If you are purchasing your coffee through seven links and imported an exporter at first by your first aggregation intermediary, but you're able to get the farm gate, the real farm gate, that's a healthy supply chain. It means that all that supply chain is connected. They are sharing data between them, data is not being corrupted and it goes from the farm to the roaster. Yes, might not be a direct relationship, blah, blah, blah, but it's healthy and that's what we're looking for.
The risk of it comes with the claims and the unsupported claims and beyond the how is it called farm direct the important thing that procurement is traceable. Ethiopia's coffee harvest is wrapping up and coffee samples are becoming available and ready to ship in the Arcana coffee marketplace. Arcana coffee connects roasters directly with smallholder farmers in Ethiopia and builds in the hard part, integrated QC, logistic support and produce a lead transparency. With every passing day, new samples are being registered on Arcana's online marketplace with all the information you'll need to help you make buying decisions and build direct relationships with farmers across Ethiopia.
Registering for an account now helps you understand timelines and can assist in planning a 2026 buying with confidence, even if you've never bought direct before. The minimum is around 20 bags and Arcana can pull multiple roasters to meet that M.O.Q. so you can participate without overcommitting. If you're curious, listen to our recent conversation on the podcast with founder Matthew Thornton, then explore the marketplace via the link in our show notes and register for an account.
You can also book a meeting with Matthew and he'll walk you through requesting samples, the order process, pulled orders, QC and shipping once coffees are ready. Samples are becoming available now and supporting our advertisers is a great way to support our mission at MAPA Forward to build responsible businesses with responsible pricing models. Check the show notes for details and explore Arcana coffee marketplace today. Welcome to the Daily Coffee Pro by MAPA Forward friends.
I'm your host, Lee Safar, and this is episode four of a fantastic five-part series as expected with Pedro Mungal from Caravella. We are talking about coffee farms in a decade from now. And in this episode, we're going to talk about the myths in coffee production and trade. What are they, Pedro?
There are plenty. There are plenty where to start. Maybe direct trade. I think that's kind of the...
That's been a theme so far in all of the episode, all the series this year. People keep saying, you know, I don't think I like the word direct trade. I'm so tired of people using that word. It's been washed.
Why don't you like people using that? Okay. It's been washed Lee. Like everything is direct trade nowadays and nothing is.
There are a few landing pages in the coffee industry that are not claiming direct trade. It is impressive. Even big, big, massive traders playing direct trade. And yeah, it is strong.
That's a lie. It's mostly a lie. It's mostly a lie. And again, there's nothing wrong of not doing direct trade.
And I think that's the problem that it's being understood that if you are not purchasing directly from the producer, you're not being sustainable. Well, guess what? You can do responsible procurement through cooperatives, you know, is not that it's impossible. And their business models build that way.
And they are not cramming direct trade and they build responsible supply chains. There is impact behind the problem. And there is the danger with direct trade is that we have come to understand that if you're not doing so, then you are procuring your coffee wrong. And it's not true.
So we came to an era where everything is directly purchased to the producer. But again, as by chart, there is no evidence of that being done. Right, right. And it's not that direct trade, as you were saying, is bad.
It's that it's like specialty coffee. It started with one definition. And now we've kind of diluted what the idea of direct trade is so much that we don't understand what it is anymore. And, you know, I want to shout out Matthew Thornton from Arcana.
Have you ever heard of Arcana coffee coffee market, please? No, Arcana. Full disclosure, there are an advertiser on the podcast, but that's not why I'm mentioning them. They have built a digital way of doing in inverted commas direct trade with farmers in Ethiopia that don't really have the means to go and build sales relationships outside with buyers.
So it's like it's sort of like Tinder for coffee, so for buyers and sellers of coffee. And when we first started talking to them, people started asking, yeah, but it's not really direct trade because I'm sure the marketplace is where people pay the farmer and it's not. It's actually the farmer and the buyer do the financial side of it outside of the platform. You discover the producer and all of the details about their farm.
They decide what they want to tell you about their farm and the different lots that they have available, and you can order samples from them directly through this marketplace. And what it's telling me is that our industry and smart people in our industry, thinkers in our industry are starting to realize that this idea of direct trade is diversifying. And it is having so many new meanings now that they are trying to find a way to give a subset of our industry the opportunity to do whatever how they have defined direct trade. So this Arcana is one way that they have defined direct trade in Ethiopia.
This particular way and that is I think that that's innovative. That's true innovation is that we are taking ownership of the idea that direct trade is another one of those terms like regenerative agriculture, like specialty coffee. All of those things that we no longer know what they mean and they're going to just define it for based on what they think it is, but it's not the only definition of direct trade that's out there. And I also don't think that direct trade.
This is a myth around direct trade that I think is important for people to understand. People think that direct trade means that it's just the buyer and the grower and no one in between. That's not direct trade guys. That's not the only definition of direct trade.
You can work with logistics partners and still have direct trade. They're your logistics partners. You still have relationships with the people who are growing the coffee. It doesn't mean you have to carry the bags on your own back and take them back to your country.
