In February I was very lucky to visit one of the world’s oldest, biggest and – arguably – most fascinating coffee producing countries. Ethiopia is East Africa’s coffee giant, a huge country with the world’s third largest Arabica production and a coffee culture that stretches back centuries.
After just a few days in Ethiopia I realised that this is a country that does things its own way. For a start, Ethiopia has its own calendar. When the rest of the Christian world dropped the Julian calendar in favour of the Gregorian calendar in 1582, Ethiopia did not and still has not. So it is currently 2004 in Ethiopia, and the new year (2005) will start on 11 September (in our calendar) and last for 13 months. Ethiopians also measure time differently from the international norm – like the Swahili of Kenya and Tanzania, they split their day into two twelve hour cycles, starting at 0600 and 1800. This means that 7am our time is 1am in Ethiopia, and vice versa.
Likewise, the coffee industry is both singular and, at times, confusing for the uninitiated. I’m sure a lot of people reading this will understand the process very well, but it’s worth spelling out (for my own benefit as much as anything!). My observations are based on my experiences visiting producers and processing stations in Yirga Cheffe and Sidamo (both in the south) – and my information is mainly thanks to my excellent – and very patient! – hosts Bereket and Ato Mukria.
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How and where?
Coffee is hugely important to Ethiopia – it is currently the country’s number one export and the source of almost half of its foreign currency. Almost four million Ethiopians are direct actors in the coffee industry – and the livelihood of over 15 million depends on it.
Only a very small proportion (5-6%) of Ethiopian coffee is grown on estates. These large plantations (some 2,800 hectares a piece) are based in west of the country, mostly in the lower altitude growing regions. Until recently, these estates were exclusively state-owned, however new legislation has sanctioned private ownership – meaning that is likely that the proportion of estate coffee produced will rise in coming years.
Around a further 45% of Ethiopia’s coffee is, uniquely, either ‘semi-forest coffee’ (30-35%) or ‘forest coffee’ (8-10%), found in the south-west and in Bale (south-east). Unfortunately I didn’t have time to visit any forest or semi-forest coffee on this trip – but I’m told that forest coffee grows wild in thick native forests (as, of course, all coffee trees once did before they were ‘domesticated’). These trees are often very tall as they have to fight the other forest trees to reach the light, and for this same reason their productivity is usually low. The difference between forest and semi-forest coffee is that the former is totally wild, while the latter is harvested from semi-wild plants in smaller patches of forest (often near roads or settlements) where farmers thin the upper canopy and annually slash the undergrowth to aid production.
Around 50-55% of coffee produced in Ethiopia is what is known as ‘garden coffee’. As the name implies, this coffee is grown on small plots of land around people’s homes. The vast majority of Ethiopians still live rurally and make a living from farming; each family usually lives in a modest home (often a single round mud hut) and farms their own plot of land, where they grow both cash crops and food for their own consumption. In coffee growing areas, coffee will be the main cash crop – covering from half a hectare to 1.5 hectares (the latter is considered big). This is usually planted alongside a second cash crop – often a large-leafed tree (and also shade provider for the coffee) known as ‘false banana’. This looks like a banana tree but isn’t – instead its thick stem is used to produce both a nutritious flour and a fermented paste that are staple ingredients (particularly across southern Ethiopia).
There is only one main harvest a year in Ethiopia – this usually takes place in November and December across all of the country’s growing regions. There are, on average, 4 passes made during the harvest period, and, in regions that produce both washed and naturals, the last pass is used for the natural coffee. Washed coffees are then generally pulped on the same day that they are picked (usually in the evening/night), sorted into three grades by weight (heavy, medium and floaters), fermented (times vary – usually between 16 and 48 hours), washed and then usually graded again in the washing channels. The beans are then dried on African beds, where they are hand-sorted, usually by women. The cherries for ‘sundried coffee’ – ie. naturals – are placed straight on the drying beds and sun-dried for 12 to 30 days. These are also sorted on the beds to remove green cherries, although the efficiency and depth of sorting varies quite widely.
Ethiopia is a big country – approximately the same size as France, Germany and the UK combined – and most of its central spine is dominated by highlands, mountains and high valleys. These regions are a paradise for coffee – indeed Arabica coffee originates from Ethiopia’s fertile highlands and coffee trees have been growing wild here for thousands of years. Today, coffee is grown widely across several of Ethiopia’s regions in the west, south and east of the country. These regions are, in turn, split into smaller administrative areas, known as ‘woredas’, each of which has its own local Ministry of Agriculture office to oversee production in the area.
