What I can understand why it's there is the Forepress. So the Ethiopian Coffee and Tea Authority, CTA, for sure. They have created a export to minimum Forepress. So for every origin Ethiopia, every grade, every processing type, and every exporter type, there is a Rowan Excel sheet that has a price.
I've seen it. That has a price. Yeah, it has a price. For every week, it has a price listed that you cannot sign a contract for below that price.
It has to be above it. And that price arrived. It's kind of a headache because there's been plenty of time when I've been working on pricing between a buyer and a farmer. We finally get to an agreement.
We missed that Tuesday, and the prices come out, and the price has risen 10 cents, and the buyer's like, oh, no. I can't do anything about this, and we have to start it all over. 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 parts, integrated QC, logistics support, and produce a lead transparency.
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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 Mapper 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 Mapper Forward Friends. I'm your host Lee Safar, and this is episode two of a five-part series with Matthew Thornton from Arcana Coffee Market. It is an online platform, and we are having this conversation about the 2026 Ethiopian coffee harvest. Matthew samples are gonna start to be ready to be sent out soon, because the harvest is revealing itself.
Let's just say that the details of the harvest from a quantity, quality, and pricing perspective have revealed itself. If anyone is starting this series at this episode, go back to episode one, and you'll be able to get the details on that. And also before I forget, on the 25th of February, I'm going to be in Sydney, Australia, and Mapper Forward in collaboration with Stitch Coffee are doing a Aussie Coffee Town Hall. So if you are going to be in Australia, it's a live in-person event, tickets are free, but you do have to register to go, and there's tickets on our website, a details how to register on our website, and we're gonna be talking about all this kind of stuff, like the future of specialty coffee in Australia, which involves supply, it involves pricing, it involves access to sourcing and stuff like that.
So whatever comes up comes up, but please, if you do wanna be there, please consider coming. Now, Matthew, in this episode, we're gonna talk about how is Ethiopian unique as a coffee trading origin. You and I between episode one, recording episode one and episode two, we were talking about how high the prices are, and we were doing that in a little bit more detail. And I wanna start the conversation to the fact that, I know that the way that coffee is priced and traded in Ethiopia is very different to the way that it's done in most other countries, and that's a fairly new thing.
Can you explain what that means to people? Because most people still think that coffee's traded on the sea market in Ethiopia, and that's not the case. That's not the case. So with trading and things that make Ethiopia unique, I would say there's a few aspects to it.
The first one being the sheer number of exporters and the sales of each. We also have the Ethiopian government floor price, which is really, has come about because of Ethiopian, or coffee's importance to Ethiopian economy and the development of the country. So to start with, I'm talking about exporters, currently, and this number is really hard to pin down, but it's about 400 registered coffee exporters in Ethiopia. Wow.
Yeah, there's a lot of people. And for smallholders, there's thousands of smallholder farmers that have gotten their export license to directly export their coffee. Focusing only on the larger exporters. And you have a lot of diversity.
You have some guys that are focused on specialty coffee and they do it really well. You have the other side where it's commercial coffee and they do it really well. And then you have guys that do specialty coffee and they don't do it well in the same with commercial. And they don't do commercial.
And across this range, all these entities exist and you really have to be careful with what you're working for. And I see a lot of people make the assumption, like, oh, this company, they do really good specialty coffees so they can do commercial coffees as well. And it's not the case. They just, it's just not in their business model.
They don't have the infrastructure set up for it. So yeah, you really have all of this diversity in exporters, which can create a lot of challenges for buying, but as any good entrepreneur in the challenge, there's always opportunity. So people can wait through it and find people for the different types of coffee they want to source. The right price points, they really, I would recommend not relying on one individual company, kind of diversifying what you're buying from.
So that's one unique thing. I would like to also add the fact that there's thousands of smaller coffee farmers in Ethiopia is quite unique in Ethiopia. Especially in East Africa, they were the first country that I'm aware of that made like on legal grounds for small holders that have coffee farm. They made like the legal foundations for them to get an expert license at the Directly Export, which is amazing kudos to the coffee and tea authority, Ethiopian government for seeing the value in small holders, the value that they can bring back to their communities, which I have some amazing stories on, too, from our travels.
I'm very good to you. Yeah, kudos to the government for seeing the impact I can have, and it's starting to catch on in other countries in East Africa. Kenya knows down there less, they have something similar. So that's also very unique in Ethiopia.
And then I think kind of the fact that there's one piece of this also that it's kind of a big, but I can understand why it's there is the for us. So the Ethiopian Coffee and Tea Authority, CTA for sure. They have created a export minimum for price. So for every origin in Ethiopia, every grade, every processing type, and every exporter type, there is a row and an excel sheet that has a price.
I say net, that's a price, yeah, that's a price. For every week, it has a price listed in it that you cannot sign a contract for below that price. It has to be above it. And that price required, it's kind of a headache because there's been plenty of times when I've been working on pricing between a buyer and a farmer, but finally got to an agreement, we missed that Tuesday and the prices come up.
