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ETHIOPIA 2018 UPDATES



COUNTRY BACKGROUND

Ethiopia is a large, landlocked country in the eastern Horn of Africa with a population of over 85 million people with more than 80 recognized languages amongst its inhabitants. There are numerous tribes throughout the country, however, two dominate: the Amhara(from the north) and the Oromo(from the south) with Amharic the dominant lingua franca.

Ethiopia is home to a vast landscape with geographical sub-regions ranging from dry and arid deserts to lush tropical jungles. Yet, the one defining characteristic of this diverse country in the Horn is its highlands. The famous Great Rift Valley which stretches as far north as Syria runs right through Ethiopian heartlands and it is here where some of the world’s most sought after Arabica coffee is produced.

There are approximately 9- 11 geographical regions within Ethiopia that produce coffee including Harrar(Harar), Sidama(Sidamo), Yirgacheffe, Limu, Djimmah(Jimma), Kaffa(Bonga), Nekempti(Lekempti), Wellega and Bebeka. And with thousands of wild varieties still unknown, Ethiopian heirlooms are either consistent year after year or completely take us by surprise with nuanced flavor profiles. And It is important to remember that Ethiopia is considered the birthplace for coffee as we know it.  In some terms, all Arabica coffee is Ethiopian coffee.  And the 15+ million farmers throughout the country take great pride in producing these unique heirlooms which make up 5% of global production.

Ethiopia is known for producing mainly sun-dried natural and washed coffees.

In the dry or natural process, coffee cherries are dried whole.  This is usually done using African-style raised drying beds.  Over the course of a few weeks, the skin and juices within dry.  Once it meets certain specifications, dried cherries are sent to hulling stations for processing.  The advantage of sun-dried natural coffees is that it requires little to no water. Thus, we find more natural processed coffees in areas within Ethiopia that experience drought or have less access to a reliable water source.   In the washed process, the outer skin of the coffee cherry is removed immediately upon harvesting.  This is done using a mechanical device which stripes the skin and mucilage leaving only the parchment and a fine layer of mucilage.  Coffee is then placed inside a vat for up to 24 hours to remove the remaining mucilage before it is placed on African-style drying beds for up to 3 weeks until the parchment reaches a comparable moisture level before being warehoused.

 

the ETHIOPIA COMMODITIES EXCHANGE

The Ethiopian Commodities Exchange(ECX) incorporates a trading platform for several exportable agricultural goods in Ethiopia including wheat, maize and beans..  The basic foundation of the ECX is to offer a central and standardized system at which agriculture can be traded. Coffee was added to the ECX in 2008.

Most coffee exported from Ethiopia is traded through the ECX. Coffees are given a grade and geographical location.  Grading is based on visual analysis ranking coffees from 1(highest grade) to 9(lowest grade). Cup quality of coffees are ranked from 1(high) to 3(low). Once coffees are graded, they are bagged and stored within the ECX secured warehouse until auctioning.  Only exporters with registered licensing can bid on coffees through the ECX, in which they can process and sell these coffees under their brand names.

ECX GRADING SCALE (NB: non- equivalent to SCA grading)

GRADE 1 (G1)

91-100

GRADE 6

50-57

GRADE 2

81-90

GRADE 7

40-49

GRADE 3

71-80

GRADE 8

31-39

GRADE 4

63-70

GRADE 9

20-30

GRADE 5

58-62

UNGRADED(UG)

< 20

 

Coffees produced by Cooperatives do not have to pass through the ECX. Usually Cooperatives have their own drying and washing stations and process coffees internally.  Some of these include the Oromia Coffee Farmers Cooperative Union(OCFCU), the Sidamo Coffee Farmers Cooperative Union(SCFCU) and the Kaffa Forest Coffee Farmers Cooperative Union(KFCFCU) to name a few.   

 

2018 REGULATIONS and TRANSPARENCY

In 2017, it was announced that the Ethiopian Coffee Authorities would modify the current trade system allowing for exporters with valid export licenses to directly sell their coffee to international buyers.  In addition, emphasis was placed on also improving trade transparency. Exporters were skeptical in regards to the implementation of these recommendations, however, in late 2017 developments were underway.

 In November 2017, a 30-page document was sent to industry leaders on the topic of coffee marketing and quality.  It was suggested that licensed exporters could have the ability to export coffees direct and would have the right to disclose further geographical and quality information on coffees purchased through the Ethiopian Commodities Exchange(ECX).  Since coffee was added to the ECX, exporters could not make certain details on coffees public. This included naming suppliers, sellers, washing stations and farmers(if available). The ECX was highly protective of the trade process and only allowed exporters to give general information such as  local and sub-regions as seen below::

REGION

SUB-REGION

PROCESS

GRADE

QUALITY

YIRGACHEFFE

KOCHERE

WASHED

GRADE 1

QUALITY 1

 

With new regulations for 2018, exporters can now disclose washing station(woreda), ECX cupping scores and if available, farmer names to buyers. This is a major breakthrough as it opens the door to building further relationships with smallholders that may not be affiliated to cooperatives or unions.  So taking the example from above, an ECX purchased coffees could now have the following data profile:

REGION

SUB-

REGION

WOREDA

FARMER/ESTATE

PROCESS

GRADE

QUALITY

ECX SCORE

SIDAMO

YIRGACHEFFE

KOCHERE

ABEBE, TENESH

WASHED

GRADE 1

QUALITY 1

93

 

 

What does this Mean to ATH and ROASTERS?

SHORT-TERM

In the short-term, this will allow for ATH to provide roasters with more detailed information that was generally not available beyond private farms or estates. Getting a more concrete geographical location of coffees purchased through the ECX means improved transparency. This information can then be used to generate improved and more in-depth marketing material which roasters can then use to increase sales and educate their consumer base on Ethiopia’s supply chain.

 

LONG-TERM

In the long-term, it is our hope to use all collected data to improve our purchasing for future harvest seasons.  We are very pleased with all coffees purchased by our partners from the ECX. And it is our hope to repurchase some of these coffees again next year.  

In doing so, we will take time in our 2018/19 origin visit to travel to these washing stations. This would be the start to establishing relationships with management of the collecting stations and, if possible, try to meet some of the smallholder farmers that drop off their coffee cherries regularly.   This introduction could ultimately lead to even further data collection on farmers(eg. household, age, years farming, income, ect) and possibly even direct purchasing somewhere down the roast, which streamlines the supply chain and ensures that we find unique coffees that are exclusive to ATH and its partners.

 

Our Short Conclusion…

When it comes to the trade of coffee(and any other commodity for that matter), nothing is set in stone.

Developments in Ethiopia’s coffee sector give hope to a future that is full of greatness and potential.  If successful, this could give smallholder coffee farmers a greater voice, one in which they could now be called by name.  And who knows, maybe even the tension throughout Oromia would be eased if locals felt they had a greater opportunity to sell their crops to whom they wish at a price determined from within.   We’re hopeful. But we must also be realistic knowing that these changes could be easily reversed by a new minister or government.

ATH will continue to monitor the situation and update all of you later in the year once the season has come to a close and the industry has had time to evaluate successes/failures.

 

 


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