That gives them a massive competitive edge. They can under-compete all of the exporters. If they're smart, they're going to realize that, use this year to maybe compete so a little bit cheaper, secure those relationships, prove that they can handle international business, and start these long-term business relationships with buyers. And that's what I'm hoping for.
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And this is episode three of an awesome five-part series with Matthew Thornton from Arcana Coffee Marketplace. We are talking about the 2026 Ethiopian Coffee Harvest. And we are now going to talk about what happens if the harvest goes well for all of the stakeholders. So Matthew, what happens if it goes well?
So I'm going to focus on stakeholders in Ethiopia. And I think for some of them, it's already done. Farmers, anyone's applying cherry? They did well.
They made some good cash. Yeah, I think there's also farmers that have dried the cherry so they have the cherry pods and they're going to sell them like the secondary markets for them. Is that like meals? They're going to send them to meals or, right, okay.
Yeah, some to meals or there's brokers that go for exporters that are hunting for quality coffees. They could do well. I think they would need to sell fast because I think that right now, exporters are looking and expecting demand. So they're trying to fill orders, at least get some kind of volume secured.
If the sales happen, I think they'll conduct demand will continue, but if sales dry up because prices are too high, which could be a reality, then I think that demand could fall. And then the farmers will be left holding whatever dried cherry pods they have. So I would think they need to move quite fast. For farmers that are selling directly, for instance in their coffee market system, I think this is there here to shine.
If it goes well for them, like they're not the ones buying cherry. They don't have those overheads. And coffee is like a gift in Ethiopia. You go to other origins, like Columbia, I've seen it before that you see the operation.
It's like they work so hard. And we have our fermentation tanks tiled. We have like we watch the pH, every hour to make sure the fermentation is just dry. And then I know I have a, I'm not saying no Ethiopia goes into that much detail, but many don't.
And I've put in coffees that definitely haven't on the table with these guys. And the Ethiopian still scores better. It's just like a natural gift. It's the diversity in the quality of the plants, et cetera, et cetera.
Anyway, yep. Yeah, yeah. And it doesn't have a lot of input. So farmers can really produce good quality coffee for cheap, not a lot of inputs again.
That said, that gives them a massive competitive edge. They can under-compete all of the exporters. If they're smart, they're going to realize that, use this year to maybe compete so a little bit cheaper, secure those relationships, prove that they can handle international business, and start these long-term business relationships with buyers. And that's what I'm hoping for.
And Shala as we say in Arabic. That's, yeah, there's a lot of, so for unions and co-ops, that's a tricky one. Here we go. I think, actually, the, I think it will be okay now, Seth.
If they've managed quality, well, it should be okay for them. In the east, due to, you know, capital restrictions, like hard cash restrictions as well as regions crop, I think there's going to be a lot less coffee that's produced through these stations. And if they focus on quality, they should still be able to sell whatever coffees they have at a higher price. I'm assuming a lot of buyers will come and be like, you know, that's really expensive.
We want to continue the relationship. So we buy it at this higher price. But we'll reduce our volume, which fits in perfectly for what happened with them. So as long as they manage quality, they should be able to get by.
But I think it's going to be a season of survival for a lot of these guys. Not like making a lot of cash, it's going to be survived. And I think this will also go to the same for exporters in the industry here. As long as it's managed quality, they should be okay.
As long as they weren't leading the charge, I'm just buying as much charity as possible. I have a market. They should be okay. And then you have less, that's in the east.
Outless, I think it could be good because I had a bumper crop. The prices should be lower out there. And I think a lot of buyers shifting from the east to fill in the quantity demand they have, they'll shift to the west and be able to pick up some of the extra production that's happening out there at a cheaper price to make sure that their books match are balanced. Yeah, their books match with the quantities of buying, the quality of the buying.
So I think overall, this season actually could work out quite well for everyone. But I think for exporters and stuff, again, it's about survival. It's not a year of amazing coming from. But it is going to be a year where the producers start to get some of those back.
Compared to last year. They've heard a lot of farmers that are supplying to these guys. They've already made a killing the monies in the bank. Excellent.
Although I want to talk about, I can worry about next year because they may have unrealistic expectations for the price next year. And I'm hoping the trend, it's good that they made the money, but it has to be balanced with demand. And for prices like above $5 above $6, I don't know if that's sustainable. And a farmer's coming with this expectation again next year and they don't save up their cash now, put it towards something else.
And they just kind of burn through it. I've been worried for a next season. They don't have the same expectation, it's just not finding it. Well, if what's happening is similar to Brazil, I'm hearing a lot of correlations with Brazil, right?
Brazil has an on-crop and an off-crop. But all of that's being thrown out to the window, out the window, thank you, climate change. But farmers have learnt in Brazil that they have to manage their cash flow that way. And it sounds like there's something similar between the East and the West happening in Ethiopia.
Farmers in Brazil are also not just, they're realising their impact on the pricing. And they're not being as free flowing with regards to. And I've heard this from many, many people. But they're realising we don't have to send all of our coffee to the market at the same time.
