Coffee Pricing
Understanding Coffee Pricing: A Guide to the Complex Journey from Farm to Cup
At our roastery in Melbourne, one of the toughest challenges is setting consistent prices for our coffee. We often hear from customers asking why our prices differ from some other roasters. The reality is that coffee pricing is influenced by many global factors, from market conditions and logistics to the immense amount of work that goes into producing a high-quality cup. In this blog, we’ll break down how coffee pricing works—from the global C Market to your morning brew.
1. Currency and the Global Coffee Market
The first thing to know is that coffee is traded globally, and all coffee prices are quoted in US dollars (USD), no matter where the beans are grown. This can be tricky for us in Australia, as the Australian dollar (AUD) tends to fluctuate against the USD. When the AUD drops in value, we end up paying more for the same batch of coffee, even if the price in USD stays the same. This currency volatility is one reason why coffee prices can feel more unpredictable here in Australia compared to roasters in the US.
2. The C Market: The Base of Coffee Pricing
Coffee, like many agricultural products, is traded on a commodity market called the C Market (or Coffee Futures Market). This is where the base price for coffee is set, similar to how oil or wheat is priced on commodity exchanges.
The C Market price changes daily based on supply and demand, weather events (such as droughts or floods), political instability in coffee-growing regions, and general market speculation. It’s a volatile market, so prices can swing dramatically. For example, if there’s a drought in Brazil (the world’s largest coffee producer), production might drop, and prices could rise because of the anticipated shortage.
The C Market sets the starting price, but this is only part of the story—especially when it comes to specialty coffee.
3. Specialty Coffee: The Differential
Specialty coffee—coffee that meets high-quality standards and is often traceable to a specific farm or region—commands a premium over the C Market price. This premium is known as the “differential” and reflects the extra care and effort involved in producing and handling specialty coffee.
The differential depends on factors like bean quality, processing methods, and relationships with farmers. For example, if the C Market price is $3.00 USD per pound, and the differential is $0.50 USD, the specialty coffee would cost $3.50 USD per pound.
Specialty coffee roasters want fresh coffee. As most producing countries have one harvest per year, roasters need to forecast their demand for the upcoming year and purchase the coffee outright, or organise finance. This leaves specialty roasters particularly vulnerable to market fluctuations as they’re not willing to wait to purchase older coffee that may come down in price.
4. The Price You See Isn't Necessarily What the Farmer Gets
It’s important to remember that the farmer doesn’t always receive the full price of coffee—either the C Market price or the differential. That’s because there are multiple steps in the supply chain, each adding costs and taking a share of the final price.
Farmers often belong to co-operatives, which sell coffee on behalf of multiple smallholder farms. The co-operative receives the payment and distributes funds to its members based on their contributions.
Farmers also need to process the coffee (removing the cherry’s outer layers, drying it, etc.) and obtain an export license to sell internationally. The cost of processing and exporting varies depending on the method used. Some farmers process their own coffee, while others sell unprocessed fruit to local stations, which affects the price they get.
In many cases, farmers only receive a small fraction of the final price paid by consumers.
5. Our Role: Working with Importers and EXPORTERS
We don’t buy coffee directly from farmers. Instead, we work with importers who manage logistics, shipping, and sometimes even processing. Importers typically have long-term relationships with exporters, farmers and co-operatives, which ensures we get high-quality, ethically sourced coffee.
Importers and exporters play a crucial role by:
Ensuring coffee beans are properly processed (dried, hulled, sorted)
Helping farmers access financing, better farming techniques, fertilisers, and equipment
Managing the complex export and import paperwork and logistics, including quarantine services
Filling shipping containers efficiently to reduce shipping costs
Working with experienced importers helps ensure that our coffee is handled responsibly from farm to roastery, while supporting farmers and their communities.
6. The Roasting Process: Adding More Costs
Once the coffee arrives in Australia, it’s time for roasting. The green beans we receive aren’t yet the aromatic, flavour-packed beans you’re familiar with. Roasting causes the beans to lose around 12-20% of their weight, mostly due to moisture evaporation.
There’s also the cost of maintaining and running our roasters, packaging, storing beans, and covering general business expenses, like wages and utilities. These costs all factor into the final prices you see on our shelves and for your daily cup.
7. The Final Price: A Reflection of Complexity
When you enjoy your cup of coffee, it’s important to remember that the price you paid reflects many moving parts, including:
The fluctuating C Market price
The differential for specialty coffee, which compensates for the extra care, quality control, and sustainability efforts
Roasting, packaging, and storage costs
The logistics of working with importers who help bring the coffee to us in great condition
Oh, and we’d be remiss not to mention the small profit margin in there as well. Like any business, we need to cover our costs and ensure we stay sustainable in the long run.
Wrapping Up
Coffee pricing is far more complex than it might seem at first glance. With fluctuations in the C Market, currency exchange, and the multi-step process of creating specialty coffee, it’s a delicate balance. But at Omar’s, we’re committed to sourcing the best coffee, working closely with our importers to support sustainable practices, and always ensuring that the quality in your cup reflects the care and expertise that went into producing it.
By understanding these factors, we hope you’ll feel even more confident in the value of what you’re drinking. When you enjoy that sweet espresso or delicate pour-over, you’re not just paying for a cup of coffee—you’re paying for the care, expertise, and hard work that goes into creating a premium product. Every step, from the farm to the roastery, adds to the quality you taste. We hope this helps you feel good about the price you’re paying, knowing you’re getting something truly special.