And like the price has risen 10 cents and the buyers are like, oh no. I can't do anything about this and we have to start all over. But the foundations of this is, it comes from a good place. I mean, Ethiopia is a developing nation.
And importing is crucial for the local economy, as well as for some of the large scale development projects the government is pushing. They just lack the internal production capacity, so they have to import. To do that, making dollars and coffee is a major driver of dollars for these products as well as, again, these projects. I think they're like the grand Ethiopian Renaissance dam.
I'm sure a lot of money from coffee went into that. That's also the core of our project. And if anyone that comes to Addis will probably notice a massive change here. They're doing a lot of renovation of the city and putting into infrastructure, which is exciting, but it costs me and it costs foreign currency.
So with coffee being a primary driver of foreign currency, the government has put, they're really trying to maximize, I guess the money that comes in from export and reducing the amount of, I would say, places the coffee can escape to that could bring in dollars. Let's not forget the coffee, Ethiopia, this past year they did lose the title as largest exporter in East Africa to Uganda, but they are still, by far, the largest producer of coffee in East Africa. They just consume half of it, which I thank all of the Abunas that I've been to, all the coffee people on the corners that are selling coffee that feed my coffee edition. I really appreciate them all over.
But the government has to have a lot of controls in place to try to not only promote that market, but just make a distinction between the local market and the export market and maximize the dollars it comes. And their best bet is this exports minimum for price. Again, every Tuesday, remember that guys, every Tuesday, anyone comes out, get your contracts in by Monday latest before that price changes on you. And within this system, right now, if there's an associate, it's 500 rows deep from all the different origins, grades, processes and exporters, or exporter types.
And with this export, for pricing, it's important to try and understand how they set the prices. And the coffee T authority says that they're taking consideration the sea price. And then they look at the previous week's registered contracts for every grade and type. And they average them and then set a new price based on that.
So what I've seen, they use the sea price to kind of dictate the start of the season where they set that. And after it seems to fall with just the previous week's registered contracts. And here's a question for you, Lee. Can you, which direction could that price ever go?
If you're just using the previous week's registered contracts? I mean, can you predict that given the volatility that we're experiencing at the moment? Because, I mean, I think the answer that sounds logical is up. But given the amount of volatility that we've had, the US dollar experienced a four year low last week, I don't know how we predict anything anymore.
Like I keep saying it, I don't understand anything about fucking anything anymore. Gold and silver. Except gold and silver, I had a 28% correction in a day and it was still at a record high, not a record high, but it was still higher than previous years. So like, everything's being messed with, right?
You can't write this movie. No, not to get distracted. I think the gold and the silver drop was mainly Game Futures Markets. I think it was all a paper bullshit got nothing to do with actual fundamentals.
I get it. It sounds like coffee. It sounds like a thousand percent. How could people show you the contrast?
Right. And there was like a bank correction that they needed to, they needed the market at a specific thing so that they could fuck with it. We're all useful idiots at this point, folks, and we're buying into their narrative. And we all just have to accept that and figure out how we can take advantage of that situation.
But back to coffee. Well, the price you were right, it only goes up because if you average in the previous week's contracts, it gets some people that have a contract right at that minimum price, but they'll all be some people that are above it. So your average income comes in the middle. So it goes up.
It keeps going up until the price comes out of market, people stop buying, and then the CTA will produce the price, and it goes up, up, up, up, and then they produce the price. Up, up, up, produce the price. So if you might be able to understand those patterns in the market, you might be able to produce, you know, if your coffee's out of your price, you know, this week, maybe almost time it will come back into price. Unfortunately, you're going to take a month away under coffee delivery.
But that's just a trend I noticed in the pricing. Just going up and dropping, going up and dropping. Can I, for a second, I want to see if I understand this correctly, because it sounds like the FNC Columbia do something a little bit similar to this, where they set the price and you're not allowed to pay a producer, but they do it daily. You're not allowed to pay producers any less than a specific price on that day, right?
And it's got a correlation back to the same market, et cetera, et cetera. So if I understand what's happening in Ethiopia correctly, every Tuesday, a price list comes out that says, you are not allowed to sign contracts that are less than this price, and it's very specific, it talks about like there's a lot of items on there, I've seen it. So it's very specific. It's not a generalized price at all.
They're going to a lot of detail that talks about region and quality, and et cetera, et cetera. And so that pricing is built off the mix between the C market the week before and the contract price the week before. Is that correct? Yes, with less emphasis on the C market.
And more based on the actual contracts that were signed. Okay, and every now and then there's a correction that the coffee and tea board association makes happen. Is that correct? It seems that way, because it's based on the previous week's contracts.
Again, if you take the average of them, the price really only trends upwards. And as that happens, eventually the coffee's become out of market, like no one's going to pay the price for them. And then you'll see the next week, those are the whole week of business. And the following week, the price will drop down 10, 15, 20 cents.