Like there are people that do those things where you're still doing the kind of direct trade that you want to achieve. But you could still use logistics partners or you can use importers who have the relationships directly with the farmers, like Caravilla, right? That's still a form of direct trade. For example, we don't claim direct trade, Caravilla.
We connect the roaster and the producer and we have direct relationships with the producers and the roasters. Right. But in Caravilla, we do not claim direct trade. And for me personally, direct trade is how you divide.
Is a buyer purchasing directly from a producer? Yes, no, in terms of the risk of victory. But the problem with that definition and that's the core of direct trade is that it's only possible with big farmers that have exporting or importing capabilities. Those are big real states in Brazil, big real states.
I don't know what they might have signed by these big farms owned by wealthy families that they have the means. They have the means to export their product without interning the artist to a roaster. And that is good. It's good business.
They don't need anybody else. That's good business. The problem is direct trade with more older farmers is not a farmer with one hectare in Oaxaca. Has no means to export their coffee direct to an roaster.
So what is needed, as you say, is an interning term in the area that has a direct relationship with them and a direct relationship with the roaster and is able to put the coffee of that farm in the gate of the roastery without many cuts on the value, without different interning areas on it. And that's responsible is not wrong. It's not direct trade. So help me understand something then.
For example, raw coffee company. Shout out to Raw. They're based here in Dubai. They're not advertisers on the podcast.
Matt and Kim will go to Origin, wherever, whether it be Ethiopia, whether it be Mexico, Colombia, whatever. They will cup at the farm. They will decide that they want that coffee, whatever it is. And then they will organise through intermediaries the logistics to have that coffee shipped, exported out of that country and imported here into the UAE.
Would you consider that direct trade? If there are farm gates being reported, and that's kind of my indicator, I will consider that a healthy sourcing relationship. I don't know if direct trade. I don't want to get into the direct trade and the hashtag.
But I will be able to claim that I purchased that coffee and I could trace the price that the producer is getting. And that's the point here. That there is a lot of direct trade being claimed, but there are no farm gates to support. And it's truly simply when you purchase a cup of coffee on your favourite abroad in Dubai, they'll give you a ticket that stands.
Lee bought this coffee this day at this price in this coffee shop. And that allows you to say as Lee, I purchased this coffee from Raw. Right. The problem is when you say I purchased this coffee from Raw, but you don't have the ticket to evidence that.
And it's just like Lee, where is your receipt? No, my receipt is a friend of mine has it or my receipt got lost. My receipt is really hard to get. I don't need my receipt because I'm reinvesting what I did.
So it comes all this array of excuses on why we are not reporting farm gate prices. And I feel that by definition, direct trade needs to be transparent in order to inspire. And you need to evidence it, especially in an industry where so many claims are unsupported. So beyond if it is direct or not, it is the farm gate price that allows us to understand if you actually know how much of what you pay, reach the partners.
And that's where direct trade gets. Sorry, so I find to send you correctly. I just want to make sure I'm keeping up with this. There is an intrinsic relationship between the coffee that you're buying and the traceability of that coffee.
And if you're able to trace that back to the earth, the farm where it was born, if you can, with confidence and with evidence, trace that back, you don't have to make that not that information public knowledge. Nobody needs to know how much. But as long as you can actually trace that back, that is how you would define direct trade. That's how I would define that roasters or buyers have a direct relationship with the producers.
That makes a lot of sense, Pedro. I've never thought about it that way. I really appreciate that clarity around that. Because then that removes the, you know, what, what rather logistics played in it.
Because it's not really important. That's not really important. It is not. It is truly not me.
Because under that scheme, like it wouldn't be direct trade for a roaster to purchase coffee through seven links in the supply chain. It wouldn't be. But again, as we were talking direct trade does not make a supply chain responsible or irresponsible. It's the claim.
So if you are purchasing your coffee through seven links and imported an exporter at first by your first aggregation intermediary, but you're able to get the farm gate, the real farm gate, that's a healthy supply chain. It means that all that supply chain is connected. They are sharing data between them. Data is not being corrupted.
And it goes from the farm to the roaster. Yes. Might not be a direct relationship, blah, blah, blah. But it's healthy.
And that's what we're looking for. The risk of it comes with the claims and the unsupported claims and beyond how is it called farm direct direct trade, the important thing is that procurement is traceable. What does an unhealthy supply chain look like? If that's what a healthy supply chain looks like, what does an unhealthy supply chain look like?
In my view, if you are claiming that you have a healthy relationship, but at the end you cannot trace it back. It is that simple. And again, there are big players out there that do not have the direct relationship with the communities they purchase, but they have long-term commitments of purchasing. They do reinvest in the communities, they buy from comparatives, and that's healthy.
Many of these players have these big supply chains are pilot projects within their bigger scheme of things, and it's only kind of a small supply chain, but it's a massive supply chain in our eyes in the specialty coffee, and that's healthy. The problem is when you're claiming all this support, but you don't have the evidence for it. When you're claiming direct trade, but you don't have a farm gate to prove to yourself that you're purchasing that coffee to the farm. So we are circling back to Alejandro's point, but principally to the Prime Minister of Canada's speech, is that our industry is filled with all these signs of responsibility that we know privately that are false, and that's where it becomes unhealthy.
