Although the season did kind of work out in favor in a way with that in the East where there's really high specialty coffee lower cash availability Cheamed up with lower production in the regions means there's probably less coffee to sell And I think again if they can get those sales and get them out quick, they'll be okay I don't think they're doing massive profits. I think this is a year just to stay low or alive Make it one more year until next season For those that don't or for those that really didn't have markets lined up We're just copying her neighbor because he was buying it to 60 300 per kilo. I'm gonna buy it I think those guys are going out of business Sourcing green coffee doesn't have to mean sorting through endless options to find the one that works Arcadia green coffee focuses on identifying Colombian coffees that match what roasters are already seeking or preparing to release They only move forward when pricing aligns for both producer and roaster They pay producers up front and they provide a clear landed price helping roasters make better sourcing decisions more efficiently Find out more about mapper forwards podcast advertising partner Arcadia green coffee by visiting their Instagram At Arcadia green coffee and then contact our gusto amaya on WhatsApp or email. You'll find all the links and details in the show notes Welcome to the daily coffee pro by mapper forward friends I'm your host Lee Safar and this is episode four of a really wonderful five-part series with Matthew Thornton the founder of Arcana coffee market place We are talking about the 2020 60th European coffee harvest and in this episode We are going to talk about the flip side of what we talked about in the last episode So in the last episode We said what happens if everything goes well for the stakeholders within Ethiopia for this harvest and now what we're going to talk about is what happens if it doesn't go so great for the stakeholders with Anythrough before that coffee harvest so Matthew tell us give us a tea what happens if it doesn't go well Give me the short version please if it doesn't go well.
They go out of business Shut up Fantastic Well, you know honestly I mean for farmers the harvest is done anyone selling cherry to recommendations. It's done They did it well My only concern is that they area on this anticipation for these high prices into the next year because prices are really high and I don't think it's sustainable I think with any markets I think this is a swing and I think next year needs to come down a little bit in order to meet any buyer demude but for this year it's open for farmers For exporting farmers They need to focus on securing business relationships getting that business in and getting it out We're getting our coffee arms If they don't do that they're likely going to have to sell into like secondary Kind of meal markets where they sell their dried cherry positive meal and then there's either exporters and brokers searching around in there for high quality coffees They could sell into that and make some some cash but really that would just be a lost opportunity I don't think for exporting farmers. There's much of a risk of going out of business. I think that falls upon unions, cooperatives, specialty exporters although the season Kind of work out in favor in a way with that in the eastward is really high specialty coffee Lower cash availability teamed up with lower production in the regions Means they're probably less coffee to sell and I think again if they can get those sales and get them out quick Don't be okay.
I don't think they're making massive profits I think this is a year just to stay afloat or alive. Make it one more year until next season For those that don't or for those that really didn't have markets lined up We're just copying their neighbor because he was buying it 260 300 per kilo. I'm gonna buy it I think those guys are going out of business Which means more coffee probably getting dumped into the secondary markets these mills and stuff I don't know for what prices But maybe some of these specialty guys that were better hedged were better informed They might be able to pop pick that up cheap and maybe they'll be able to sell it down the road in a couple of months So you go buying and we'll be able to see those coffees come around again But time will tell it's really hard to predict that And then you have commercial guys I think they need to just leverage their bets if they're really usually commercial guys will have You know Relationships in the east like more of specialty regions in a lot in the west I think it's a good year for them to turn their attention to the west focus on where coffee can be picked up for cheaper Try and walk in contracts with buyers or ships any potential domain they have out west either for pricing Yeah, mainly price to actually just make you for pricing for their buyers We'll try and shift the buyer attention out west and fill the man in that way I think they could do well But if they just focus on the east where these prices are higher I think they're gonna struggle and again, it's going to there's always going to be the threat to Going out of business moving on the horizon One interesting caveat so all of this is A lot of exporters are in this To support their import businesses any the opia any export they move their off your broad They get to retain 50 percent of that as foreign capital The other 50 percent gets converted to bird to going market rate and gets deposited into their accounts as well but they're foreign capital a lot of these Exporters, they're really importing companies just getting into export for foreign capital But they'll use that to purchase good spring into the country to support their import business So they could technically take a loss on this coffee and then Make up their money on the import business or the manufacturing or the fabrication business Whatever else they have going And those guys are bluffing they get done after kind of playing both sides Both sides of the field and they could probably take a bit more of a loss in coffee With a realization that they get up in whatever other business they have going What you've just said is really important for people to understand everything that you've said is important for people to understand But this is a unique window that our industry doesn't typically get into each origin, right? And we're giving people this insight here.
