Why Coffee Cost so Much?

THE COST OF COFFEE

The cost of coffee is so high for several reasons. The current price of Arabica coffee beans in the global market price is rounded to 0.45 - 0.75 cents per pound in 2001. Now in 2010 coffee per pound is $1.26 the price has gone up so rapidly because the fair-trade association has set the price to $1.21 as the sustainable production price for coffee. Therefore in order for a farmer to grow a pound of coffee in a sustainable and environmentally friendly way and still have enough left over to live a regular life style he will charge $1.21/pound and an additional 5 cents to represent a premium that foes into a certain fund to pay for development projects and other needs for the community as a whole. Now if we look at a $5.00 cup of coffee from Starbucks, they only pay $ 1.26 towards the coffee and the rest of the $ 3.74 is the amount of product and promotion time to spend towards your coffee. Now if we make our own coffee for example, we buy the Costco brand of coffee in the three-pound can. The can costs about $10, and it lasts about 2 months. That's for 60, strong 20-24 ounce cups of coffee and, about $0.16 per cup. Of course, there are other costs: milk, cream, the electricity to heat it up, and the time it takes to make the cup of coffee. But, the cost of the other ingredients is negligible, and if you make coffee as part of a routine in the morning, the time cost is also negligible (or close to it if the alternative use of time is finding the coffee shop and waiting in line). Let's double our previous price to account for these other costs. Therefore, the cup of coffee costs around $0.32 if we make our own, or even coffee shops that charge $5.00 per cup.