We're taking the risk of you paying up front to anybody that is an ocean across from you. So you don't have to do that. You don't have to pay the producer. You just need to sit down and wait for your coffee to come at the time that it will take, but it will get to you and it will get to you in the amounts that you want to pay based on your cash flow as well and your consumption.
So you have to get the stones on the quantities, right? Okay. Exactly. So, but we have to go to Colombia and tell the farmer, Lee, like your coffee, we need six don'ts when you can deliver two weeks.
Okay. So he's going to deliver the coffee impassionment. So it's not going to leave it in green, beautiful, like everybody was expecting. So we have to process that coffee.
We have to package that coffee, we have to put it in the portal, whatever. So, but we need to pay that farmers straight away in order to get that coffee and process that coffee. So as soon as the coffee leaves the farm or reaches the, the mailing facility that we use, coffee has to be paid in full. Traditionally, businesses have found new leads at trade shows, but in 2026, that model is changing.
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Check the show notes for all the details and let's conspire to each other's success today. Welcome to the Daily Coffee Pro by Map of Forward Friends. I'm your host Lee Safar and this is episode four of a fantastic five part series with Augusto Amaya from Arcadia Green Coffee. Just a reminder, guys, if you're in Australia on the 25th of February, please consider coming to our Aussie Coffee Town Hall.
It's going to be in Sydney at 5.30. Tickets are available. You can check the show notes or our website for that. But we're about to have a fantastic conversation about risk.
Augusto, I guess in a coffee crisis as so many things keep changing, one of the more difficult parts about making sure that your business is staying above water or continuing to grow is understanding the relationship that you have with risk and understanding how to manage risk. And you guys are the matchmaker, right? In the middle between the buyer and the seller and in a time like this, trying to manage risk and make sure that the relationship that you have with your supplier is one kind of risk and the relationship that you have with your buyer is another kind of way of managing risk. Or is it the same kind of risk in your mind?
I think I love this bit because it shows that everybody in this business has a place, right? So if you think about from the roaster side, there is a huge risk in doing a direct business with a supplier for different reasons. 5,000 kilometers miles away, the risk of not getting the coffee that you think you booked, at the time that you think you booked it, and the quality as well. So imagine a roaster who wants to secure coffee from six different countries doing all of that themselves.
So it's a huge risk. And the bigger the volume, the bigger the risk of course. So that's one. And then the other one, imagine a farmer in Colombia.
Again, I can only talk about Colombia. A farmer in Colombia with five acres, who produces one or two tons of coffee, a per harvest. They don't have the tools to market the coffee. They don't have the finance structure to go and send samples or send a full delivery and then wait for a roaster to get it three months after and then pay one month after receiving the goods.
So for a farmer to do that, it's a huge risk. And they don't have the cash flow to do it as well, right? So we are in the middle. We try to mitigate the risk of everybody involved, including us.
So let's say we go to Lee's roastery, you say, I want a floral coffee. I want two tons to be used in six months. So we bring you the samples for five different candidates. You're happy with one.
Say, OK, guys, bring me the six tons and deliver one ton per month for the next six months. I only want to offer this to my customers for six months and that's it. So we go back to the roaster, sorry, to the producer. Your coffee was selected.
What's your price? Give me the price. Give me the price. Yeah.
Let's go for it. So we're taking the risk of you paying upfront to anybody that is an ocean across from you. So you don't have to do that. You don't have to pay the producer.
You just need to sit down and wait for your coffee to come at the time that it will take, but it will get to you. And it will get to you in the amounts that you want to pay based on your cash flow as well and your consumption. So you draw it down on the quantities, right? Exactly.
So but we have to go to Colombia and tell the farmer, leave like your coffee. We need six tons when you can deliver two weeks. OK, so he's going to deliver the coffee in parchment. So it's not going to leave it in green, beautiful, like everybody was expecting.
So we have to process that coffee. We have to package that coffee. We have to put it in the portal, whatever. So but we need to pay that farmer straight away in order to get that coffee and process that coffee.
So as soon as the coffee leaves the farm or reaches the the the milling facility that we use, coffee has to be paid in full. So we do that. Now, we know that it's a coffee of quality. We know that it's a coffee that it has a home.