Something in particular that you've said about currency is we need to put a microscope on it So I've been talking recently in my walk and talks and on the podcast about the fact that I think the way that we delineate our industry Is perhaps the wrong lens to be looking at it and you've just demonstrated a really important reason why? So currently we talk about the coffee industry as commercial and specialty grade That's how we delineate it and I propose that we start looking at it from the perspective of corporate versus independent And What you've laid out for us is a couple of really interesting dots that we need to connect so that we can start digging deeper You've said That the coffee in the west and the coffee in the east in the west we have more coffee in the east we have less And you've also said that in the east is where the majority of the specialty coffee is produced in Ethiopia, right? And so In a year like this year where there's there's going to be less supply of specialty grade coffee in Ethiopia and the prices are going to be higher You've also said that a lot of exporters in Ethiopia are using coffee as a mechanism to earn us dollars So that they can then take those us dollars they go and they buy other imports for Ethiopia so that they can make more money locally so they will um they will trade coffee They get to keep 50 of those us dollars the other 50 automatically gets flipped into local currency if you're being better And then they take that that 50 of usd They go and buy toys or electronics or whatever it is in us dollars outside of Ethiopia Then they import those goods and then they sell them locally and continue to do that So the coffee is what they're using as a means to an end to greater export import opportunities. Am I understanding that correctly?
Yes for I don't want to say it's all exporters. No, it's general being very generalized there, right? And yes, there are specialty focused exporters bellcosa grade example of that they're there. They're looking for quality They're buying based on traceability.
That's the way that they're focused on all of that, right? There are exporters that are there that are focused on that kind of thing if if we continue to Build an industry that is centering quality as the conversation And the actual industry is working like on the ground to the corporate side of the industry is working based on The commodity structures and the economic structures that exist We're not working in We're in different industries then they are working purely as a commodity and we are working as a naive We're gonna make everything better based on quality kind of industry. We are not we are not Do you see my point? Like these folks can switch it on a dime if if tomorrow cacao becomes The most exported thing and I'm not saying that it is.
I'm just saying whether it's cacao or whether it's eucalyptus or whatever it is Yeah, if the trade flips, they don't give a fuck about your quality Right these people are looking at trading and using commodities as a means to an end We are not thinking like these people we are thinking about what's the cup squat? Well, these people are thinking I don't care about your cup score because if that tree has Cherries on it and I'm going to be able to pick cherries off that and sell it for $6 or whatever it is on a more commercial market I don't care whether the cherries are red or green. I'm just going to send it into a market and start exporting Yep We're not playing on the Well, and we need to grow up As an industry in my mind so that we can start actually participating For the long term not just based on this fanciful kind of idea of let's hold hands and sing kumbaya and just focus on a cup score It's that's not what's going to help farmers. That's not what's going to help roasters At all You're at all I said this thing in the Augusta on my a series that I haven't stopped thinking about since Coffee roasters think they're in the hospitality industry Coffee roasters are not in the hospitality industry coffee roasters are in the commodities business Yes, I could see that they sell to hospitality businesses But they are majority in the commodities business whether they're dealing in specialty coffee grade commodities Or they're dealing in commercial grade commodities.
They are still in the commodities game. Am I incorrect there? Well, I didn't have that much insight into the supply chain On that end I guess I'm more focused at origin, but I would think that they're If they have a cafe, it's more hospitality, but I think any sizable roaster Is definitely in the commodities in one way or another. They're not buying career specialty If they're doing anything at a scale They have some connection to the sea markets They definitely have pricing they have to watch out for But but remove quality from the conversation, right if we remove remove quality You are at the very least let's forget about terms like commodity.
