If you're a roaster, you've probably felt it. It's getting harder and harder to find great quality coffee at volumes and prices that still make sense. One origin that's often been overlooked in the search is Honduras. For years, it's been treated as a conventional origin, even though there are producers quietly growing exceptional coffees that never make it into the specialty conversation.
The Honduran Coffee Alliance is a social enterprise with a simple mission. Connect those producers and buyers in a fair, sustainable, and commercially viable way. They work with organized producer groups across regions like El Paraiso, La Paz, Olancho and Comoyagua, helping them evaluate quality, tell their farm stories, and move coffees that belong on specialty menus, not buried in anonymous blends. What that looks like for roasters is previously untapped lots that heat your flavour and quality targets, a minimum of just four bags to get started, transparency reports so everyone can see where every cent of the purchase goes, and turning that first buy into a long-term trade relationship, not just a one-off.
If the idea reforming a long-term relationship with producers in Honduras is of interest to you, reach out to the Honduran Coffee Alliance so that they can work to find you a fit for your 2026 menu. Samples are going to be ready soon. You'll find Sean Warner's WhatsApp and email in the show notes. Send him a message and tell him you heard about the Honduran Coffee Alliance here and start exploring what these overlooked Honduran coffees could do for your menu today.
Check the show notes for links. Welcome to the Daily Coffee Pro by Mapper Ford Friends. I'm your host Lee Safar and this is episode three of a five-part series. We're talking about how the current conflict between America and Israel with Iran is impacting the global coffee industry.
And in this episode, we're going to talk about who's going to get hit first in the coffee value chain as a result of this conflict. This is a conversation about risk. As I mentioned in previous episodes, I am currently and will be for the rest of this conflict based in Australia. My home is Dubai now, but I'm not able to return until the flights open back up and that does not look to be happening anytime soon.
Everything with Mapper Ford is running as business as usual. We will continue to grow the business through this year. And just as we have been here for the coffee crisis, we will be here to support you through this crisis. We are going to be bringing on the best guests that we can find that can speak directly to all the different layers and elements that will be impacted by this crisis.
So we've had to pivot quite significantly because we are building a crisis. We have a crisis on top of a crisis and the consequences are going to be deeper and more wide-reaching than what we had originally anticipated. We're here for you and we will create spaces and continue to create spaces to get you the information that you need to help you adapt to what's necessary. There are going to be some people who thrive through this and there are going to be other people who don't survive this.
Nobody is going to remain untouched from this and I'm not sure that enough people in the coffee industry actually understand that. So let's talk about who carries the risk in a crisis. So the coffee supply chain isn't evenly vulnerable. That's important to understand.
It's what we've been talking about a lot for years now on the podcast. Who manages the risk? Who carries the risk? Who puts the risk on to other people?
This crisis is going to highlight all of those things. The coffee industry talks about producers being vulnerable, but this crisis is going to reveal the vulnerability across different parts of the supply chain and how risk is being managed by you and how risk is being managed by your entire ecosystem and your supply chain partners. So as we move through this episode, we're going to talk about different players in the supply chain and we're going to talk about the risk that they're carrying and how this is going to impact them, how this conflict is going to impact them. So let's start with the coffee producer.
So the coffee farmer is going to face indirect impacts from this. So what we are looking at here is the kind of impacts, for example, fertilizer prices as we talked about in the last episode. 35% of fertilizers come out of the Middle East or West Africa. They travel through the Strait of Hormuz to get out of that region.
Iran has closed it. That fertilizer cannot get out of there. What happens to farmers? That is driving the price of fertilizers up.
We are already saying it is driving prices of fertilizers up around the world. And there's something that we need to manage here that we need to mention here. There are other conflicts that are going on in the world. The Russia-Ukraine conflict, Russia also exports a significant amount of fertilizers that conflict has restricted.
The amount of fertilizer that can leave, Ukraine also ships a lot of fertilizer. There have been supply chain disruptions and guys, that's an important thing to mention. All of this, everything that we're talking about in the series, goes under the heading of supply chain disruptions. Not just coffee supply chains.
As we mentioned, fuel supply chains, manufacturing supply chains all over the world, food supply chains. Right now in Australia, we are experiencing a near-on-crisis because our farmers cannot get access to the diesel. That's required for them to harvest the wheat crops that they need to harvest right now. They cannot get access to the diesel to put in those tractors.
They cannot get access to the fuel that they need for their trucks. They cannot get access to the fertilizers that they need to prepare the soil after the harvest is finished. We are facing that right now. Now, if the fuel supply chain is impacting the farming, the food of supply chain, you can see the flow and effects.
So that's what we mean by the farmer is going to receive indirect impacts. So fertilizers, fuel costs are going to be increased. No matter where they're getting the fuel from, the price of crude oil is so volatile right now on a global scale. The next thing that is going to impact farmers is export delays.
We'll reduce the cash flow. And so if because of that, in the last episode we were talking about how they will be delays in shipping and unpredictability in shipping, if your exports cannot leave and they are delayed in arriving depending on the arrangements that you have with your buyers as a coffee producer, it is very important, or arrangements that you have with your exporters, it is very important for you to think about that cash flow. But you don't need me to tell you that if you're a coffee farmer, this is something you've been living with for decades. And now on top of the coffee crisis, this is an issue.
