It had been five years since my last visit to Honduras, and much has changed in the coffee industry during that time— the creation of the European Union Deforestation Regulation (EUDR) to give an example. However, one of the most striking changes, and a topic of widespread conversation, is the dramatic shift in the New York Arabica Futures Market.
Back in February 2020, prices were languishing in the once familiar territory between 100 and 130 US c/lb. By the time I arrived in Honduras in February 2025, the market had soared to a new record high of 388.95 US c/lb. Over the course of my trip, the price continued to climb, reaching 440.05 US c/lb—a fourfold increase! While we are all aware of the high prices being paid for coffee in destination countries like those in Europe, I wanted to dig deeper into the impact of these prices. Are high prices purely beneficial for farmers, cooperatives, and exporters, or is the situation more nuanced?
Farmers’ Perspective
My first stop was the Capucas Cooperative, a long-time partner of ours. When I asked Omar about the effect of these high prices, his smiley face shifted to one of quizzical concern. For years, many farmers had felt that coffee prices were too low to cover production costs and generate a reasonable profit. Now, with the higher New York futures prices, farmers are receiving more money per kilogram of coffee, which they can reinvest back into their farms or use for other purposes, such as funding a child’s school or university education.
However, as I soon learned, rising market prices pose a dilemma for farmers as they also lead to increased expenses for them. As pickers become more aware of market movements, they demand higher wages. Since pickers are usually paid on a weekly basis, farmers must have enough cash on hand to meet their wage obligations. This can be challenging, especially when nearly a year has passed since the farm’s last cash injection from the previous harvest, and wages have risen substantially. In many cases, the farmer will not receive payment for the coffee until after it has been dried and delivered to the cooperative, which may take several more weeks.
A further complication arises when, in subsequent years, the market may contract, but pickers will still demand the higher wages established during the high-price period. This creates a financial strain, locking farm owners into elevated expenses for years to come—similar to the effects of a minimum wage increase in European countries.
Later in my trip, when discussing the issue with our suppliers, Solcafe, I heard anecdotal reports of other businesses—such as car mechanics—raising their fees simply because they had heard exaggerated rumours of the farmers’ newfound wealth. As well as this, Delmi and Nicolle from Beneficio San Marcos shared concerns about the theft of cherries directly from the trees, a problem exacerbated by the rising value of the fruit. Fortunately, such incidents seemed to be rare.
While high prices are theoretically beneficial for farmers, the reality is that these gains will only be realized if they have access to a market willing to purchase their coffee. With roasters purchasing lower volumes, the impact of this is felt further down the value chain, reaching the importer, exporter, and cooperative.
One unintended consequence of the high market prices—one that may seem counterintuitive—is the potential decline in coffee quality. Some farmers fear that if they take too long to collect and process their coffee, they might miss out on the current price surge. This fear was particularly heightened this year due to rain delays that pushed the harvest back by over a month in Honduras. As a result, some producers have opted to process washed coffees instead of naturals or honeys, or experiment with new processes to shorten drying times. Feedback from some of our suppliers indicate that this year it may be more difficult to find speciality microlots.
Cooperatives and Exporters’ Perspective
Across the board, every supplier I spoke with shared a common challenge: despite the high prices, the bank would not increase their credit limits, leaving them without the cash flow needed to purchase coffee from their farmers. This issue is compounded by the high borrowing interest rates in Honduras, which are currently just above 14%. For many businesses, the cost of storing coffee is simply too high. In addition, the backwardation in the market (where future contracts are priced lower than spot contracts) forces suppliers to adopt a “buy to sell” strategy, meaning they can only purchase coffee when they are confident they can sell it. This changes the dynamic of where the coffee is physically sitting. By now it would usually be in a Co-ops warehouse, perhaps already graded and prepped for export, but in many cases, it is still with the farmer.
APROCACERCHIL
Is This High Market Here to Stay?
What could bring an end to these high prices? While these prices may benefit farmers in some ways, for most other participants in the value chain, the situation appears to be less advantageous. From my time in Honduras, it was clear that the dilemma has not stifled investment in coffee, with new mills and warehouses dotted around the countryside. Given the current circumstances, it seems likely that farmers will either expand their coffee-growing areas or seek ways to increase productivity.
The Honduran government has already launched a program to distribute 20 million coffee trees in an effort to boost the industry, recognising the vital role coffee plays in the national economy. While this is a medium to long-term strategy, if farmers in other countries adopt similar plans, it could shift the balance of supply and demand. On the other hand, the unpredictability of global weather patterns is increasingly affecting coffee harvests, and regimented harvest cycles may soon become a thing of the past, leading to lower output and increased market volatility.
Politics plays a role here too. As rhetoric from the Trump administration sounds around wall building and deportation more people may be forced to seek livelihoods in coffee-growing regions of Central and South America. And, of course, we cannot forget that the best cure for high prices is often… high prices.
