Bitter Brew: How Rising Coffee & Cocoa Prices Threaten Supply Chains—And What Suppliers Can Do About It

Coffee and cocoa prices have reached record highs due to climate change, extreme weather, and crop disease. What to do?

Feb 20, 2025

Image: biochar-coffee-farm-insetting

The Commodity Crisis: What’s Happening?

Coffee and cocoa prices are soaring—and it’s not good news for anyone. Coffee futures have hit 50-year highs, while cocoa prices have more than doubled in the past year, surpassing $12,000 per metric ton. Extreme weather, climate change, and crop diseases are wreaking havoc on supply, pushing traders, brands, and farmers into crisis mode. Traditional hedging strategies—like futures contracts—are failing to stabilize costs, leaving traders scrambling for a new playbook.

The root of the problem? Climate volatility is no longer an occasional shock; it’s the new normal. Droughts in Brazil, erratic rains in Vietnam, and rising temperatures across West Africa have slashed yields. Coffee leaf rust and cocoa swollen shoot virus are decimating crops. Even when farmers get higher prices for their beans, production costs—fertilizers, labor, and disease management—have skyrocketed, leaving many worse off than before.

How This Crisis Hurts Every Stakeholder

Farmers: Smallholders—who produce ~60% of the world’s coffee and most cocoa—are seeing lower yields and rising costs, forcing some to abandon their crops.
Traders: The traditional hedging model is breaking down. Price volatility is triggering massive margin calls, squeezing liquidity, and making it harder to secure supply.
Brands: Manufacturers struggle to pass on rising costs to consumers, while shortages force difficult sourcing decisions.
Consumers: Prices rise, and quality may decline as brands adjust blends or switch origins to cope with scarcity.

Bottom line: The old way—relying on market cycles and short-term fixes—won’t work anymore. Traders and brands must invest in long-term supply resilience.

The New Hedge: Investing in Farm-Level Resilience

To weather the storm, forward-thinking traders are moving beyond financial hedges and adopting “field hedges”—on-the-ground investments in climate resilience. Two of the most promising solutions are agroforestry and biochar.

Agroforestry: The Time-Tested Solution

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Agroforestry integrates shade trees into coffee and cocoa farms, mimicking natural growing conditions. Benefits include:

Temperature control: Shade trees buffer against extreme heat, reducing plant stress.
Soil & water retention: Healthier soils retain more moisture, helping farms survive droughts.
Higher yields & quality: Slower cherry ripening in shaded environments can enhance flavor and boost long-term output.
Diversified income: Intercropping with fruit or timber trees provides additional revenue streams, reducing financial risk.

Several leading coffee and cocoa traders already invest in agroforestry, helping farmers transition to more resilient systems. But agroforestry alone isn’t enough—soil health must be addressed, too.

Biochar: The Next Big Opportunity

Biochar is a charcoal-like soil amendment made by heating organic waste in low-oxygen conditions. It’s gaining traction as a game-changing solution for coffee and cocoa farms.

Soil moisture retention: Helps soil hold water, reducing drought stress.
Nutrient efficiency: Locks in nutrients, reducing dependency on expensive synthetic fertilizers.
Yield stability: Trials in Ghana and Brazil show biochar can increase yields while reducing disease susceptibility.
Carbon sequestration: Unlike agroforestry, which takes years to mature, biochar delivers immediate carbon-removal benefits—valuable for traders with decarbonization goals.

Unlike traditional financial hedging, biochar and agroforestry hedge against physical supply risk—ensuring stable, long-term production.

The Business Case: Why Traders Should Act Now

Secure reliable supply: Invest today to build a steady, loyal supplier base tomorrow.
Stabilize costs: Climate-smart farms experience fewer yield crashes, reducing price-volatility risk.
Meet Scope 3 targets: Biochar and agroforestry directly contribute to decarbonization and insetting opportunities.
Differentiate: Buyers seek sustainability-driven suppliers; first movers win contracts and market share.

A Smart Investment for the Future

Coffee and cocoa supply chains face existential threat; business-as-usual won’t cut it. The smartest traders and brands are shifting from reactive crisis management to proactive resilience investments.

Agroforestry and biochar aren’t just sustainability initiatives—they’re strategic hedges against climate risk, input-price volatility, and supply shortages. Investing in them isn’t charity; it’s how we secure the future of these essential commodities. The choice isn’t whether to act—it’s whether to act now or be left behind.

About Valorize Systems

Valorize provides comprehensive management software for organizations developing waste-to-value projects. Their end-to-end platform enables companies to develop, verify, and monetize biomass valorization programs through offsets or insets, with specialized expertise in biochar and other nature-based solutions. Operating in 10 countries across five continents, Valorize’s solution helps companies maximize the financial and environmental returns from their carbon projects. For more information, visit ValorizeSystems.com.