Okay. So the reason I wanted to understand, make sure that I understood that correctly, is because what it sounds like is that, and I never ever thought that a statement like this would come out of my mouth on this podcast. But it sounds like that, given the extractionist nature of the consuming end of the market, the coffee market, on origin countries, what I mean by that specifically is that people have used mechanisms like the C-market to drive the price down of coffee. It sounds like the Ethiopian government has said, no, no, no, we don't like how this works.
Fuck you very much. Yes. We are going to make sure that this commodity that is incredibly valuable for Ethiopia is going to be traded in a different way. Is that what has happened?
Oh, I don't know. Yes. Yeah, the government's just, which I love, actually, that's something I really like. The government here is kind of like, we don't like this.
It's not working for us. We're not going to have it. We're going to play by our game. It's our coffee.
So yeah, that's definitely a protectionary measure to make sure that I think one, two, protect dollars coming into the country. So like any exporters that are trying to sell will be cheap. Well, one thing some exporters do is they'll reduce their price locally, sell it to a sister company abroad, keep a lot of the profit in that sister company when they do a second sale, and kind of avoid money coming back to Ethiopia. So it prevents that.
But it also makes sure that people that may not be as informed in the market get better pricing. They get fair pricing based on market demands and market trends. So as much as I can curse at it, I can understand where it comes from, too. Well, it sounds like they're trying to, and I'm being very generous here, folks, and I'm aware, like anyone who understands how a lot of this stuff works is going to be like, you're being very kind here.
Lee, I'm being very generous when I say, it looks like the government is taking care of its people. There are many other reasons, I'm sure, that this is happening. But it does sound like this is working for people in Ethiopia as much as it's working, or maybe more, than it's working for the people outside of Ethiopia. Am I understanding that correctly?
Yes, I think so. Honey? Or it's working better, let's say, than the system did before. In terms of, it depends on how you define better.
Okay, that's good. They're not getting taken advantage of it as much as before. I would say yes, they're definitely getting and pricing that, again, is following market trends and demand, and they're not exposed to some predatory buyer coming into England. I like your coffee, you want $4, I'm only going to give it $2.
Right. It prevents those people from getting into the system. But yeah, I mean, it has its flaws. Everything has its flaws too.
But at least they're strong. So final, at least it sounds like this is an effort to actually take things more into, to be less extractionist, which I think is fantastic. My last question for this episode is like, well, first of all, let me preface it with another question. How long has this system been in place?
A couple years. No, it's been a while then. I think since like 2019, 2018, somewhere in there. Okay.
Okay. So it's still rather new compared to the historic longevity of the Seamarket. So given that last week that the price of coffee, we're recording this for context. We're recording this on the 2nd of February.
So given that this has been something that's in place, the new pricing structure since about 2019, the price on the Seamarket is about $3.40. What is, what kind of prices are we looking at for Ethiopia in this harvest, generally? Let's say equivalent coffee that would be sent to the Seamarket. I think currently you're looking at, it really depends on the region.
They're all over the place. I think it's sitting at around $3.20, $3.30, right, at the Seamarket. But usually coffee needs a trade at like minus 17 to make it feasible for people to buy it. In Ethiopia.
So yeah, yeah, you're gonna have a differential of like minus 17 and then it makes sense for you to buy like a grade five commercial coffee. Okay. So that's per pound, right? Depending on where you're at.
Perfapilence, extra pound. And are you seeing a market difference between the delineation you made between the East and the West of Ethiopia in the last episode? Are you seeing any significant numbers popping up that are showing you any kind of significant understanding of how they're being priced? Given that the East has less coffee than the right?
I mean, not really, I think. I don't think a large contrast have come through yet. So specifically in terms of the minimal pricing, it's gonna take time to see where they go. But on average, coffee's in the West trade cheaper than coffee's in the East.
Maybe except for like the Agaro-Gara area, those can be pretty expensive. But everywhere else in the West, you really do see lower prices as compared to East. Right. But in general, you said in the last episode, people should be prepared for sticker shock from coffee out of Ethiopia, they see.
Oh yeah, yeah, yeah. I think we mentioned it briefly before, but I've got some offers coming in now for like grade four in the East at three dollars and 80 cents. Per pound, right? But like grade one, these are all per pound prices.
And then grade ones, I haven't really seen offers. I've heard of things in the six dollar range per pound. I know that they're break even again for purchasing cherry was about equivalent to like four dollars and 35 cents a pound, up to five dollars and 44 cents a pound. This does in fact are in export costs, transport and labor, factoring and rejects.
Terrace. Oh yeah, Terrace, there's some new chaxes locally too. So just be prepared if you're buying stuff in the East. Get ready for that sticker shock.
Yeah, okay. So in the next episode folks, what does it look like if the harvest goes well for each of the stakeholders? We are going to explore that in the next episode. And the next episode after that, we're going to talk about it in the other perspective, what happens if the harvest doesn't go well for each of the stakeholders.
So we know that the harvest is finishing, but like what comes now? So if it goes well, and if it doesn't go well, so join us for the third episode of this series. Peace, I haven't paid up, I have an amazing rest of your day. If you enjoyed this episode, consider supporting Mapper Forward, our guests and advertisers on social media.
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