Ethiopian Coffee and the ECX
Batdorf & Bronson Coffee Roasters was lucky enough to be part of a round table conference that took place in Dire Dawa, Ethiopia last February. The discussion at the conference was mainly focused on the new Ethiopia Commodity Exchange (ECX) system and the regulations regarding the export of Ethiopian coffee.
The Ethiopian government has decided to become the clearing house for all Ethiopian coffee in an effort to serve the greater good of the peasant Ethiopian coffee farmer. In a proclamation issued in August of 2008, the exchange was established to route all non-certified coffee and non-privately exportable coffee through a government-run warehouse and auction system. Basically, what this means is that every coffee produced will be lumped together into large lots and homogenized with other coffees from the same region. Traceability will be lost, individuality will be sacrificed, and the coffees coming out the top end will be commoditized. There is an exception to this – certified coffees are allowed to trade outside the ECX system because the traceability component is essential to the integrity of the certification.
While most of the global coffee industry is moving towards greater transparency and delineation of coffees at extremely micro levels, back all the way to individual farmer/producers and even to individual plots of land, this new system in Ethiopia all but eliminates the possibility of doing that. Specialty roasters are puzzled and in near panic over the seeming wackiness of pursuing this sort of system. For them, the loss of transparency is the biggest issue: there will be no way to be assured the lot you want is the lot you will get. Simply putting in an order for a grade 5 Harar and taking whatever comes out of the warehouse is no way to maintain your control over receiving exactly what you want.
In the weeks since my visit to Ethiopia we’ve seen a few new chapters unfold. Even though many of the exporters I visited with in February felt they would have the chance to follow lots through the ECX and get them back out the other end, as of early April they are no longer confident this can happen. The fear of bottlenecks and standstills that were expressed in February has turned to reality as coffees have sat in ECX warehouses without changing hands. The government has accused the country’s six largest exporting firms of hoarding coffees and has suspended their licenses.
Our contracted shipments that were supposed to leave the country in March are nowhere on the horizon, and importer stocks of last year’s coffees are flying out the doors as roasters worry and do their short-covering. The latest feelings are that Ethiopian coffees will eventually get to flowing into the U.S. again, though maybe not for two or three more months. In the meantime, we all wait and hope that this mess gets sorted out and that the Ethiopian coffee producers aren’t the ones paying the highest price for all this quarreling.