The global coffee market is facing an imbalance of supply and demand. Demand for coffee beans is steadily increasing worldwide, driven by the popularity of coffee shops or cafes and the growing coffee-drinking culture in various countries.
However, coffee production is facing challenges due to limited supply. This condition has driven the trend of coffee prices to increase since the last 5 years.
The crop, which thrives in the tropics, is facing challenges as the global climate worsens. Coffee production is in danger of declining. Extreme weather patterns such as prolonged drought or excessive rainfall have damaged coffee plantations in many major producing regions, including Brazil, Vietnam, Colombia and even Indonesia.
This symptom has been reflected over the past decade. There has been a downward trend in production since 2021 in major coffee-producing countries. Although production increased slightly in 2023, the growth was not enough to meet global demand. As a result, prices have increased.
Indonesia as one of the world's largest coffee producers - 4th place with a 6% share of world production - is also feeling the impact of this phenomenon. In 2018, Indonesia managed to achieve production of 10.7 million 60-kg bags. However, in the following year, production fell slightly to 10.6 million 60-kg bags.
Until 2024, Indonesia has managed to maintain production at 10.7 million 60 kg sacks.
The Sumatra region ranks first as the main coffee producer in Indonesia. The provinces of South Sumatra (209,470 tons), Lampung (141,930 tons), North Sumatra (91,900 tons), Aceh (71,080 tons), and Bengkulu (54,090 tons) contributed.
Furthermore, in Java, coffee production came from East Java (48,050 tons) and West Java (25,550 tons) as the main producers. Eastern Indonesia was contributed by South Sulawesi (30,630 tons) and East Nusa Tenggara (25,830 tons).
To keep production from declining, one solution that has proven effective is the diversification of coffee varieties that are more resistant to diseases and extreme climates, such as species-specific robusta varieties. In addition, sustainable farming practices that conserve water and improve soil health have also been implemented to ensure long-term production sustainability.
As the world faces a similar supply crisis, one approach is to optimize collaboration between government, industry and farmers. Training programs for farmers on better farming practices, provision of improved seeds, and financial support for investment in irrigation technology are some examples of solutions that have been implemented.
In some South American countries, for example, programs that focused on rehabilitating old plantations and replanting with new varieties succeeded in restoring production after a sharp decline.
To meet today's challenges, both past solutions and new innovations are possible. In addition to improving crop resilience and agricultural practices, it is also important to build more efficient and transparent supply chains.
Governments and coffee companies must work together to ensure that farmers get a fair price, which encourages them to continue investing in coffee production. Ultimately, a balance between demand and supply can only be achieved through collective efforts focused on climate resilience, innovation, and coffee farmer welfare.