So if for some reason, you pull out of the business, we own the coffee. I'll call you on the coffee. So it's up to us. If you pull out of the business, it's up to us to do something.
So it's a risk. So because we own the coffee, right? So it's up to us to decide whether we put it or not, whether we send it or not, what we do with it. What we do is we do a logistic.
So we own the containers, the 20 tons or the 25 tons that are coming in the container hours. So we're putting all the coffees for all the customers. So when that coffee is going to come to Europe anyway, or we can sell FOV to any other country. But let's say that there is no hiccups.
So we own the coffee. It comes to Europe two months after it was bought from the producer. So the producer has set a risk. So ready paid, time ago.
Comes to Europe and we stand doing the delivery. So the risk, we own the coffee. So we have a good to be backed up with. So we can sell it into the market if needs to be.
But that's not the case. We want to sell it to me because she's the one to want it. And we know that we're going to deliver to you every month on the clock and everything's going to be fine. But if you see there is different risks and scenarios that are different in all the parties.
So what we're trying to do is to reduce all the parties involved to the minimum, to the minimum. So that's the way we're trying to do the matchmaking, let's say. But it's something that worked for everybody involved, basically. And that works for an order of a full container of 70 kilobacs.
Because it's the same for us, it's the same operation. And for us, we are showing the people that they can actually get the coffee that they want. Because after three years, we have done a very good amount of exercises, finding the coffee that somebody's looking for that most than probably after three years. If you tell me I want to floor, I would probably have some coffee that already matched that profile.
That you can try to stay away. And if not, Jessica will be more than happy to scout all over the country and find it for you. But it's about reducing the risk. Yeah.
What other, I mean, we are recording this on the 26th of January. It feels like we've lived three years in this first month of 2026 with all the tensions that have happened, right? It looks like 2026 is going to be as volatile in coffee and the world as 2025 was. How does risk, what is the potential for risk to either increase or decrease over the scope of 2026 in your mind?
Well, not a lot of questions from Lee. You're welcome. So I think, I think if we are linking volatility with risk, that's going to be another big part of 2026. I think, I don't know, climate-wise or forecasts, I believe that to people that know that best and anybody, geopolitical-wise, everything is fair and square.
If you told me that as well, it could happen, I would tell you you're crazy, but it did happen. It didn't happen right now. Well, hey, there's a ship on the way to everyone was talking about Greenland being a distraction for what's going to happen in Iran. And that could happen any day now, right?
And that could throw the whole world into chaos if there is the Iranian version of an urban as well. That's just about to happen. It's not funny. I'm laughing because it's fucking ridiculous.
I can't believe we're saying these words out loud that they're real. Yeah, we're having that conversation. It's like, so I think the market has to stabilize at some stage. I think being a commodity, it will do what commodities do.
So it will find its own happy place for a while because we keep hearing that from the supply side, things are looking okay. So from that side, there is no much downside in terms of unless there is obviously an event that will disrupt it, but all things being equal, most probably the supply side is going to be okay this year or healthily, let's say. So the big ones are the markets in terms of exchange rates, geopolitical situations, of course, the consumer. Yeah, and stuff like that.
I don't see the fundamentals being an issue, to be honest. We're having elections in Colombia. Sadly, Colombia is a divided country. It's 50-50.
So anybody could have a very good guess. I don't know what's going to happen. I don't have any affiliations. I've been out of Colombia for like 15 years.
So I just want the country to keep growing and developing, and that's not happening, sadly. So I believe we have every opportunity to exploit the potential of our country. So yeah, in terms of risk, I think anything can happen from a geopolitical point of view, and that's something that we didn't have before. Yeah, that's a sad thing.
Well, Brazil has elections this year as well. And so does the US, and not presidential elections, but they have the midterm elections. And it just feels like the tension is building in so many different places around the world that is making the consumer feel a little bit uneasy. And for me, right now, the biggest risk in our supply chain is other than the obvious ones of geopolitics, is the consumer.
Because right now, consumer debt is at record highs around the world. And we keep trying to understand how is the consumer continuing to afford the price hikes in the supermarket, for cafes and restaurants and things like that. Well, it's debt. That's how they're affording it.
