The global coffee industry remains in flux, and Australia continues to feel the pressure. Since February, green coffee prices have stayed elevated and have surged again, with ICE Arabica futures now trading near USD 4.20 per pound. That is a sharp rebound from the mid-year dip and firmly back in record territory. This reality, shaped by tariffs, weather and global demand, continues to ripple through our local coffee scene.
A quick check on ICE Arabica
ICE (Intercontinental Exchange) Coffee refers to the market for coffee traded on the ICE exchange, primarily the benchmark Arabica Coffee C futures contract, which sets global prices for this coffee type.
In September 2025, ICE Arabica futures jumped to over USD 4.20 per pound. This rise was driven by a combination of poor harvests and a major policy shock. The United States applied a 50 percent tariff on Brazilian coffee imports, sending ripple effects through global markets. At the same time, frost damage and dry conditions in Brazil reduced yields. Together, these events pushed futures higher and reintroduced volatility that many thought was easing.
Tariffs and trade tensions
Tariffs have become a new force shaping the cost of coffee. The recent US tariff on Brazilian coffee has effectively lifted global benchmark prices by limiting trade flows. Brazil is the world’s largest producer, so any restriction on its exports reshapes the entire market.
For Australian roasters and cafes, this matters even though we do not buy directly from the US. Coffee is priced globally. When tariffs distort supply and demand in one region, the effects are felt everywhere. Higher global benchmarks flow through into contract prices and spot buying. Importers in Australia now face more expensive sourcing and more volatile contracts. This adds another layer of cost pressure on top of weak currencies, higher freight costs and rising farmgate prices.
Putting things in perspective
Even if the price of beans went up by $15/kg that is only 15 to 16 cents per shot. To recover this increase the price of a cup of coffee needs to increase by around 45 cents for a small and 90 cents for a large coffee.
Therefore, while no one likes increased prices, the incremental increase at a cup level is small in comparison to the risk of bad or no coffee at all.
Supply chain costs falling behind
A key problem is that many roasters and cafes have not yet passed on the full impact of these costs that have built up over the last 12 to 24 months. The surge in costs has been absorbed in part by thinning margins, or temporary delays in price changes. That is not sustainable. We expect the prices cafes pay for beans as well as the prices consumers pay for a cup to continue to increase over the next 3 to 12 months.
Every kilogram of roasted coffee now carries a materially higher cost base. By the time freight, roasting loss, packaging and wastage are added, roasters are paying $8 to $15 more per kilogram than they were just two years ago. Without passing this on, the long term viability of both roasters and cafes is at risk. The industry needs further price adjustments to catch up with reality. And if your coffee price hasn't changed, you should be worried.
From a perfect storm to a permanent crisis
The structural issues have not disappeared. If anything, they have become more entrenched:
Brazil’s Arabica harvest is lower again this year. Frost and prolonged dry conditions have stunted yields, producing smaller beans and fewer bags. Brazil once delivered close to 50 million bags of Arabica. Now it is estimated to be closer to 45 million. Each poor harvest reduces global supply, tightens inventories and keeps prices under pressure.
Vietnam’s Robusta output is stronger, but demand is even stronger. Good rains and farmer investment have lifted yields, helping Robusta production recover. Yet global consumption is at record highs. New demand from markets like China, alongside continued growth in Europe and North America, is absorbing every extra bag of coffee that enters the market. Increased supply on its own cannot restore balance when consumption is climbing faster.
Freight, energy, and a weak Australian dollar continue to compound costs. Coffee is traded in US dollars, and with the Australian dollar stuck well below its historical average, every bag costs more for local roasters. Add to that higher shipping rates, expensive fuel and rising domestic overheads, and the landed cost of coffee is pushed up even further. These pressures are not temporary spikes but part of a longer cycle of structural cost inflation.
What was once called a perfect storm now looks more like a permanent crisis. Weather volatility, geopolitical trade shocks and fragile supply chains are no longer occasional disruptions. They are becoming the normal backdrop to doing business in coffee. That is why prices remain high, and why the industry must accept this as the baseline rather than the exception.
Specialty coffee under pressure
Specialty roasters like us pay above commodity benchmarks ($5 to $30 more per kg) to secure quality, sustainability, and fairness for farmers. With ICE Arabica at USD 4.20 per pound, specialty coffees are considerably more expensive again. By the time beans arrive in Australia, roasted costs can exceed AUD 20 to 30 per kilogram, even before wages, rent, utilities and equipment are factored in. That leaves little choice but to raise cup prices further.
Read Profitability per cup: How to truly measure coffee value
Guidance for Australian cafes
Raise prices steadily. If a small flat white is still under $5.50, it is overdue for an increase. Many cafes will need to head towards $6 to $7 to survive. Global prices already sit at $9 AUD for a flat white. Here's what goes into the cost of your flat white.
Do not cut quality. Customers are loyal to good coffee, not cheaper but weaker cups.
Communicate clearly. Share the story with customers. Explain the role of tariffs, weather and costs so they understand why prices are shifting.
Plan for catch-up. The industry has already absorbed $10 - $15 per kilogram in extra costs. But most of these have not been passed on to cafes or the consumers, yet. Prices must now slowly reflect that reality as this is the new reality.
For consumers: what we don’t value, disappears
Australia boasts one of the world's most vibrant coffee cultures, but it cannot survive on outdated pricing models. Cheap coffee has been subsidised for too long by cafes in hope of selling food.
The gap between local coffee prices and global prices is more than $3 AUD per cup now. What’s more concerning is that many customers are not aware of this gap.
When you pay an extra 50 cents or a dollar it ensures that cafes can continue sourcing ethically and sustainably, supporting farmers through these challenging times. And most of all, it ensure they can stay open for you, for their staff and for the community.
Embracing the new normal
Coffee is entering a new cost era shaped by climate, global demand, and trade policies like tariffs. The cheap coffee model is gone. Farmers are finally receiving more fair compensation and that is essential for long term supply. For cafes and roasters, adapting means accepting that higher prices are here to stay. What do Australians really think about coffee prices? We surveyed 850 people to find out.
For consumers, it’s important to understand what’s at stake. The choice is between paying a little more or seeing our cafe culture disappear. Paying a little more per cup ensures sustainability for producers and viability for our local cafes.
As life’s too short for bad coffee.