The south-west is the largest producing area, accounting for over 45% of the country’s total production. Coffee is believed to originate from this part of Ethiopia – in what used to be called the Kaffa Province, around the town of Jimma – and it still grows wild in the area’s highland forests. Producing regions in the south-west include Jimma (or Djimmah – know for is sun-dried coffees), Limu (or Limmu – predominantly washed coffees), Lekempi, Gimbi, Wollega, Godere, Bebeka, Bench Maji and others.
Coffees coming out of the south-west can vary widely in quality. Some regions, such as Jimma, are traditionally known for producing commercial grade sundried coffees. Yet in recent years many new washing stations have been constructed in areas that used to only sun-dry their coffees, thanks partly to the support of NGOs such as Technoserve – a US organization that helps men and women in the developing world to improve their income through business initiatives. This means that there are also some good quality washed (and sundried) coffees coming out of southwest Ethiopia – and great potential for the future.
The South is famed for its high quality and characterful coffees from two main regions: Yirga Cheffe and Sidamo.
Yirga Cheffe – or Yirgachefe as it is commonly known – is in fact part of the Sidamo region, but its sometimes exquisite washed coffees are so well known that is has been sub-divided into its own micro-region. It is, in turn, split into four woredas – Yirgachefe, Wenago, Kochere (which mainly lies above 2200 metres and, arguably, produces many of the Yirgachefe region’s finest cup) and Gelena Abaya. This steep, green region is both fertile and high – a lot of its coffee grows at 2000m and above. It gets pretty cold at night at this height – I could see my breath in the morning before the sun came up properly! At first glance Yirgachefe’s hills look thickly forested – but in fact it is a heavily populated region and the hills are dotted with many dwellings and villages growing garden coffee. There are currently 23 cooperatives in the region, representing some 43,794 farmers and around 62,004 hectares of garden coffee. The production is predominantly washed, although a smaller amount of sundried coffees also come out of Yirgachefe. At their best, Yirgachefe’s washed coffees are clear, complex and floral, with notes of lemon and an acidity that manages to be both vibrant and delicate!
Sidamo (or Sidama – the latter refers to the Sidama people, the former is what used to be known as Sidamo province) covers a large area spreading through the fertile highlands south from Lake Awasa in the Rift Valley. It is made up of over 20 different woredas, with varying microclimates and altitudes, so there is a big variety of both grades and cup profiles that end up labeled as Sidamo. Around 60% of the region’s coffees are washed, while Sidamo also produces some excellent sundried coffees. There are upwards of 50 cooperatives in operation here, as well as many private buying stations – with over 200 washing stations around the various woredas.
Harrar comprises eastern Ethiopia’s growing regions – incorporating East and West Harar, Bale and Arsi. Generally these areas are warmer and dryer than the country’s other growing regions, and Harrar’s coffees are almost exclusively sundried. Quality, consistency and cleanness of cup vary wildly, but these heavier-bodied, intensely fruity naturals have a big following in several markets worldwide – notably Saudi Arabia and Japan.
Worryingly for the coffee industry, I was told that in several regions – and particularly in the Harrar area – farmers are ripping up coffee to replace it with what is known as ‘Chat’. This is a mildly narcotic leaf that is chewed in vast quantities in several areas, and thrives in the same conditions as coffee. Like the Coca tree (from which cocaine is derived), Chat can be harvested three times a year so, like Coca, it is more immediately profitable. At present Chat is legal in Ethiopia, though it will be interesting to see how the government responds if coffee continues to be replaced at such a pace – coffee is, after all, the country’s number one export.
Cooperative or private buyer?
Each year small producers must make a decision – either they will sell their cherries to a cooperative or to a private buyer. In most areas these buyers – both private and cooperative – will operate side by side at the same collection station, where they will buy cherry from the local area and then deliver them to their own processing facilities (usually serving at least a thousand farmers each, often more). Generally a private buyer will pay a little more, but on the other hand a cooperative will allow a farmer access to benefits – such as a financial top up at the end of the season if sales have been good.
So, if the farmer decides to sell his or her cherries to a cooperative, this cooperative will then process the cherries (either fully washed or sundried) along with those of many other small farmers in the area. Each cooperative is, in turn, part of a regional ‘Union’ of cooperatives – for example the Sidamo Coffee Farmers Cooperative Union is made up of some 50 co-operatives from different ‘woredas’, each with around 1000 members. These regional cooperative unions are – along with the handful of private estates – the only organisations in Ethiopia that are allowed to export directly. In other words they can bypass the Ethiopia Commodity Exchange (ECX) auction that anonymises lots prior to sale (more on this below), although it’s worth noting that they must still get their coffee officially graded by ECX cuppers prior to export. Each union is then permitted to export on behalf of its cooperative members – in other words a lot will be traceable to the individual cooperative that produced it (and not just to the union).
