”notes Vincent Prolongeau, president of JDE Peet’s roaster in France. The market had already suffered a first surge in prices in 2021/2022, linked to frosts in Brazil. Since then, the sector has had to deal with coffee tree diseases, but also climatic problems which have mainly affected the production of robusta, a crop concentrated in four countries, Vietnam, Brazil, Indonesia and Uganda.
With the closure of the Suez Canal, transport is more expensive
Financial speculation on raw materials has further amplified this heatwave. And to make matters worse, the closure of the Suez Canal caused by the war raging in the region is forcing boats from Asia to bypass Africa. “This adds twenty additional days of travel and multiplies transport costs by four”alert Giuseppe Lavazza, president of the roaster that owns the Carte Noire brand in France.
Consequence: the price gap between the traditionally less expensive robusta varieties and arabica has narrowed. “The difference between the two, which was 115 cents per pound, is down to 35 cents. It’s quite extraordinary! »underlines Philippe Chalmin. In November, coffee prices again reached record levels.
Over a rolling year, green robusta rose from 2,300 to 5,200 $/t on the London Stock Exchange, when arabica rose by 180 cents, to more than 380 cents/pound on the New York Stock Exchange. Although a slight easing has been observed in recent weeks, the outlook remains high. “In 2025, we do not see objective reasons for global green coffee prices to fall »recognizes Vincent Prolongeau of JDE Peet’s France.
In order to help coffee producers adapt to the new climate situation, the G7 development ministers validated on October 23, in Pescara (Italy), the creation of a global public-private fund “endowed with 10 billion euros over ten years”according to The Echoes.
Spectacular rise in the price of cocoa
In the cocoa market, another disease, called “witches’ broom”, has affected crops in South America, particularly in Brazil. In Africa, episodes of drought and delays in the renewal of plantations have also worsened the situation. As a result, cocoa prices have seen a spectacular rise, reaching almost $10,000 per tonne by Easter 2024. Currently, it stands at around $7,500 per tonne. “If the 2024/2025 harvest promises to be better than the previous one, we should not return to historic production levels »in advance Patrick Collin, CEO of the Cémoi chocolate group.
The main harvest, which started in October in Côte d’Ivoire, could indeed be quite short. The great volatility of global markets is resulting in more wait-and-see positions on the part of operators, with processors not knowing how consumers will react to the surge in prices. “I estimate that this period of tension should last at least until mid-2025”warns the leader of Cémoi.
“If the 2024/2025 cocoa harvest promises to be better, we should not return to historic production levels. »
Patrick Collin, CEO of the Cémoi group
These fluctuations in the world prices of tropical raw materials will not be without consequences. “The increase is barely reflected on the markets, given the delays between purchases of raw beans and the arrival of processed products in stores”recalls Patrick Collin. According to the latest figures from the panelists, the chocolate bar market has increased by 8.2% since the start of the year (CAD P10), with volumes up 1.7%. In the month of October alone, tablet prices even accelerated by 12% and volumes by 6.4%. According to the boss of Cémoi, chocolate prices could have increased by 30% in one year for Easter!
Weakened businesses
Same observation on the juice side. “We will not be able to continue to absorb all the additional costs alone. Distributors will have to agree to pay more for our products because we want to continue to deliver them all and to promote our brands in stores and on promotion”warns Arnaud Jobard, from Suntory. Especially since the increase in production costs linked to the surge in energy prices and inflation has already weighed heavily on companies’ accounts. Between 2022 and 2024, these additional costs wiped out one year of profit for the subsidiary of Japanese beverage giant Suntory Holdings. For Lavazza, they amounted to 600 million euros over the same period, « the equivalent of two years of Ebitda »according to Guiseppe Lavazza.
More dramatically, the surge in coffee prices has finally deteriorated the financial situation of the roaster Cafés Legal. Placed in receivership by the Paris commercial court on October 8, this flagship founded in 1851 in Le Havre is looking for a buyer. Clear proof that global warming does not only have effects on the melting of glaciers or the rise in ocean temperatures. It also weakens businesses, plunging many employees into uncertainty.
The article is from the December 12, 2024 edition
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