So there's also the same market that's a problem for the indirect impact. All of these issues are causing speculators to move the price of coffee on the sea market based on this conflict. The impact on the sea market, the coffee futures market is continuing to get more and more volatile as we're getting to it. People no longer understand what's moving this.
Is it because of the conflict? Is it because of financial markets? Is it because of fundamentals? Is it because hedge funds have decided to get out of it?
It's a dysfunctional environment now. The fertilizer markets are heavily linked to global energy prices. And the export delays are heavily linked to the prices that are going to end up being seen by the end consumer or the roaster, who is then going to pass it on to the end consumer. So I mentioned those two things to say that all of this is interlinked.
It's all interlinked in a very significant way, and it's intricate, which is why I employ you, if you have not mapped out your supply chain and you have not mapped out your risk, figure out a way to do that. And just before we move on to exporters from producers, if you are a roaster, if you are an importer, but particularly if you are a roaster, I employ you to start thinking about having conversations with your producing partners so that you can ensure that they survive this by if you can afford to pay them for the crop ahead of time, do it, even if you need, and this is not business advice, but even if you need to consider that it may be necessary to carry more of the risk by getting greater lines of credit in order to secure the fertilizer for them or give them the money so that they can make the decisions of how to secure this for themselves. This is the time to think about farm direct trade. This is the time to go and consider those things, but conversations are what's going to be most important right now.
Let's talk about the exporters next. Exporters are going to carry the majority of the financial risk here. They have the greatest exposure, okay? So why that is is because of the uncertainty that comes from it.
They have paid for the coffee, depending on what country they're in, but let's say they've got the coffee on the ship, okay? They're going to sell the coffee FOB on board. But what's going to happen if there are no containers available? What's going to happen if the shipping is late?
What's going to happen if the contracts that they have are reaching the deadline and they can't deliver them on time? What happens if there are issues with currency exchanges and they have exposures there? So exporters carry an enormous amount of this risk. If you are a roaster that is working with a farmer who is an exporter, it is important for you to understand that they have double the risk of what's going on right now because of all the risk that they are exposed to, okay?
Again, it's not just about the price of the coffee. As we mentioned, containers, shipping delays, the cost of fuel, pressures to make contracts for different reasons. All of this is, these were pressures that existed before, but now they have been made significantly heightened. And unfortunately, it's the smaller exporters that will most likely bear the brunt of this and collapse under this pressure.
But if you're a roaster and you can work with those exporters, you may be able to help them stay alive. And this is where working in tandem with each other, strengthening supply chains, disengaging from the corporate structures, who they're going to be fine through this, they're going to struggle, break a sweat, but they have the money to hedge. These smaller exporters, smaller roasters, smaller farmers, not so much. Now, let's talk about traders.
So traders carry a large risk, but they can hedge against that risk, right? Traders have the ability, they know the game, they know the tools, and they know how to hedge against that risk. They can store their inventory, they can move coffee between markets, and they can absorb the logistical shocks. But volatility is going to increase, and as volatility increases, prices increase on everything.
Their job as traders is to manage that risk and hedge against it, something that most exporters, depending on how big or small they are, most exporters find more difficult and farmers find more difficult. And so the way that we have been told on the podcast by different farming groups and exporters that are dealing directly with farmers, the way the farmers are starting to use hedging is not in the traditional ways that traders are using them, which is to buy options on the sea market. What they are doing is they are using supply and demand economics to move the prices. So if they're not happy with the price, they're just not selling that coffee, that is a partner, they're being more speculative that way.
And I think that's fantastic. So now let's talk about the roaster. So the roaster faces significant risk, significant risk based on the participants in the supply chain that came before them. So the further you get from origin, the more risk that you are going to have to bear based on what happened with your supply chain partners before this.
And this is where for the last maybe five or six years we've been talking about, make sure you choose great relationships, make sure you build values based relationships. This is where that's going to matter in times like this. And we were warning about a crisis that is going to show up, COVID showed up, the coffee crisis showed up, this crisis showed up, these relationships matter more than ever right now. Your partner's ability to mitigate risk and manage risk in times like this is going to matter more now than it ever has.
So roasters need to think about shipping delays, rising freight costs, unpredictable arrival times. This will impact your stock levels, it will impact your blends, it will impact your pricing, it will impact your productivity, it will impact your need to be able to have access to spot coffee so that you can fill in any gaps that you've got. It is really, really important that you hedge against this by managing things better. So again, I want it to be really, really clear in wrapping up, I want us to understand that the coffee supply chain through this conflict is not going to be evenly vulnerable here.
The risk is going to be shared across the supply chain in very different ways depending on how this conflict unfolds and in different severities. You're understanding that about your own business, but also about your producing partners, your export and importing partners, your logistics partners, and as well as every other part of your ecosystem is going to be the difference between whether you survive this as a business or not. Now, in the next episode, we're going to be talking about the economic domino effects of this conflict on the coffee supply chain. Join us for the full episode of this series, folks.
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