The Price Gap Problem: Why Producers Earn Less While Coffee Prices Rise

Global coffee prices have shown significant volatility in recent years, yet higher market prices do not always translate into better income for producers. According to the International Coffee Organization (ICO), the composite indicator price averaged around 160 US cents per pound in 2024, with peaks well above that level during periods of tight supply. However, studies from the International Trade Centre indicate that farmers typically receive less than 10 percent of the final retail value of coffee. This imbalance highlights a persistent disconnect between global market prices and farm level profitability.

One of the key reasons for this gap is the structure of the coffee value chain. Costs related to exporting, logistics, roasting, branding, and retail significantly increase the final price of coffee, often leaving producers with a relatively small share. At the same time, rising input costs such as fertilizers, labor, and farm maintenance are putting additional pressure on producers’ margins. In some producing countries, these costs have increased by over 20 to 30 percent in recent years, according to data from the Food and Agriculture Organization (FAO), further reducing profitability despite higher market prices.

For buyers and traders, this issue is becoming increasingly relevant as sustainability and long term supply depend on producer viability. More companies are exploring direct trade models, price transparency, and long term contracts to help ensure more stable incomes at origin. Understanding how value is distributed across the supply chain allows buyers to make more informed sourcing decisions while supporting a more balanced and resilient coffee industry. As the market evolves, addressing the price gap may be essential to securing both quality and future supply.