Brewing risks: Cocoa and coffee supply chains face escalating climate pressures

Coffee and cocoa supply chains have suffered pressures from climate risk directly impacting yields through increasing climate-driven diseases. These pressures are creating structural production deficits and heightening price volatility, squeezing profitability for Latin American coffee growers and West African cocoa producers, who together account for about half of global coffee and cocoa production.

Production gaps are widening, driven by climate-induced yield declines and extreme weather events

Frequent extreme weather and inelastic commodity demand are causing price fluctuations, highlighting the need for climate adaptation and mitigation in supply chains to build resilience. In the next 20 years, coffee and cocoa production from key producers will note a ~10%-30% production gap caused by climate change under the SSP2-4.5 medium climate scenario, which is expected to result in global average temperatures rising by 2.7 degrees C (2.1 degrees C-3.5 degrees C) by the end of the century. This does not account for extreme weather events. When you add extreme weather event probability on top of this ongoing risk, the yield losses are significantly amplified. For example, in Ivory Coast, by 2050, drought and wildfire risk will intensify across the major cocoa‑growing regions — San Pedro, Nawa, Gbokle (35% of total production). In addition, prolonged drought conditions are amplified by the yearly Harmattan winds, which bring exceptionally dry, dusty air that accelerates moisture loss from both soil and vegetation. Similar impact will be noted in Ghana, where by 2050, 65% of the cocoa-producing region will be under drought stress. In Latin America, Brazil’s top producer of arabica coffee, Minas Gerais, with 70% of national production, will note increasing drought hazards by 2050 in the western portion of the state, which is part of the Cerrado biome and has an extended dry season. Whereas, in Colombia, more rainfall due to La Niña causes soil waterlogging, increasing the risk of pluvial flooding and landslides. This is concerning given that most of Colombia’s coffee is cultivated on the Andean foothills and other steep terrain.

Production gaps result in direct trade impact, especially for European importers, as well as deforestation risks posing non-compliance with the EUDR

African cocoa and Latin American coffee producers are responsible for 60% and 30% of global exports, respectively. As an implication from changing climate and extreme weather events, European importers face the highest risk from cocoa and coffee shortages, as the European Union (EU) alone imports 40%-60% of total exports from Africa and Latin America. While producer prices are impacted by various factors, such as currency depreciation, global market prices, geopolitical situation and demand drivers, cocoa and coffee producers have noted some significant shifts in weather that have historically tightened supply and created price spikes in the last 10 years. For example, for arabica coffee, in 2020 unusual frost in Brazil has impacted about 11% of the country’s total arabica coffee supplies. The frost was considered the worst since 1994 and lasted two years, eventually impacting 20%-30% of the crops. In Colombia, the prolonged La Niña phenomenon that lasted 2.5 years reduced coffee supply by almost 24% between 2019 to 2022.

For cocoa, heavy rains in Côte d'Ivoire and Ghana between 2023 and 2024 caused plant rot, reducing yields by about 50%. In the absence of additional pesticides and fertilizers, the prices continue to remain high before they normalize.

Deforestation in Ghana and Côte d’Ivoire has declined significantly in recent years, positioning both countries to comply with the European Union Deforestation Regulation (EUDR), which requires that commodities originate from land not deforested after December 2020. However, this progress remains fragile as climate-driven yield declines introduce a growing compliance risk. As cocoa productivity declines under increasing heat and moisture stress, farmers may face mounting pressure to expand cultivation into forested areas to sustain output. This dynamic is further intensified by the loss of forest cover itself, which removes up to 80%-90% of the rainfall recycling that cocoa systems depend on. Without this natural buffer, hotter microclimates and more erratic rainfall patterns emerge, compounding yield losses and reinforcing a cycle of land expansion and environmental degradation.

The implications extend beyond environmental concerns to regulatory and market risks. Cocoa produced on land classified as forest reserves or protected areas is non-compliant with EUDR, exposing producers and supply chain actors to penalties that can include exclusion from public funding and fines of up to 4% of EU turnover. Economically, continued deforestation driven by climate stress risks amplifying production shortfalls, which can quickly translate into sharper price spikes and increased market volatility. As a result, safeguarding forest ecosystems is not only central to meeting regulatory requirements but also critical to stabilizing cocoa supply and mitigating long-term market risks.

