PAGAR ALAM, Indonesia -- In southern Sumatra, the cost of global warming stares Rusi Siruadi in the face as he surveys the stunted trees on his coffee farm.

On a plot of land a little bigger than a soccer field, Siruadi expects his robusta bean crop to shrivel by nearly a third from last year's level once harvesting is wrapped up in late September. Robusta beans, often used to manufacture instant coffee, account for 80% to 90% of the crop across Indonesia, one of the world's top five coffee producers.

The culprit, Siruadi told Nikkei Asia, is the kind of extreme, erratic rainfall Indonesia has seen since last year. Scientists attribute those weather patterns to human-induced climate change "The branches have shrunk and the flowers have rotted because of the prolonged rain since last year," said Siruadi, 53, who has been growing coffee around his home for 10 years. "It will take two to three years for the trees to recover their production." Siruadi's experience points to how climate change is convulsing through Indonesia's coffee supply chain, with major implications for the nation's growers, exporters and consumers alike. The U.S. Department of Agriculture (USDA) forecasts that in the current marketing year, Indonesia will be the only top-five producer to see its crop shrink.

The culprit, Siruadi told Nikkei Asia, is the kind of extreme, erratic rainfall Indonesia has seen since last year. Scientists attribute those weather patterns to human-induced climate change "The branches have shrunk and the flowers have rotted because of the prolonged rain since last year," said Siruadi, 53, who has been growing coffee around his home for 10 years. "It will take two to three years for the trees to recover their production." Siruadi's experience points to how climate change is convulsing through Indonesia's coffee supply chain, with major implications for the nation's growers, exporters and consumers alike. The U.S. Department of Agriculture (USDA) forecasts that in the current marketing year, Indonesia will be the only top-five producer to see its crop shrink.

Rusi Siruadi shows harvested coffee beans at his farm in Pagar Alam in southern Sumatra, Indonesia, on June 30.

To make matters worse, weather forecasters are predicting that the currently developing El Nino weather pattern will be extremely strong, extending into next year.

El Nino could increase the risk of severe drought in key producing regions, potentially disrupting flowering and further depressing Indonesia's already-low yields. Robusta farmers typically harvest less than 1 metric ton per hectare, partly because the use of higher-yielding seeds remains limited and many growers still depend on local planting materials, according to the USDA. That compares with around 3 tons per hectare in Vietnam, the world's second-biggest coffee producer, only surpassed by Brazil.

Indonesia's predominantly smallholder-based coffee industry also relies heavily on traditional farming methods, with many growers dependent on rainfall and sunlight to boost yields. "Coffee here is highly dependent on the weather," said Siruadi, whose farm sits about 1,150 meters above sea level. "Even three months of hot weather can cause the fruit and leaves to fall." Experts at BMI, a unit of Fitch Solutions, said they expect the "strengthening of the ongoing El Nino event to elevate downside risks to production, particularly across weather-sensitive producers in Asia." They warned that a strong El Nino poses particular risks to robusta growers, including those in Indonesia.

Indonesia's predominantly smallholder-based coffee industry also relies heavily on traditional farming methods, with many growers dependent on rainfall and sunlight to boost yields. "Coffee here is highly dependent on the weather," said Siruadi, whose farm sits about 1,150 meters above sea level. "Even three months of hot weather can cause the fruit and leaves to fall." Experts at BMI, a unit of Fitch Solutions, said they expect the "strengthening of the ongoing El Nino event to elevate downside risks to production, particularly across weather-sensitive producers in Asia." They warned that a strong El Nino poses particular risks to robusta growers, including those in Indonesia.

USDA numbers forecast Indonesia's production of green, or unprocessed, coffee in the 2026/27 marketing year will fall 8% from the previous year to 11.38 million bags. Each industry-standard bag weighs 60 kilograms.

Indonesian coffee industry officials dispute that prediction, but like Siruadi, the USDA cites excessive rainfall during the flowering and fruit-development stages in robusta-producing areas of southern Sumatra and parts of neighboring Java.

See also 'Godzilla' El Nino menaces farmers from India to Australia Indonesian Trade Ministry data show coffee exports slumped to $614 million in January-May, down a third from the same period the year before.

The decline came off an unusually strong 2025, when the value of the nation's coffee exports jumped 53% as Indonesian suppliers helped fill the gap from reduced Brazilian shipments, highlighting the volatility of a global market increasingly exposed to weather-related production disruptions. If accurate, the USDA's projection would see Ethiopia overtake Indonesia as the world's fourth-largest coffee grower, with Brazil top, Vietnam second and Colombia third.

