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  • Writer's pictureGrant Foad

Climate & Coffee (pt. II): Sometimes it Does Come Down to Money

Welcome to Part II of our three-part article on coffee and its relationship with a shifting climate.

Before we can begin to consider solutions in the form of innovative social or environmental intervention strategies, we must first make ourselves familiar with the value chain of coffee. We will specifically follow that of specialty Arabica coffee, in reverse, from the cup in your hand to smallholder farms in Colombia.

AMACA, Cauca, Colombia. 

Photo by: Victor Pagan. Courtesy of Cafe Imports.

Business Insider cited 2022 data from NPD Group, a market research company, which stated a single cup of coffee costs $4.90 on average, an increase of 7.6% from 2021. As we’ll cover later, drought, inflation, climate change and a whole host of other factors may push that price higher.

So, perhaps you purchased your cup of coffee from your local, family-owned coffee shop for a price close to the above. Or perhaps you saved a bit and poured it yourself. But, in any case, that liquid gold was, not too long ago, a bean with a very different value. It was a roasted bean. Using a popular B Corp, Stumptown Coffee Roasters, as an example, a 340g bag of specialty Colombian coffee costs around $25 (meaning 1lb of specialty coffee runs for just over $33 to the consumer) and can usually provide around 20 cups (17g each) of coffee at $1.25/cup. 

Before the coffee is ground, packaged, marketed, “logo’d”, and sold to retailers that prepare it for consumption, it is roasted at temperatures between 370 and 540 degrees for 8 to 15 minutes, depending on the desired roast profile. More often than not, roasting is performed in the country of final consumption as opposed to the country of origin. Beans, therefore, are standardly purchased as “green,” or unroasted, for a price the University of Connecticut found unusually often to be below the cost of growing the coffee. 

Green coffee beans. AMACA, Cauca, Colombia. 

Photo by: Victor Pagan. Courtesy of Cafe Imports.

In the case of Cafe Imports (or another purpose-driven roaster/importer like Stumptown), they are paying significantly above the norm. According to their most recently published Progress Report, Cafe Imports paid, on average, 43% over the Avg C-market rate, and 12% above the going specialty coffee rate. Without access to any actual numbers, let’s just assume that they paid an average somewhere near the 2023 Fairtrade minimum price, which, in Colombia, is $1.80/lb. This payment covers all steps prior to export, including cultivation, harvesting, and processing:  

The structure of the coffee value chain begins with the cultivation phase. Coffee cultivation begins with a coffee cherry, which becomes a usable harvest typically 5 years after the coffee plant has been planted. In order to maximize the coffee cultivation process, fertilizer and pesticides are often used and create emissions of nitrogen and phosphorus. This also represents a key input cost for farmers! 

Once coffee berries are collected, they begin the “processing” phase, which often consists of costly transportation from farm to mill. The processing phase converts the raw fruit of the coffee cherry into dried coffee beans using one of two processing methods: wet or dry. The wet process sorts coffee cherries by immersion in water where the bad cherries float and the good cherries sink. The ripe, good cherries are then machine cleaned and dried either by machine or sun. The dry process involves manual sorting and cleaning and machine- or sun-drying. After drying and hulling (removal of the clear parchment-like layer on the outside of the bean), the green coffee beans are exported to the consuming country for roasting and packaging

Regarding the hardworking people behind the process, 44% of the world’s smallholder coffee farmers are living in poverty and 22% are living in extreme poverty, according to Carto, a data intelligence platform. Studies have shown that producers typically retain around 1% of the retail coffee price which, for a $4.90 USD cup of coffee, equals around $0.05 USD per cup. 

Now, be sure to take this all with a grain of salt. Due to the fluctuation in costs of inputs and, of course, climate challenges, it isn’t unheard of for Fairtrade rates not to cover the cost of production, or for standard C-market rates to actually yield higher revenues for farmers during certain times of the season. That being said, for the farmers that can afford to maintain sustainability certifications like Fairtrade or Certified Organic, revenues tend to err on the higher end of the spectrum of earning potential.

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