I couldn't agree more. I couldn't agree more. We claim direct trade, or there are a lot of players claiming direct trade and have no idea of what farm gate means, not that they don't know the farm gate. They don't know what farm gate means.
So it has become a way to evidence direct trade is the picture of the farmer, the name of the farm, and the municipality where the farm is. And we have custom consumers and normalized within the industry that transparency is having a picture of a smiling coffee producer. And that's not transpires. That's not traceability.
And we, as an industry, have made a lot of effort to take transparency up to the FOB level. And for those folks that are not related with DICO terms, FOB is free on board, but in technical terms is the money that from consumer countries reaching the gate of the origin country or the gate of the country. But from the gate of the country to the gate of the farm, there is so much happening. There are so many players involved.
So not even knowing what farm gate price is, but claiming that you have a direct relationship with the farms, it just doesn't make sense. You know, we've been talking a lot on this podcast and on social media about this term that I've been spending a lot of time researching, which is involution. Do you know this business term, involution? Have I heard it?
Involution is when an industry or a business has stopped innovating in ways that drive things forward. So it's innovating kind of sideways. An example of involution in our industry is when we create a V60. And the way that we innovate from a V60 is to make a V60 with two V60s, next to each other.
Which is what's happening. Like this is involution, where we're no longer looking, so somebody had come back to me and said, well, where would you like us to focus? What you were just talking about is where I would love people to start paying attention, start learning about economic terms around coffee, start understanding the supply chain, looking for the problems that we really need to solve in connecting our industry on the consuming end of the market, with the rest of the supply chain, more downstream or upstream, sorry. This is where we have so many, so many opportunities for actual innovation.
Whether it be through technology, whether it be through agriculture, whether it be through other technical ways that we might be able to make things work business, financing. There's so much opportunity for actual innovation that when we take a V60 and we say that we're going to create a tool that allows you to blend coffees by pouring two single origins at the same time. And that's what we call it, no disrespect to Mariam for creating it or anyone that's selling it. But I think we can do better.
I think we can do better as an industry if we want to ensure the longevity of our industry. Go ahead, Petra. Innovation is a beautiful word, but it needs courage. Word, cheese to that.
It needs courage, especially when you're talking about transparency and when you're talking direct relationships. This is a broken industry. It's an industry that has been operating, as you were saying, and finance by producers, where producers are price-taker, well, we all know everything of that. And being transparent, which is innovative by itself, requires courage.
Because what people is expecting for transparency is perfection. Transparency is not about perfection. It's about unveiling the reality that exists behind the cuff to make better decisions. And we're scared to talk about it.
Exactly. So nobody wants to be transparent, because being transparent brings problems, exposes your cracks, and the cracks within your business, and the farms, and the roasters. And that's why I work in Caravilla, but I admire Caravilla and Alejandro and Giancarlo for the courage we have in saying our Mexican producers are vastly underpaid. And we are paying them less than we should.
And there are ways to pay them more. And these are the ways, because Caravilla is not only exposing the gaps. The idea of prosperity in Caravilla is also to build the frameworks and the means to close those gaps. But having an impact report saying, hey, we are not doing well requires courage.
And transparency is about that. And innovation is about making that leap of faith, telling that reason, of doing something that might not be good news for everybody, the reality. I'm going to mention Bob and Michelle Fish again, but in particular Michelle Fish here. I don't know if you have seen the video that she released about child labor.
And also the post above. Right. And it is the perfect example of the complexity of transparency. And I will link to it in the show notes.
Everybody should see the way that Michelle is navigating this promise that she made to the Big Be Nation, that she will not buy coffee. They will not buy coffee from farms that use child labor. And she goes through the process of what it was for her to come to understand the complexity of the statement that she just made, and the promise that she made and it is completely beautiful to watch her navigate the difference between her lived culture and the culture that exists in origin countries. And what I think is exciting about what Bob and Michelle are doing is that they are bringing us into that process.
And they don't have any answers yet. Michelle was really fantastic about saying like, I don't know where this is going to go, but I'm going to continue to be really transparent with you about how I'm wrestling with this idea of how I feel about children working on coffee farms when I also realize that their families, like this is just how coffee farming is done. And these families are working together to build this business. And it is beautiful.
Like, as you were saying Pedro, the transparency requires courage. And we need more of it in this industry. Exactly. Sorry.
It's a way to make yourself vulnerable and your business vulnerable to what it's out there. And it requires courage for that. But that's that's innovative and that inspires. And that's what we call in Caravan.
Welcome to the farm gate era because we are pushing for more people to enter that era of vulnerability, of transparency, of our core transference, real transference, no layers, no caveats, just how much of what you pay reach the farm. Yeah, I love it. As Brene Brown says, like, you can't, like, there is such strength in vulnerability. And it's transformative when you have that kind of courage to have that strength.
We have one episode to go guys. Join us for a discussion about what the next 10 years is going to look like in coffee production. Peace, love and peanut butter. Have an amazing rest of your day.
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