Cocoa producers may see geographical shifts in production patterns

Climate change is reshaping cocoa production patterns across West Africa, driving a gradual but significant shift in geographic suitability under a mid-range emissions scenario (SSP2-4.5). Traditionally dominant cocoa-producing regions — particularly in southern and central Côte d’Ivoire and Ghana — are increasingly facing declining yields due to compounding stressors such as rising temperatures, moisture constraints and heightened pest pressures. Key producing areas like Nawa and San Pedro in Côte d’Ivoire, alongside Ghana’s Ashanti and Central regions, are projected to experience sustained declines, with only limited recovery even under lower-emissions futures. At the same time, an emerging belt of climate risk is becoming evident across central and eastern zones in both countries, signaling a broadening exposure of cocoa systems to adverse climate conditions.

In contrast, more resilient and potentially expanding production zones are emerging, particularly in northern and peri-urban regions. Ghana’s Bono East stands out as a notable resilience hotspot, with projected yield gains significantly exceeding historical levels, while areas such as Ahafo and Western North show near-term stability. In Côte d’Ivoire, regions around Abidjan and Grands-Ponts are expected to see modest improvements. These shifts point to a gradual rebalancing of cocoa geography, with medium-scale producers in emerging regions potentially gaining a larger share of output as traditional strongholds lose ground. Overall, the outlook suggests a northward and resilience-driven redistribution of cocoa production, underscoring the need for adaptive strategies and investment to support transition zones and sustain long-term supply.

South American coffee growers await consequences from potential Super El Niño

El Niño and La Niña are interacting with a progressively warmer climate baseline to create new and more complex risk pathways for South America’s arabica coffee sector. Although these climate oscillations have always been part of a naturally recurring cycle, projections indicate that their intensity and frequency may increase under both low- and high-emissions scenarios. El Niño, the warm phase, typically brings higher temperatures and reduced rainfall to key coffee-growing regions in Brazil and Colombia. While warm early-season conditions can initially support vegetative growth and raise yield potential, this benefit is highly time-dependent. As the season progresses, heat spikes and moisture stress during critical flowering periods can undermine yields and reduce coffee quality, amplifying production risks. This year, coffee is expected to have a strong 2026 crop. However, the next cycle of potential Super El Niño puts the crop at risk because heat is stressing flowering in Brazil, and Colombia is also getting drier. These conditions could damage South American coffee in 2027. These same pressures are expected over the coming decades, which adds to the existing long-term risk.

La Niña, by contrast, introduces a different set of challenges, primarily through above-average rainfall in Colombia and shifting precipitation patterns across Brazil. Excess moisture in Colombian regions can disrupt flowering, restrict field access, and heighten the risk of landslides, all of which constrain production. At the same time, La Niña tends to generate rainfall variability across arabica-producing areas, with alternating periods of heavy rainfall and dryness further destabilizing crop development. Together, these opposing yet overlapping climate dynamics increase operational complexity for growers, as they must contend with rapid swings between water excess and deficit. Even where aggregate production remains relatively stable, the growing unpredictability of seasonal conditions complicates farm management decisions and raises the need for more adaptive, climate-resilient production strategies.

Technology adoption on farms has proven to protect yields and create climate resilience

Advancements like new seeds and digital farming boost yields and lower land use. Countries with higher technology adoption show stable yield projections in the SSP2-4.5 scenario, highlighting the importance of investing in ag-tech and sustainable farming for long-term resilience. Brazilian coffee plants are more resilient to temperature and precipitation as technology is quite advanced on-farm. Technological improvements have been adopted by producers since 1984, including increased use of agricultural machinery, the development of new varieties, and the adoption of irrigation techniques. In contrast, lower adoption of crop protection and fertilizer products by Ivorian cocoa producers has caused yields to decline where demand is being met at the expense of increased land-use. As a result of low tech adoption, yields are projected to decline with temperature and precipitation changes, indicating low resilience.

Sustainable agriculture practices such as agroforestry improve soil fertility and climate resilience in coffee and cocoa. While yields may not immediately exceed monocultures, plants show earlier flowering, improved quality and lower heat‑related yield losses over time. Adoption of sustainable agriculture practices can contribute to yields that are stable in the long term.