But Irfan Anwar, chairman of the Indonesian Coffee Exporters and Industries Association, queried the projected decline, with harvesting still under way in several producing regions. Robusta-heavy Sumatra churns out around 70% to 75% of Indonesia's green coffee, while more delicate arabica beans -- roasted for specialty brews -- are mostly produced in Java and northern Sumatra. Robusta beans -- often used to manufacture instant coffee -- are seen at a farm in Pagar Alam.

"I don't believe production is falling because we are still at the end of the harvest season," Anwar told Nikkei Asia. "Overall, there is no production problem. Arabica prices have risen, and robusta prices are also starting to increase as demand remains strong." Anwar expects annual output to grow by 1% to 2%, saying attractive prices should encourage farmers to invest more in maintaining their plantations. Coffee has become considerably more profitable for growers than it was a decade or two ago, he said, encouraging more intensive cultivation.

"I don't believe production is falling because we are still at the end of the harvest season," Anwar told Nikkei Asia. "Overall, there is no production problem. Arabica prices have risen, and robusta prices are also starting to increase as demand remains strong." Anwar expects annual output to grow by 1% to 2%, saying attractive prices should encourage farmers to invest more in maintaining their plantations. Coffee has become considerably more profitable for growers than it was a decade or two ago, he said, encouraging more intensive cultivation. Farmers and traders on the ground across several producing regions, however, say the industry is under pressure. Climate change is convulsing through the coffee supply chain in Indonesia, hitting farms like this one in Pagar Alam.

In Takengon, Aceh, in northern Sumatra, coffee grower Furqan said a landslide during severe flooding late last year destroyed half his plantation, reducing it to a single hectare. Furqan, who like many in Indonesia, goes by only one name, said the disaster also damaged infrastructure used to move arabica coffee toward Medan, a major processing and export hub, raising transportation costs.

In Garut, West Java, arabica grower Enung Sumartini harvested only about one-third of her 2024 crop this year. The lack of supply has made selling to the local market more attractive than exports, she told Nikkei Asia.

"Arabica prices are elevated, but without volume, exporting is difficult. Selling locally yields better margins anyway," said Sumartini, who also runs the Mahkota Java Coffee roastery near Mount Papandayan. The pressure is spreading down the value chain. Besemah Coffee Shop-owner Hikmah Zahara, right, and her husband in Pagar Alam have seen profit margins narrow to 15% to 20% from about 30%.

Besemah Coffee Shop in Pagar Alam has seen its profit margin narrow to 15% to 20% from about 30%, according to owner Hikmah Zahara. It's not just coffee beans that have become more expensive -- electricity, fuel and packaging costs have also risen. Zahara said the shop has hiked prices to offset some of the higher costs, but is reluctant to pass on further increases as demand from both individual customers and souvenir shops has weakened.

"For us, the priority is to retain our customers," she said. "But with costs rising, we have had no choice but to raise prices by 10% to 20%." The picture is different for larger coffee chains due to their greater access to capital. Fore Kopi Indonesia, one of the country's publicly listed coffee chains, reported that first-half 2026 revenue jumped more than 50% from the same period a year earlier to around 1 trillion rupiah ($61 million), while net profit climbed more than a third. The company added 40 outlets during the first half, including in smaller cities across the country, as it continued expanding after raising 353 billion rupiah in an April 2025 initial public offering.

Fore Kopi Indonesia, one of the country's publicly listed coffee chains, reported that first-half 2026 revenue jumped more than 50% from the same period a year earlier to around 1 trillion rupiah ($61 million), while net profit climbed more than a third. The company added 40 outlets during the first half, including in smaller cities across the country, as it continued expanding after raising 353 billion rupiah in an April 2025 initial public offering.

But even bigger coffee businesses ultimately rely on the same supply base. At a warehouse in Pagar Alam's traditional market, coffee aggregator Sutomo Kesuma said he has watched arrivals from farmers fall by 50% to 70%. Kesuma's family has operated the business since 1978, but he remains a middleman rather than a direct exporter because he lacks the capital and processing equipment needed to sell overseas.

