Ethiopia 2010

Ethiopian govt was approaching a problem with illegal activity amongst exporters. 50k tons of coffee which was supposed to be exported was either blended with lower grade coffees and sold into the local market at better prices or substituted with lower grade coffee and exported. Profits on selling into the local market were above 30% at times. Additionally the act of buying from your own company when they are not legally separate was everywhere. It was something which was technically not supposed to happen but the transactions were being allowed. Prices for direct coffees were very high. The govt was revising its auction system and the CLU (coffee liquoring unit) to address transparency to producers and improve the integrity of the quality grading at CLU.

The great bulk of coffees out of Ethiopia were simplified but also homogenized by this process. When the Prime Minister heard of the illegal local selling of export grade coffee he arrested and shut down many exporters.

The result is that unless you are a union or cooperative or association of growers with a license to sell to foreign buyers or a large farm with the resources to sell via the second window, you cannot export your coffee as a specific brand or specific to a location beyond the ones the ECX has. The coffee is delivered to an ECX warehouse and catalogued and then auctioned as one of many regional types on the ECX. It is still illegal for an exporter to buy their coffee if they are also involved in milling.

The DST is the Direct Specialty Trade capability of the ECX. It is an auction system developed to allow buyers to cup the coffees they want to bid on and to buy directly from a producer who will then elect a Service Provider (formerly known as exporter) to export the coffee. The auction was a success for the project in terms of the prices received but the great majority of coffees did not move.

Many Coffees were submitted and paid just above the going rates from the Unions. The opportunity to have growers organize into groups and be able to assign a good miller to represent their coffees is still in progress. Very few have been successful.

I visited Idido and Beloya with Johannes from Bagersh. It should be a 6 hour drive to yirga but it ended up much longer. Obstacles are many.

The road is basically swarming with dogs, goats, people horse and mule drawn carts. And vehicles of every imaginable type. There is a built in survival mechanism in almost every animal that lives near this road. This Hyena likely was bolting across the road at night. They are not well liked by the locals as evident by the stones and fruit that the kids pelted its corpse with.

Johannes is the manager of Idido and Beloya. The stations (both washed and natural special prep) are managed by a manager also. Currently the stations are idle and the amount of top natural coffee coming out is nil. Small bits have made it to the auction and also to a couple of US buyers. Some of this special natural was auctioned off by Bagersh and raised $2.95/lb FOB Djibouti. This coffee was intense but potentially edgy with a lot of edgy fruit. Some buyers apparently liked it very much. Ultimately I think this was a fair price for this coffee.

The Idido mill is located Southeast of the town of Yirgacheffe. The coffee comes from 1850-1980 masl (meters above sea level). Half of the mill is devoted to sun dried coffee (all of which is ripe and carefully selected) which can produce a total of 4-5 containers/year. Currently the mill is only producing washed coffee as the ECX has made this the only option. Specific coffees are still unattainable via the ECX unless it is from a producer group that has elected to organize and gain access to the export market via the second window. If Idido were to produce top natural coffee it would be homogenized into a yirgacheffe natural and blended. The specific origin of the coffee would be erased.

The near side of this picture is where the drying beds would go for the washed coffee. One crosses a small bridge over a stream to get to the area for the drying beds for the natural coffee. This is one of the great coffees of Ethiopia and the pinnacle of cherry red production. Abdullah Bagersh is really the pioneer of this coffee and his techniques in dry milling are secret and increase the capability of removing the quakers from this coffee.

The coffee at left is just regular sun-dried coffee. It is better than much of the sun-dried coffee in Ethiopia but still a grade below what we would need. The coffee is dried in the cherry to appr 12% moisture and then it is milled to remove the hull. This milling process results in a very mixed quality of coffee which needs to be separated by gravity tables, catadors (vertical air sorters) and by hand in the dry mill.

The dehuller operates with a stone or a metal rotary press against a pressure plate which can be adjusted. All of these processes can be adjusted to allow some sorting along the way. What comes out of this particular de-huller is likely a traditional grade 4 Natural Yirga which needs to be further sorted for export.

As with most processes in Ethiopia the coffee is moved by hand. Labor is available and the processing of coffee is a major supplement to the income of farmers in any given area. Women will sort coffee on the drying tables and men will do the moving of coffee in the mills as it is processed.

We had a bit of coffee in the coffee hut at the mill. Buna Arbol is the first boiling of the coffee. Buna Baraka is the second. This is a tradition in Ethiopia. The local consumption is high and it is competition for the coffee that we buy as the local price is competitive with export levels.

We hope is that the grouping of producers who make great coffee and enabling them to lease milling capabilities will allow them to sell their coffee direct. We are a bit dubious as to the potential of organizing these groups for 2010 harvest.

3 options exist for buying coffee in Ethiopia.

Unions such as Oromia, Sidama, Yirgacheffe (recently FT re-certified) or private estates with grower groups surrounding them such as Mordecofe which can access the second window.

ECX coffees which are regional in designation, but not geographically specific.

These coffees have lower value as a result of their lack of specificity so we have to be careful where we buy.

Or

DST coffees from the auction which are specific small lots from producers. These seem to be mostly coffees from Coops at this point and this was not the opening up of direct trade with producer groups we hoped for. It did create the framework for this process but we will have to wait and see how it progresses for the 2010 harvest beginning this autumn.

The Next DST Auction is on April 29, 2010 and samples should be available around the time of this writing.