You are in the trading game Yes, you are not in the hospitality industry. You are in the trading game. You take a product regardless of its quality You purchase and trade that product And then you transform it and you sell it yes Yes, if you sell it even direct consumer Even if you sell it direct to consumer, you are still not in the hospitality game. You are still in the trading game You are trading a good You know, I think you're trading and I think you're actually a bit of both I think you're a trader especially in terms of recall because you need to secure Your product for a price that you know you sell it for And if we didn't want to go into quality here a little bit You know that you have to have they'll be doing blend Yeah, so you're taking on that side of your trading and then you're just selling the goods And it could be to anywhere could be direct to consumer, but in terms of hospitality in the way I perceive it I wouldn't say you're super involved in that unless you're selling a lot of your coffee in a cafe Like the vast majority of it you get is then maybe you're more in hospitality restaurant and stuff like that But if you're just roasting and selling you're like you're actually more than one.
You're not just a trader you're A trader and a retailer Right and the reason I raised this in relation to our episode here Matthew is because I'm not sure if it would shock you or not, but the majority of roasters will be Completely surprised and have no idea by what a sea contract is By the difference in grades and how they're um traded in different countries They will not have any idea about currency exchange and the role that that plays on the price of the the thing that they are buying They leave all of that up to other people and this is no disrespect to any roasters guys I want to be really transparent about something. I was a dumb dumb in coffee for the majority of my career as a barista I didn't understand any of this stuff. It wasn't until I started owning businesses in coffee that I started understanding I don't understand five percent of what I'm supposed to understand And that's because our industry has been focused on the idea of quality Not on the idea of trade and we need to shift that so please know that when I say this stuff I'm right there with you. I'm pointing the finger at myself before I had this podcast We don't understand this stuff because we haven't been required to understand this stuff and I think that it is but well sort of by design Um because it benefits specific parts of our industry But the producer and this is where I think platforms like Arcana are fucking delicious Why because they force a conversation between the stakeholders directly, right?
They force People to be able and because you're in the middle they're translating as that sort of matchmaker They force a conversation between the the seller and the buyer to understand the reality of what's happening on the ground Yeah 100 percent. It's a trade relationship Yes, I would say one thing though. I don't know if roasters really need to understand the sea market The most they should know is like these guys are buying in some of the future contracts A lot of it is preculative a lot of this coffee that is actually being traded in contracts will never be actually come to delivery I would say like what they really need to know is like At the bare minimum, they shouldn't know how much they can sell coffee for how much they can buy in for And start building out like a like a sourcing model for themselves like time Okay, Ethiopia's gonna come in to see so this time. I should be looking at Ethiopia It's now Columbia is here and Brazilian is here Whoever fits into the blends what they should really have a clear idea Oh, the qualities are looking for the aspects of the coffee that are important to them and what that's worth even their coffee Modeling their business if they don't have that.
I just don't understand How you have a business even be better raw ingredient you need to have an understanding of your raw ingredient what it's worth to do Which you can sell it for And that that kind of forms the basis of going into trade negotiations I love this conversation because I'm gonna push back a little bit on what you're saying and you can help me understand where I'm wrong here for the 90s the early naughts and up till 2020 The ignorance was a big part of what was suppressing the market, right? There was this and you could turn around and say to a rosa look bro, you don't have to care like this shit is cheap And it's gonna stay cheap. So you just keep building and everything's gonna be fine. So the ignorance was there And then 2024 happened where the price on the sea market doubled Yes, well in 2025.
So it started in 2024 to escalate in late 2024 and then it doubled in 2025 Now the problem is that specialty coffee, let's say for specialty roasters The same as for commodity roasters this one mechanism the sea market Which seems to be playing such a massive role across so many origin countries with a majority of people who are using this futures market Have fucking nothing to do with coffee. It is directly impacting the cash market because of what's going on in the sea market If roasters don't understand why coffee doubled in a day Or across a period of time if they can't understand that They are going to have a big problem preparing their business And being proactive for price rises rather than being in the situation where most of them were Which was they were being reactive and not understanding why my coffee is so expensive having arguments with importers saying this doesn't make any sense bro Why all of a sudden is coffee getting more expensive? So if they don't understand these mechanisms They are constantly going to be reactive to these ecosystems, which is I would say though that the roasters that They still deserve it, but like I would say we always talk about the specialty market. We need to break ratings.
We need to break ratings. Yeah Okay, so why Someone that's surprised by coffee prices rising all of a sudden means they weren't being proactive in supply chains They weren't working with whoever they're buying coffee from to figure out a sustainable price for both parties Um, and they were just accepting whatever the important problem for them. So today's this price Oh, why is it because of the sea price and then maybe I would call them to question the fact that they're working with that in order Super dependent upon the sea price. I think there's better levers for finding a mutually beneficial price for both of these But I'd argue that they're not being correct at all.