Whether it's credit card debt, or whether it's buying our pay later schemes, this is how consumers are affording to keep up with what they're doing, to save appearances. They are using debt or leverage to be able to do that. And this kind of practice hits a wall eventually. And so when the consumer finally breaks, and I really believe it's coming, I don't know whether it's this year or whether it's next year, if I had to bet on it, and this is not financial advice guys, I think it's happening this year.
On the demand side. Yeah, I think that the consumer is right on the edge right now. And the reason I think that, just to help people understand my logic, I think that there are a lot of people that are way, way, way over leveraged. So they have way more debt than they're admitting to, and way more debt than they can afford.
But the reason they're able to justify that debt is because they have assets on paper that are worth something. That house of cards starts to fall down if the yen trade reverses. If we have a reverse yen carry trade, the whole financial system, if it's on a larger scale, the whole financial system will come down. And then people who had all of this debt to buy all of these assets that then become devalued.
It's a big problem. And at the moment there is that kind of, and as people are saying right now, that the yen reverse carry trade is not the thing that will bring down the entire financial system, but it will be the biggest crack so far that is leading towards that. That kind of thing spooks people. If we have a spooked consumer that stops buying, that means we have cafes that are starting to empty, and we have people buying less coffee, and people that are starting to really, really look at their spending habits.
We're coming up to summer. I really don't know. I mean, it's an interesting take. The way I see it is all of the speculators.
We didn't have three years ago, two years ago in the market. Some of them are the way you say. Some of them are people who are using hip money from Japan to get in the last gravy train, and the AI guys who invest in AI, the guys who invest in Bitcoin. I'm not saying that I'm against all of that.
I'm just saying that we will invest in the high temperatures available, and those were the highest available at the time. Coffee was one of them, and one of them was one of them as well. If they lose the access to the money, they go bankrupt, then you will have a reduced volume of speculators in the cacao and coffee markets. That means that you will have a correction of some case in those markets.
That might decrease the sea price as well. From the demand side, I would be worried of some leverage roasters that they face the $4.40 of the sea market, and they probably try to weather the situation with loans and no increase in the price to the customers for the fear of losing them. And that could be unsustainable. So you could lose them as well.
Also, importers and exporters. Those who are carrying the risk, right? Those are the ones who are covering the cost of the coffee, like you guys. Those who are borrowing money to cover the cost or have lines of credit to cover the cost of purchasing the coffee and awaiting two or three months before they start to get paid.
If it's the wrong two or three months. Well, that's risk, right? If you're playing and not playing, being part of the legacy trading, I'll be worried about you. Yeah, yeah, yeah.
And this is why I found your business model so interesting, right? Eventually, we're going to find some stability. And as we find some stability, and people decide, okay, I think it's time where there's enough stability that I can think about opening a business in the coffee industry, and I'd like to become an importer, right? I hope that the next generation of business owners takes examples of what didn't work before this all breaks.
Because- I think- Go ahead, please. No, no, please. I'll finish. Well, I just think that the legacy models that exist are trying to fit into a system that is changing so quickly, that it's just such a heavy burden on it, and they either need to adapt or break.
And I think that there are too many businesses that just don't want to adapt, that they will break. Do you think I'm saying that the wrong way? No, no, I think I can agree with you in terms of the legacy way of doing business as its place. I'm not saying that that's the wrong one.
I'm saying is, if you're moving 120 containers every six months, you need to talk to a lot of people. Oh, first I'm saying, that's the corporate side of our industry, though. Exactly, but we are not in that. No, no, no, no, no, we're far from it.
So we don't do commercial coffee, we don't do commercial coffee, we don't do commercial coffee, we don't want a specialty coffee, and we're working with small farmers to medium farmers or whatever. So, but it's about, okay, you are in the specialty business, yes. So what do you want? And look for it and build those relationships to us or to other vehicles or whatever, but do it.
So don't come back to me and say, you know, I'm used to our weekly offer list, and I make my decision based on that. So if you're happy with that, fantastic, you know? Go find somebody that's not what we do. Exactly, keep going.