And if we do hold back, they're understanding their role in the way that the market works. Where previously, I'm not sure that that was the case. Previously, I think what was happening was, and this is all respect to farmers, they're just playing it differently now. It sounds the same thing as happening in Ethiopia, that they're playing it.
The farmers are realising, no, we can, you know, some people would say it would be manipulating the market, other people would say they're just being smart. And participating now in the game of commodities, because it is a game, supply and demand to now is a game. We've gamified everything in the economic sphere and beyond. And it sounds like farmers are getting on board.
I would slightly disagree with that here. I think that exporting for many of supporters in Ethiopia is kind of like gambling in a way. They just come in by golfing and expecting it. Yeah, it's absolutely gambling.
I think farmers, they really don't have a say in the pricing so much, but they were just along for the ride and worked out low for them this year. I wish they had more say in it. But I think they just don't have the information about what's going on in international markets. And you really want to have just ex-laughters in the game.
It's 400 of them. And especially in like southeast, just so much competition, like the prices just shut up. And the farmers are just raking it in all the way to the bank. By chance.
By chance, by chance. Okay. Because here like the farmers are so much smaller, most of them have a half a half a half a half a half a half a half. Right.
Like they're combined power. They're not organised in the combined power. Could be immense, but the fact that they're not organised in that capacity. Out of interest, how does it work better for the farmers that are trading through Arcana?
How is that different? Like I'm sure this is new for them. Oh. For the farmers trading in Arcana, I mean, they're directly working with clients.
They're still getting the, they're such a culture here of a farmers forming a connection with like us, maybe considered like a broker. It's really hard to berate them away. Right. No, this guy is your client.
You need to watch him. Don't worry about me. We're matching him. You're my client.
Yeah, you're my client. I have to watch out for you and him. And there's actually one point where we're out with the client recently where he was looking at something in the farmers were discussing a small group home and standing amongst them. And I noticed the client kind of wandered away out of the warehouse.
He was looking at like, I forget what he was checking. But I looked at the farmers and I'm like, hey, your client is leaving. You have to go follow them. And they looked at me and they're like, they're kind of quick to know.
Oh. That's my customer. Yeah. I'm like, this is your guy.
Don't worry about me. Yeah. One question that I have for you is historically, there's been a lot of talk over the last few years about, is there something going on in Ethiopia with regards to overall yield? And what I'm curious about is historically, we have started to see the yield in Ethiopia drop compared to, let's say, a few decades ago.
You said this was a killer crop in the west of Ethiopia this year. On average, for the entire origin, do you know, is the yield this year bigger than, let's say, the last few years? Fortunately, I don't have an accurate estimate of the total yield this year. I'm assuming, because pricing has been better over the past few years, that there's more farmers participating in coffee and that the overall production will increase.
I think the hardest part about making any kind of inferences about Ethiopia is the lack of accurate and reliable data on production until after it's exported. Right. Yeah, it's really hard. Even when I used to work for Suka feet, I mean, they're always wanting for this information.
And it always seems like kind of like a stone dunk. Yeah. You send people out to go to surveys and stuff, but it's such a wide area. And the habitats and micro planets are so diverse, that it's really hard to pinpoint exactly what production is.
So, I wouldn't really have a hard time saying one way or the other. I do think that if it's in the west, it's good. It'll kind of be a bumper crop, because that's where a lot of production is in Ethiopia. Something like the vast majority of Ethiopian coffee is just like commercial grade exporting.
And the vast majority of that is produced out west. And if there's a bumper crop out west, that means it's going to be more of those volumes. So I would say, yes, the production is probably higher than at least last year. The year before that, I'm not 100% sure.
Okay. And if most of the commercial grade is produced in the west, is the east where more of the concentration is for specialty grade and hyper-specialty grade? Yeah, for sure. So there's going to be less available this year?
Yeah, exactly. Quality size. That's going to be very interesting. Yeah, so maybe those prices will be okay.
People are going to have to compete for the limited stock. It's available. But... Oh, that's going to be so funny to watch people.
Anyway, sorry. People are just going into the interesting mechanisms that happen in my mind. Anyway, go ahead. There's going to be some great walk-and-talk that come out of the consequences of that.
But really, the big names and coffee for calling, Kooji, Sidama, Yirga Chefi, Katabere, which is a part of Gedio near Yirga Chefi, Hambella, Boraga. All these names of people, no specialty, they probably know these names. They're all from the southeast. All right, guys.
We've had a couple of technical difficulties through this episode. So if you hear a bit of studying and stopping, we apologize for that. But we are now going to wrap up this episode. And in the next episode, we're going to talk about the reverse of this.
So what happens if it doesn't go to plan for the stakeholders within EFIOBS? So join us for the fourth episode of this really fantastic series with Matthew from, um, from Arcana. Peace on Peanut, but I have an amazing rest of your day. If you enjoyed this episode, consider supporting Map Beforeward, our guests and advertisers on social media.
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