producers, like myself, that had to have started to work on direct trade. And I actually signed some contracts last year, for example, I'm going to tell you one sample. And I was very happy because I said, okay, this is going to be a good contract. I feel like this is going to be a good deal, because it was a nice price.
And the battle was very had a really good, I don't know, price as well exchange right exchange. Yes. And what I never predicted was that my yield was going to drop us it did last year. So it was horrendous.
And that immediately brought my of course, my cost of production really high. 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 small holder farmers in Ethiopia and builds in the hard parts, integrated QC, logistics, 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 your 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 make that M.O.C.U. So you can participate without over committing. 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 shown us for details and explore Arcana coffee marketplace today. Welcome to the Daily Coffee Pro by MAPA Forward friends on your host Lee Safar.
And this is episode one of a brand new five part series with second time guests and a donation from Cafe PrimaTV and welcome back to the podcast. Thank you, Lee. It's a big honor to be here again and to have this opportunity to talk about this new phase and after this crazy year, we just went through crazy year that we just went through is such an understatement. And I'm right there with you.
I feel like I don't know if we're still at the beginning of the crazy. We're in the middle of it or we're almost at the end of it. And I think that's the hardest part of all of this. We really don't know where we are in the cycle.
And that's why I wanted to have a conversation with you is because the last series that you were on the podcast was really deeply well received by a lot of coffee producers around the world, because they saw themselves in you, they saw themselves in your honesty. And I wanted to have a chat with you because I want to understand what the reality really is for smallholder coffee farmers right now. And I it's one thing to have conversations with people and hear through LinkedIn or through WhatsApp, what's going on. But to sit down with an actual farmer who's living this and trying to navigate that, I don't think you can compare to that.
So in this series, folks, we're going to be talking about the reality of being a smallholder coffee farmer in this volatility. And in this episode, we're going to talk about what the volatility in inverted commas that coffee farmers have been experiencing is we're going to really name the volatility in this first episode. And a real quick reminder, everybody, what Cafe Primitivo is and what you how you came to do this, because your journey into it is a little interesting. Well, Cafe Primitivo is a family business.
It was, we created Cafe Primitivo in 2019. So it's been already seven years. It is, we created the brand as a way of honoring the grandfather who loved coffee and who always taught me the love for it. And he was always telling me, Anna, coffee isn't just a business, coffee is social activity.
And now I understand it completely. And I feel like that's exactly why I am stealing coffee. And what we do is we produce coffee, we're producers, five generations now with me. And we are, we are working on specialty coffee, working on community based way of producing it and trying to navigate through all these crazy times through direct relationships and trying to make it work for everybody.
And you're in Kindio in Columbia, correct? Yes, I'm in Kindio. And your background, you didn't just finish high school and say, I want to be a coffee farmer, you tell people, yes. So I, me as a lot of other young people that grew in coffee farms and like my dream was never to be a coffee producer.
That was the last thing I went for himself. As many others, I left home down and I went to Bogota, which is a capital of Columbia. And I studied there, my I did business administration, I did any space station, I don't know about like a master's in innovation and business management. And now I have a master's degree in coffee agribusiness.
That was after I returned. But my dream was just to go and maybe go out of Columbia or just work at another place. But live or gutter, for me, it was life guiding me and God guiding me back to my hometown. I thought I owned this to my family.
It was four generations, a lot, a lot of years working in coffee. And I saw there was another way of doing stuff like we could do coffee another in another way. Through direct relationships, through looking for a better quality coffee, through telling our story. And that's why I decided to come back after my grandmother passed away.
The reason I wanted you to tell people your personal story separate from what your family is, how you came into coffee and how your family has had the fun for so long is because succession and having the next generation now wants to be into coffee farming is one of the big challenges that we have ahead of us. And it is on as when we talk about the coffee crisis, it is one layer of the coffee crisis. So I wanted to position and anchor the conversation in the fact that you are not here by accident, you are here with a lot of education, a lot of training, and you intentionally came into this, and you have been doing it for a number of years, you were for all intents and purposes, you were quite prepared to face what we're facing right now, without even knowing that it was coming. And maybe you knew that something was going to change, but I don't know about you, I didn't know what was going to get this bad, did you?
Not at all. Yes, so when people hear you say that, and when I talk to people about the fact that coffee producers are going through hell right now, people say, but what do they have to go to hell through? Like, the coffee prices are so high. So let's start with the volatility conversation with regards to pricing.
If you don't mind, if that's if you think that's the right place to start this conversation, it's perfect, it's perfect because, sorry, people think about volatility, people just think about a prize or a number and a screen, and that's it. And volatility goes far, like it's so much bigger than that. So we need to think about greasy exchange, we need to think about the cost of producing, we need to think about the climate change that actually will affect directly our yields and the production that we're going to have for a year. So if we have a really bad year, then our cost of production per pound will just go up dramatically.
And that's something that happened actually last year. So we as producers need to think about so many stuff at the same time, not just the number on a screen or not just the prize that we're seeing in the New York stock. And when all of these just are is moving at the same time, very fast, sometimes very hard to keep up with the ability and to and to, I don't know what to say this, but like to preview or to see it beforehand, or the right time to predict exactly. Right, exactly.
And a lot of people are saying, but, you know, aren't coffee producers getting, even though their production costs have gone up, aren't they getting all the money from how high the prices are, if anyone not watching and is shaking her head, can you help people understand where the disconnect is there? So most of the people around, at least in Columbia, are the traditional way of producing coffee is you produce it and you immediately go and sell it. Like, that's how we sort by tradition. Right.
And actually, we, I heard one of your, one of the episodes you had a few days ago, and somebody was saying that new producers are starting to leave some coffee for themselves and to wait for better prizes, right? Yeah, and Ramanga from Caravilla. Yes. And I have met some people that are starting to do that and they're starting to start like taking risks, they take your risk and like they're playing this game, right?