However, this system is not without its challenges. In order to obtain an export license a union must invest in costly sorting equipment (manual and machine) to prepare each lot prior to export. These sprawling organisations have also frequently faced management and administration difficulties – finding and securing reliable managers who can deal with both their cooperative members and international buyers. And finally, some cooperative unions struggle to secure access to buyers – due in part to language, communication and logistical barriers. This is not to say that the process is impossible – in fact some cooperatives/unions are doing very well. Hopefully more can follow suit in future years.
As a result of the challenges described above, many cooperatives will choose to sell some or all of their coffee through ECX. Private buyers don’t have a choice in this; all privately run processing stations must sell their coffee via the ECX auctions. This means that some 87.5% of Ethiopia’s exports go via the ECX. Around a further 8% are exported directly by Cooperative Unions, and 4.5% by private estates.
ECX – cupping, grading, anonymising
I visited the Sidamo ECX warehouse and lab in the dusty lake-side town of Awasa – one of eight regional ECX delivery sites where coffee is delivered, graded and stored until it has been sold to an exporter. It is an impressive operation and, on paper, makes a lot of sense. In practice, however, the system appears to be working less than smoothly, not least for specialty buyers (more on this below…).
Around 800,000 bags of coffee pass through the Sidamo ECX warehouse per crop. It serves suppliers – co-operatives and private buyers – from 23 woredas in around a 150km radius of the warehouse. Each woreda has its own Ministry of Agriculture (MoA) inspector, who is supposed to check the coffee as it is loaded onto the van – particularly to ensure that the moisture content is below 11.5% (any higher and the coffee will be sent back from ECX for further drying). Each truck is then sealed with an MoA metal seal, and the supplier is given a voucher detailing the number of bags, date, processing etc. This information is also entered into the ECX computer system upon arrival – so the ECX has a record of the name of the supplier of each lot (although not of the individual producers who contributed to that lot).
The ECX practises ‘100% sampling’ – meaning that a small sample is taken from the top, the middle and the bottom of every single bag in the lot. This adds up to around a 3kg sample from each truck, which is mixed together, taken to the lab and given its own sample code.
The ECX lab then hulls the coffee (ie. removes the parchment layer) and re-measures the moisture content to check that it is below 11.5%. Each sample is divided into three: the reference sample, the working sample and the client sample. The working samples is then divided again 4:6, with 40% used for raw analysis – to check for primary and secondary defects – and 60% for cupping. This means each grade is based on a mix of defects and cup profile.
The Sidamo ECX has a team of five cuppers, all of whom are Q graders. Five cups of each lot are analysed (13.75g:250ml water per cup) for cleanness, acidity, body and flavour (I’ll add a pdf the ECX quality assessment sheet below). Each coffee is then given a numerical grade according to its overall score on raw and cupping analysis – these grades range from 1 (best) to 9, with a final ‘UG’ (ungraded) for the very lowest. Export grades are usually 1 to 5, while sundried coffee usually isn’t graded above a 3 due to the number of defects in the raw analysis.
Each coffee is also given a letter, as well as a number – this refers to its geographic location and not its quality. It gives traceability to a sub-regional level, but does not go as far as tracing each coffee to its woreda. For example, a grade 3 washed Sidamo that is from area ‘C’ might be from the woredas of Kembata & Timbaro, Wellayta, South Omo, or Gamogoffa.
Just to complicate things further, Yirgachefe is the exception to this rule – in this case the names of the woredas themselves are used (see above – Kochere, Wenago etc..) and the letter – A or B – represents the character of the coffee. So a grade 2 Kochere Yirgachefe with that distinctive floral, lemony cup will be a Kochere A, whereas a coffee of the same grade from the same area without those distinctive characteristics will be a Kochere B!
Coffees which make the top 3 grades are further graded for specialty – this means that they are cupped again using an SCAA cupping form and scored only on their cup (rather than any raw analysis). Coffees which score 85 and up are then graded Q1 (this is the highest grade possible), and those 80 and above are graded Q2. If a coffee misses the 80 score (perhaps because of a defect) it will revert to the ‘commercial’ grade it scored in the first round – for example it will simply be ‘Grade 1’ (commercial). The problem is that often coffees cupped at ECX would benefit hugely from more exhaustive sorting – and so-called ‘commercial’ coffees may still have potential for specialty once they have been re-sorted by exporters to remove defective beans. In short, this grading system is by no means full proof.
