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How Much Should a Cup of Coffee Actually Cost?

We investigate if you're really getting ripped off, or are just a caffeine addicted parasite feeding off the third world.

by Wendy Syfret
Oct 28 2015, 5:48am

Image via Flickr use julochka


The price of coffee is an incredibly loaded topic. Asking how much a cup should cost raises questions that touch on economics, the environment, human rights, food miles, biodiversity, free trade, aesthetics, happiness, entitlement, and individual perceptions of worth. But despite the philosophical weight of a latte, most of us would agree that anything over $5 feels like a huge, douchey rip-off.

Before this article I thought I had it figured out. After all, I'm from Melbourne and we're the gatekeepers of being dicks about this stuff. Short or long blacks should be $3, lattes and flat whites $3.50, and anything with non-dairy milk $4. Cappuccinos don't count because only mums buy them and they always order them in a mug so it throws everything off.

But when you attempt to break down what actually goes into a cup, things quickly becomes more complicated. To find an answer we called a bunch of people who think about coffee everyday, and soon realised we barely understood the question.

Mark Free, owner of Everyday Coffee:

I don't think there is any one price you can give a cup. There are different quality factors to consider: how the coffee was prepared, picked, processed, where you're buying it from, and how much they pay in rent and staff.

A $20 cup would need consideration at every point, but if it tastes good it should be compensated accordingly. Think about how a $1 coffee from 7/11 tastes, and then how many times better a coffee from somewhere else does. If you multiply the price by that number, it wouldn't take long to hit $20.

Answer: Between $2 and $20

Molly Harriss Olson, CEO of Fairtrade Australia:

I think $3.50 is a lot for a cup of coffee. Especially when you consider what if would cost to buy directly from the farmer. We sell green Arabica beans at US$1.40 a pound—that's a Fairtrade price with a sustainable cost of production built in.

Obviously you then calculate transportation and production costs, but I still think $3.50 is a lot. That price, in theory, is enough to maintain a minimum living wage for the farmers and look after the environment.

Answer: $3.50

Wayne Fowler, managing director at The Coffee Economist:

From the research we've done and looking at the market, people are prepared to pay between $3.50 and $4. I'm prepared to be guided by the research and say that's the right price. People will only continue to buy things if they're correctly valued—and people continue to buy coffee.

Answer: $3.63, the average national price established by coffee-prices.com

Dr Sean Burges, Deputy Director of Australian National Centre for Latin American Studies:

I think a cup of coffee could be less if we took a serious approach to helping the growers and did more of the processing work overseas. Countries like Australia bring in raw beans and roast, dry, and process them here, meaning the growers and their cooperatives are excluded from almost the entirety of the value chain.

Boutique brewers aside, why can't the coffee be roasted by growers cooperatives in Brazil, Colombia, Ecuador, Uganda, wherever and then imported? The tariff rates to import roasted, ground coffee to Australia are effectively zero, meaning it's cultural convention that we insist on "Italian" or "Australian" roasted beans. Given most of the coffee we drink is mass processed, why don't we insist the bulk of our "fair trade" coffee value chain remain in the producing country?

The counterintuitive point is if we did the roasting in the country of origin it might bring the price of a cup down because labour and production costs in countries such as Ethiopia and Colombia are significantly less than Australia. We would probably only save five to ten cents on the cost of our morning cup of coffee, but producing economies would likely gain ten cents a cup, earning serious additional income that can positively transform rural communities in a sustainable manner.

Answer: $3.95

If you can't figure it out, you could just trust your barista isn't ripping you off. Image via Flickr user zense

Max Olijnyk, writer and coffee drinker:

If I'm paying more than $4.50 I notice. I have paid more, but I haven't gone back for it. I just want to get change from a fiver, I don't want to give the guy a five dollar note, and him be like, "Can you give me some more money please?" It's something you should be able to buy in change.

But I trust these guys (the retailers) to set the price—especially the ones I know really care about it. I kind of find it annoying that people spend so much time worrying how much their coffees are. Everyone buys their stupid coffee in the morning and they all have an opinion about it. But there are worse things in the world than an expensive cup of coffee.

Answer: $4 to $5

Rebecca White, horticulturist:

I feel ripped off at $4.50, but if you want to factor in fair trade, environmental impact, compensating workers, enforcing a minimum wage, the cost of chemicals or fertilisers, and the lower yields from organic farming it should be double that.

Coffee crops are monocultures, you have low diversity so over time it becomes really easy for biological pests to take over. The situation has actually got much worse in recent years; it's a big concern with coffee. One fungus could just annihilate it all.

Then you consider the western demand for fair trade and organic products. Farms that cater to that are smaller because they're harder to manage without herbicides and pesticides, and organic crops naturally have lower yields.

Over the past decade coffee price has maybe risen a dollar, but it doesn't reflect how much harder the production has got in that time.

Answer: $10 a cup minimum. $15 if you have milk, factoring the environmental impact of dairy farms

Bet you didn't know how easily the whole world's coffee berry crop could get obliterated. Image via Flickr user Malcolm Manners

Kym Anderson, Professor of Economics at Australian National University:

Price is determined by the interaction of the "worth" that consumers perceive on the demand side, and what it costs to produce on the supply side. The price of something like coffee tells you about the attributes that people value. I see my students walking around with five dollar polystyrene cups of coffee, there are queues out the door for it and no shortage of demand. If people are willing to pay that, it's the correct price. If people are paying $15, that is also the correct price. No matter the price, if it is being sold, it is the right amount.

Answer: Whatever we accept and are willing to pay.

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