But the reality is not many of the producers are able to do that because we depend on like we have a lot of things that we have to pay right away, like every single week. And most of the producers, I'm going to speak for myself, I need to pay labor every single week, I need to pay a higher higher cost every year. We have a lot of things going on that do not let us to just grab our coffee and let it for ourselves and start playing the game that some of producers are starting to do so. So these makes it very, very difficult, right?
And on the other side, people or producers like myself that had to have started to work on direct trade. And I actually signed some contracts last year, for example, I'm going to tell you one example. And I was very happy because I said, okay, this is going to be a good contract. I feel like this is going to be a good deal because it was a nice prize.
And the battle was very, had a really good, I don't know, prizes, right exchange, right exchange? Yes. And what he never predicted was that my yield was going to drop us it did last year. So it was horrendous.
And that immediately brand my, of course, my cost of production really high, the peso evaluated 1000 pesos per dollar. Yes. So for each dollar that was a receipt, I was receiving, I was receiving much less pesos, which is where how I make every all of my costs. And it was it was a hard year at the end, like it was not easy at all.
So I feel like most of the producers really didn't see those high prices at the end. After like, when it all comes out in the water, like understanding all of the different variables that at the end will are what it really is the volatility, not only the price, but everything that goes with it. So let's let's break that down so that I can make sure that I'm understanding what you're saying. So most people would look at a coffee farm and say that the cost that you're getting per pound should cover your cost of production for that pound, right?
What Paul Stewart from Technoserve came on here and he said, what Technoserve is trying to do is to get people to stop looking at it that way and start looking at it as though how much revenue does this smallholder farm bring in? Now, the reason is because the cost of the entire year is for lack of a better term, a fixed operating expense. The amount that it is is different and goes up and down. But whether you sell a bag or you sell nothing or you sell a million bags, you still have to run the farm.
And what you're saying is that the cost of doing the things to grow the coffee were out of control. And then what happened was something that was completely out of your control, cause the thing that would allow you to receive money to cover those costs was half of what you expected to be. So you expected from all the money you invested in your farm, you expected a certain amount of yield that would end up covering the cost of your farm. And what ended up happening was you got half of that, which ends up relatively right, which ends up meaning that whatever you do have to sell is twice as expensive.
It's actually like I knew this wasn't going to be that this wasn't going to be a high yield year, like I knew it because after a really good one that was 2024, I expected a decrease in our production, but I didn't expect it as much as we did. So yeah, at the end, it was of course higher costs. And I'm not sure that people from the consuming end of the supply chain really understand that when the big corporates are paying for a particular price of coffee, they're typically buying that coffee from a huge, huge farm that can that has the ability to hedge against their crops. And so that if things don't go the way that they intend it, they are able to use the tools that are available to protect themselves and buy insurance by by purchasing options through the C market that protects them.
And this is why guys, I have been talking on social media that we need to start thinking about the coffee industry in a very different way. We need to stop talking about it in a way that that uses quality as the way that we separate out the two different types of our industry. We have to stop saying, Are you special to coffee or are you commercial coffee? We need to be looking at things.
Is it corporate or is it independent? And the reason we need to stop doing that is because the big corporate farms are supplying the big corporate buyers who are all trading on the C market. But that same price on the C market is what smallholder farms also held accountable. That's the price that they have, they receive when they sell their cherry or they sell their coffee to meals or they sell them onto exporters or whatever, they're operating at the same price.
But as Anna was just telling us, she doesn't have access to the same tools that allow her to protect her business, not because she can't buy them. But because they are so expensive, it is prohibitive for smallholder farmers to get access to that. And so her volatility is much, much higher than a corporate farm, because she doesn't have access to the same risk mitigation tools as the big farms do. Am I right, Anna?
Yeah, you're under a result, right? Some people always ask me, why don't you? I can't answer it now. Like, that's not my way of hedging is like, I'm just pretty viewing.
I don't know if that's a word, but like, before it, like, what happens if this goes down? I don't know, 20 cents, like, that's the way risk management, right? And to give people an understanding of what it would cost Anna to hedge, the last that I checked, the entry point to buy an option is somewhere around $8,000. That like, for people to understand what that means to a coffee producer, I want you to think of your business as a coffee roasting business and ask yourself, could I afford for one of my origins to put up $8,000 in insurance?
And maybe nothing comes of it. If you could afford an extra $8,000, good for you. But I don't know many roasters that have $8,000 to just throw an insurance. Now think of a coffee producer in that situation, who's getting paid much, much, much less, and leaves on even more razor thin margins than what roasters are living on.
And they deal with a hell of a lot more volatility than what you have to deal with. And that's the reality of what coffee producers are going through right now. So high prices is one thing. But if that money's not making it back to the producer, and if they're yield, and this is why we keep saying 2025 was a great year for producers who had coffee, but that wasn't the case for most producers.
And anyone outside of Brazil has a very different reality to what the farmers inside Brazil are experiencing because they're mechanized, a lot of them. So, and before we wrap up this, what are the other volatilities? Are there any other volatilities that you have experienced that you think are worth exploring in this episode? Or have we covered them all?
No, I think that those are the ones currency, climate change will yield and cost of production, like at the earlier in the cost of the inputs that we need, that are always raising. Right. So in this episode, it's in the next episode, sorry, we're going to start looking at one of the topics that Anna touched on, which was direct trade, and what the reality of that looks like. So join us for episode two of this fantastic series.
This is just going to be delightful. Peace, I haven't paid up, I have an amazing rest of your day. If you enjoyed this episode, consider supporting map before with our guests and advertisers on social media. Subscribe, hit the like button, leave a comment, and share this episode with a friend.
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