How Much Does a Cup of Coffee Really Cost?

Starbucks charges about $1.85 for a single medium sized (Grande) cup of coffee. That price is at least 600 times the amount received by the person who picked the coffee used to make that cup. It is about 50 times the amount received by the coffee grower who hired the worker to pick it.  Between the coffee retailer and the coffee grower there is a web of economic and social relationships that escape the view of the casual consumer. Because these relationships are not immediately apparent, we fail to note the social costs of coffee consumption.

A view of mountains disappearing in blue haze.

Coffee Country – The View from Pluma Hidalgo, Oaxaca

In the mountains of Oaxaca and Chiapas, Mexico, farmers grow some of the best coffee in the world. The altitude and humidity there are perfect for the cultivation of a mellow, low-acidic premium Arabica coffee. This is the kind of coffee that coffee lovers can drink all day long. I include myself in that group. Whenever I visit the city of Oaxaca, I look forward to each new day, in part because I can drink more of their wonderful coffee. Yet, the conviviality of the open-air restaurants in the city of Oaxaca and the palatable nature of the coffee itself tend to obscure the living conditions of coffee farmers who live in the mountains only a few hours from the state’s capital city.

Ripe red coffee beans on coffee plants.

Ripe Coffee – Oaxaca 2011

A major center of coffee production in the state of Oaxaca is the village of Pluma Hidalgo which is located about 25 miles from the Pacific coast. Situated on the top of a mountain, Pluma Hidalgo overlooks a region that produces a coffee known as Café Pluma, claimed by those who grow it to be the best in the world. This is not an idle boast. Café Pluma is undoubtedly a fine coffee. Though the coffee is excellent, the economics of coffee production are not encouraging.

Over the past several years I have visited several coffee farms in the region. Most recently I visited El Refúgio, a fairly small coffee farm, similar to many in the area. Unlike most coffee farms, the owner has built a motel and swimming pool to accommodate guests who might be attracted to eco-tourism, or to those who might simply wish to get away from it all. The setting is attractive and remote. A cursory glance reveals, however, that the motel business is not flourishing. I have been to El Refúgio four times and only once did I see any guests other than those I was with.

Worker picking coffee in thick foliage

Picking Coffee – El Refugio

In 2011, the owner of El Refúgio received $136.00 (all amounts are in U.S. dollars) for each 46 kilo bag (costál) of raw coffee. (For purposes of computation, it is important to note that each costál contains 39 kilos of coffee. The bag itself weighs seven kilos.) Unlike the previous year which produced 150 costales , 2011 yielded only 60 costales. Thus, the entire 2011-12 harvest for El Refúgio was sold for ($136 x 60) or $8,160. Workers who picked the harvest received $.257 per kilo. An able-bodied worker might pick 50 kilos in 10-12 hours, thus earning $12.85 for the day. Harvesting coffee is, of course, seasonal work that lasts only a month or so.

Calculating the wages earned for the 60 costales of coffee harvested reveals that the owner paid his workers a total of $601.38 for their labor (39 kilos x 60 costales x .257 per kilo picked). Thus, the owner’s net was $7,559 for the year  – if the cost of the harvest is listed as his only expense. The annual harvest goes quickly each year. It begins in December and may go into January. The owner of El Refúgio hired some 25 workers to pick his coffee 2011-12 harvest. With 25 workers the bulk of the harvest would have been completed in two to three days, the workers then moving on to another farm, and another, until the harvest for the region was complete.

New coffee drying outdoors on a cement floor.

New Coffee Drying in the Sun- Near Pluma Hidalgo

Besides the harvest there are other expenses. Coffee production in the mountains is a year round process. Seedlings must be purchased, green-housed, and planted. Existing plants have to be cleared of underbrush. Compost must be prepared and spread. Plants have to be protected from insects. All this work is done by several families who live year round on the grounds of El Refúgio. Although they are paid little, their wages constitute additional costs of production. This arrangement is the same that I have seen at other farms. I estimate that the heads of household in these families earn $400-$500 annually in coffee farming. As coffee farms in the mountains are isolated geographically, there is little additional work.

It is clear that no one at El Refúgio is getting rich growing coffee. For the 2011-12 harvest the owner was paid $3.48 per kilo. In 2011 the United States imported medium grade roasted coffee for $10.38 per kilo from the wholesale international market. The U.S. retail price for premium coffee such as that from Pluma Hidalgo was approximately $9.00 per pound or $19.80 per kilo. Looking at who got what portion of the retail price, the workers who picked the coffee received 1.29 cents of the U.S. retail dollar or about 1/78th of the retail price for roasted coffee by weight. The grower made about 17.6 cents. The rest (more than 80 cents of the retail dollar) went to middlemen, roasters, transportation, marketing, retailers, and so forth, with the roasters getting the lion’s share.

Measuring coffee dollars by the cup instead of by weight reveals more extreme disparities in the distribution of profits. Assuming that each cup of coffee sells for $1.50 on average, and that each pound of coffee will make at least 50 cups, the value of a pound of coffee is $75.00. For that pound the coffee picker received about 12 cents, thus 1/625th of the retail price. The grower received $1.58 or 1/47th of the retail price.

Schooling for children in mountainous coffee growing country is difficult to obtain, and most children will only finish grade school, even though Mexican law dictates that nine years of schooling is mandatory. Medical services in the region are either scarce or non-existent for most rural residents. Other than first aid, emergency medical care on coffee farms does not exist. To complicate matters further, many of the residents in this region of Mexico speak only indigenous languages, and do not speak Spanish. My guide in the town of San Agustín Loxicha told me he felt he had an advantage as a coffee broker when compared to his peers because he could speak Spanish, and they could not.

So, how much does a cup of coffee really cost? The price we pay supports the price structure and dismal living conditions briefly described above. Most of us who drink coffee easily spend more than $1000 a year on coffee we order in restaurants and make at home. One thousand dollars is more than many families make in an entire year cultivating the coffee we drink.  As a matter of survival, many people from Oaxaca and Chiapas have migrated from coffee country to elsewhere in Mexico or to the United States. Everything is connected. In the long run the real cost of a cup of coffee is not sustainable.

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