And again, I'm not saying which is better, which is better, which is wrong. No, but you need to sit down and understand what alternative you have. And which ways you can mitigate those risks and go for it. And I have never even, even in the, you know, each year, I remember the first work of year I went in Greece.
My first coping was 57 different lots being offered in a warehouse, in euro, like, how? Like why? You know, but that's the business. And if it works, it works.
I'm not going to be the one telling people how to run the business, but it's just, you know, you need to stick with your work as well and with your ethos and what you're selling to your customers and all of that. Because saying, oh, I'm just going to make a lazy example. I'm selling the, I'm roasting the coffee from Peter Perez from Guatemala, just a different country. But I have my fucking clue who Peter Perez is.
Exactly. I want to add to your point, if that's okay. And I want to say to roasters who are doing business with legacy people. I'm not saying don't do business with legacy people.
Every, you do you, bro, right? You do business the way that you're doing business. I will ask one thing of you, though. I will ask you to check in with your suppliers and have a conversation with them about the risk that they're carrying because if they are not being transparent with you, they don't have to give you numbers.
They have to give you a comfort zone that you feel that these people know what the fuck they're doing and that they can carry the risk that is currently in the system. And anyone who wants to convince you that this coffee crisis is over is lying to you. It is not even close to being over. And so if you have a middle person who is carrying an extraordinary amount of risk and they haven't told you about it and they go out of business and we hope that that never happens.
But if they go out of business and you are not looking at other suppliers and you have to go into business with somebody who is not the person who you typically do business with, you're going to the back of the line to get priority, to get access to coffee. And that could get you into some trouble. Or you're going to buy spot coffee that does not exist. So we are in a moment in time where it's not just about the risk that you're carrying.
It's about the risk that your suppliers are carrying that will give you the ability to be better prepared for what's going on in business. Do you agree with that, Agusto? 100% as you said from time to time. You need to learn from your sourcing companies or suppliers or whatever.
You need to learn how to conduct their business. I think it's a valid question. If I am buying from you, I need to understand how you do your business, how to conduct your business, and how's the sourcing and where it's coming from and all of that stuff. And because more often than not, we are focused on small and medium roasters.
More often than not, our customers are only a number in the big team of things. Or for all other suppliers. But if you start asking the questions and you understand what your position is, then you will think about having some alternatives as well. Or if you're happy with it, you're happy with it.
But yeah, that's something that walking the park market is not a run-goer. No, no, no, no, no. We're not even close. Like in people who are like, don't worry, Brazil's going to have lots of coffee this year.
I wish that that was the only problem that our industry has. Is how much coffee is Brazil going to have? We have so many layers to this coffee crisis that we're far from, guys. But that doesn't mean that it's all doom and gloom.
It just means that we are in the thick of it and we are not out of it yet. So you have to remain vigilant. You have to understand your risk and your partner's risk. And you've got to understand what's going on geopolitically, globally, as well as locally.
And you've got to understand what's happening with the supply chain. And unfortunately, we're an industry that values competitions and certificates over understanding how to trade the same market or what it means or what bonds are and what's happening in finance markets. It would shock you the amount of coffee roasters that have no idea what the same market is. How is that possible?
We need to grow up as an industry. I have seen it. I have seen it. I have sat down with our customers.
I have gone through the whole explanation of commodities and how they work and all of that stuff. And in fairness, it's something that it only comes out if you sit down and talk to them. And again, they're busy roasting. They're busy looking for customers.
They'll be supplying on time or supplying their own shops and all of that stuff. I get all of that. But you need to take time and have a very good look of, okay, where's my coffee from? Who's doing what in the supply chain?
And what I can do, because the way we see it is very basic. Because this is a physical product. You have somebody who has it and you are somebody who wants it. If you have a connection, half of the work is done.
Yeah. But a connection, you don't have a connection? Yeah, exactly. Yes.
But more of them than not or in a big portion of the probability is that you're buying from somebody who doesn't have the connection. Yeah. Yeah. Also, you don't have it.
So folks in the final episode of this series, we're going to be talking about the year ahead and how you look at surviving. The coffee crisis in 2026. So join us for that. Peace, love and peanut butter.
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