Once it has been graded, the coffee can be sold at auction. Since the law was changed in 2008/9 and coffee officially came under the ECX umbrella, all lots are anonymised prior to sale. This means that the buyer (that is to say, the exporter) will only know the region in which the coffee was produced; they will not know where it was processed, who supplied it or who grew it. The government decided to insist on anonymising of lots in order to avoid corruption – ie. fixing of the auction by sellers and buyers. The problem is that it makes it very difficult for bidders to know what they are buying. What’s worse is that bidders are not allowed to cup lots before they buy! They have to trust entirely in the ECX grading system – beyond that they are buying blind.
The only way of getting round this system is to have insider knowledge of both what is entering the warehouse when, and when it is being auctioned. The situation is made more complicated by the ‘first in first out’ (‘fifo’) rule in the ECX warehouse – once a coffee enters the ECX warehouse it must be sold within one month (after that ECX charges a toll), and coffee that has entered the warehouse first must be sold first.
I visited the ECX trading floor in Addis to see the market in action – it was compelling (and noisy!) viewing. Buying and selling agents meet on the trading floor and trades are made there and then by offering bids, often with physical hand gestures. When a sale is agreed the buyer and seller ‘high five’ each other to close the deal. The ECX will then instruct payment from the buyer’s account to that of the seller by 11am the day after the sale has taken place (or ‘T+1’).
Market prices can fluctuate (within a certain range) throughout trading hours according to the trades made, and these prices are transmitted in real time to electronic price tickers in 21 regional centres across the country. It is also possible to phone in to the ECX line to get price updates – this line regularly handles more than 61,000 calls a day and more than one million a month, more than 70% of which are outside Addis. ECX is also working on an SMS pushout service – this currently has 256,000 subscribers but they hope to move this into the millions. The idea is to increase market transparency – to get price info to those that have never had it before and to allow farmers to be aware of the prices that exporters are paying for their coffees.
This year the system appears to be facing some problems – thanks partly to the dramatic rise and fall of the NY price over the past year. Put simply, last year the private middlemen bought cherry relatively cheaply, and went on to sell the processed coffee to exporters via ECX for a nice profit. This year however the price of cherry has caught up – prices are high, but the market has fallen. So the middlemen are facing losses – and sitting on coffee rather than selling it. Similarly exporters – who also had a difficult year last season – are hanging back, waiting to see what the market does next. The country seems to be seeing a strange situation where the yield this year has been very good, but clogs in the supply chain means that year on year exports have fallen. Hopefully the chain will begin to unblock itself in coming weeks.
Specialty – hope for the future?
The ECX’s first Direct Specialty Trade auction (DST) was held in 2010 – with mixed results. Only six coffees were sold in the first auction – a platform intended to provide the ‘missing link’ of traceability for specialty buyers. Sadly, this year (2011) no auction has been held and exporters have not been able to process and sell their own specialty coffees. In fact only a few months back a new rule was brought in – stating that coffee should only be exported in bulk! Such was the outcry from exporters that the government has now suspended the bulking rule for this season – and hopefully will now quietly forget about it. Indeed, while I was in Ethiopia the exporter I was visiting had heard positive noises from the MoA regarding specialty – and hopefully they will be permitted to start processing their own specialty lots again next season.
Domestic Coffee Culture
Unlike many coffee origins, Ethiopia has its own deeply embedded coffee culture. Coffee has been consumed here for several centuries and is very much part of daily life for the majority of Ethiopians. I was lucky to attend a traditional coffee ceremony while I was in the Sidamo region – this sounds like a grand title, but in fact this ‘ceremony’ is a daily, and often thrice daily, occurrence in many rural communities. Green beans that have been prepared at home are roasted in a flat pan over an open fire. They are then ground, usually using a wooden pestle and mortar, and boiled with water in a clay pot before being served in small porcelain cups without handles. Traditionally three rounds of coffee are served – and often enjoyed with neighbours or guests (the eldest is always served first, traditionally by the youngest child). In fact it is considered rude to retire before the third cup as this is considered to bestow a blessing. At the ceremony I attended the coffee was served with salt (dissolved in the coffee), although sugar is also common. The whole event takes a long time – a good hour at least. It is fantastic to see coffee treated with such love and respect on a daily basis!
Thank you to everyone who hosted me while I was in Ethiopia – it was a wonderful trip!
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