So I agree with you on that. And the fact that I think I agree with you on that. Then I would say that the sea price knowing and understanding the sea price is not necessarily being proactive in What is so proactive about being a part of the sea market? Well, we keep saying we have to break away from it.
We have to break away from it I mean, it's like when it happens it still impacts me. You weren't proactive again. You weren't studying or doing anything in your supply chain to Account for these risks that we know are inherent in the sea price I think they're very much related and just because you understand the sea market doesn't mean you're being proactive in any way It just means you understand that and now you're choosing to be You know, I don't want to say you want to ignore I don't want to ignore it, but you want to ignore the real threats of the sea market And really what the sea market all is about is all about which is we're raised at the bottom to find the cheapest price possible for buyers Yeah, I'm hoping that makes sense It does just understand the sea price alone because that's not mean to collect No, you get out there get your hands dirty and work on your actual supply chain And work on your own business understand what you can sell the coffee for again What it's worth is to your consumers and how you can get that with farmers and balance that was to me. Yeah, and unfortunately like Most roasters don't know that the sea market exists.
They don't know that these they've never seen a coffee contract They've never and I know people think like surely that's not possible It is not only possible Huh, maybe it is good. Maybe we start forgetting about that archaic sea market that still controls everything And maybe we can start to like working with some fresh minds to find new pricing And I'm taking this as a completely off to this Well, that's just avoidant bro. That's not optimistic. That's avoidant.
This this is a very real thing that is in existence that That is a Again, it depends if you where you are in this in the in the supply chain, you know This was not a problem for sukafina. You used to work for sukafina, right? These things are not a problem for them because they can afford to use these tools to hedge against their position and make money off it Whereas most people cannot go ahead. I can see something Right, and that's my point.
Right if coffee roasters don't understand who they're competing against and and what's happening if farmers at four Let's say the market goes back to four dollars What incentive is there for most farmers to actually do anything about specialty coffee? Nothing It depends on where they are in supply chain too. I think it's really hard to fit any person within this supply chain within anyone box because farmers are very Honestly, farmers are so diverse in what they want their dreams their visions Like some guys are actually very passionate about quality forming business relationships and You know growing their coffee business work using their coffee business just for another business Like it's really hard to say right fit them all into a single box I would say farmers that are supplying to watching stations That gets a bit trickier because they're not saying any direct impact of their Their coffee would work supplying cherry that gets blended with everybody else And then maybe they give a dividend at the end of the year it's much harder for them to see the value of specialty But I think any farmers that are in direct trade and then they have benefits from having direct communications or buyers that are involved in specialty Their values are very much differently along It's just so diverse out there And I take your point not when when we These generalizations are not for a hundred percent of farmers, right? What I will say is we have heard again and again and again over the last two years about people Having relationships with people who have produced cup of excellence coffees And they have benefited from a cup of excellence coffee, right?
But then the next year they want to produce more of that coffee because now it has a name But they can't get access to the label to be able to do that and the prices are so high that they're like It doesn't make any there's no justification for me to produce specialty grade coffee when the sea market is so high compared to historic numbers I'm going to either leave the coffee on the trees and I'm just gonna or I'm going to just strip everything And send it to the commercial market. This is the reality of staying alive in a market like this If if roasters don't understand these mechanisms They're not going to understand why they're such a short supply of specialty grade coffee Or why the price of specialty and commercial coffee is going up across different origins And so we I think we're entering a phase where the more informed you are And the more information that you have the more agile you're going to be as a business owner And the more you're going to be able to adapt to the changing circumstances Of geopolitics and currency and trade and climate change and all of those great things that we're going to talk about in the next episode So join us for that. I'm sorry that we went so long, but this was a delicious conversation Peace. I'm a peanut butter have an amazing rest of your day Oh my If you enjoyed this episode consider supporting map a forward our guests and advertisers on social media subscribe hit the like button Leave a comment and share this episode with a friend and if you'd like to support our work more directly become a paid premium YouTube subscriber or patreon backer to get early access to the show add free directly to your inbox each week you can find links in the show notes