A woman rakes coffee beans spread out on a road to dry in Pagar Alam. At Asia Makmur, a processor and exporter based in Lampung on the southern tip of Sumatra, founder Budi Setiawan told Nikkei Asia supplies from local aggregators have dropped by about 30%. The company sells to Amsterdam-headquartered Jacobs Douwe Egberts, one of the world's leading coffee suppliers, as well as Indonesian coffee company Kapal Api.

"This is the most difficult year in the coffee business," said Setiawan, who entered the industry in 1991 as a laborer before becoming a coffee broker and eventually building his own export business. "Purchasing beans locally is sometimes more expensive than current export market rates." Setiawan said smaller exporters are losing ground to multinational traders with cheaper financing and stronger risk-management capabilities. Larger companies can buy more aggressively when supplies tighten, hold inventory and hedge against price swings.

Budi Setiawan, the founder of coffee processor and exporter Asia Makmur, faces growing competition from foreign rivals.

"From 2012 to 2016, I was the top exporter here," Setiawan said from his warehouse, about 4 kilometers from Panjang port, Indonesia's main robusta export hub. "Since then, foreign competitors like Louis Dreyfus Co. have expanded rapidly, offering higher prices directly at the village level -- often paying more than local brokers can afford." Indonesia's traditional coffee trade can involve farmers selling through village collectors, regional aggregators and exporters before beans reach ports. Domestic industry players say that structure can add costs and make tracing coffee to individual farms more complicated just as overseas markets demand greater transparency.

The European Union's move to introduce rules to protect the environment by passing its deforestation regulation or EUDR, will require companies to demonstrate that coffee placed on the EU market is not produced in deforested areas and to provide information tracing its origin. The requirements are due to apply from Dec. 30 for large and medium-sized operators, with most micro and small operators following from June 30.

Full of beans: Workers shift sacks of coffee at an Asia Makmur factory in Lampung on the southern tip of Sumatra.

At the Indonesian Coffee Exporters and Industries Association, Chairman Anwar said his group has yet to see the regulation have a significant impact on exports to Europe. He also challenged the view that Indonesia's coffee supply chain is too long, saying foreign buyers are increasingly going directly to producing areas. Farmers capable of meeting export requirements have opportunities to sell more directly, he said. Anwar said that overseas buyers -- including from Japan -- regularly visit producing areas in northern Sumatra's Takengon seeking information about farmers and their plantations.

But Japan illustrates how market access is increasingly dependent on quality and traceability, not just price.

Fajarini Puntodewi, director general of national export development at Indonesia's Trade Ministry, said Japan has entered a "third wave" coffee market in which buyers and consumers place greater emphasis on traceability, consistent flavor, food safety and sustainable production.

Tighter requirements -- including maximum limits on pesticide residue -- pose another challenge for Indonesia's smallholder-dominated industry, where quality can vary among producers.

If the demand from Japan's buyers has grown, imports from Indonesia have not. According to Indonesia Trade Ministry data, the value of coffee exports to Japan fell to $61 million in 2025, down nearly a third from $89 million in 2024. A worker harvests coffee beans at a farm in Pagar Alam on June 30.

"Maintaining consistent quality from upstream to downstream is increasingly important for competitiveness in the Japanese market," ministry official Puntodewi said. Puntodewi attributed the broader decline across Indonesia's exports so far this year to changing global market conditions as well as fluctuations in domestic production. Coffee prices, meanwhile, have started to stabilize after sharp increases last year, she said.

The government is promoting replanting, good agricultural practices, improved post-harvest processing, certification and traceability to raise productivity and improve quality consistency, Puntodewi said. The measures are aimed at helping Indonesian coffee meet increasingly demanding overseas markets, while preserving the distinctive characteristics of bean origins such as Gayo, Toraja and Java.

Time for a brew: A drink is prepared at the Besemah Coffee Shop. Back in Pagar Alam, though, coffee farmer Siruadi believes government support needs to be closer to the farm, particularly to improve access to fertilizer, which can be scarce and which has rocketed in price since the Iran war crisis slashed global supplies passing through the Strait of Hormuz.

Still, coffee remains central to life and household finances for many in the area, regardless of where prices move next.

"At around 50,000 rupiah ($2.83) a kilogram, the price [of robusta] is comfortable for farmers for now, depending on the size of their farms," Siruadi said.

"But whatever the price, farmers will sell their coffee because it is one of our main sources of income -- for our children's education, building houses, buying cars and even making the pilgrimage to Mecca." Fathiya Dahrul is a contributing writer.