Ethiopia, which claims to be the birth place of coffee, is on the right track to transform coffee farmers from price takers to price makers, United States coffee traders said.
The country aims to reverse the declining income from coffee export over the past years through specialty coffee promotion, which is expected to generate premium price at the international market.
“There are already cases in Ethiopia where that [coffee price making by farmers] is happening. The unions of Yirgachefe, Oromia, etc, they have already set their prices. And those prices are not related to New York prices. Last year their prices were much higher. Those prices has been going up and Ethiopian coffee is becoming expensive,” said Timothy Chapdelaine, Managing Director of Trabocca, coffee roaster in North America.
Meanwhile, Ethiopia has not yet been able to reverse the declining trend of country’s export earnings from coffee over the past five years. Ethiopia’s export earnings from coffee has been declining over the past five years reaching $780 million last year (2014/15 budget year) from close to $842 million five years before, according to the statistics from the Ministry of Trade of Ethiopia.
Mr. Chapdelaine, says that the traditional practice of setting prices for agricultural commodities like coffee by global traders at international commodity markets is now changing.
Improvements in coffee quality, infrastructure and logistics as well as the integration of Ethiopian Commodity Exchange (ECX), the unions and individual farmers are contributing to the price increase of Ethiopian coffee on the international coffee market, according to Mr. Chapdelaine who is a weeklong tour in Ethiopian coffee farms along with couple of dozens of United States roasters.
“When those components are in place, the ability to pay higher price for that coffee is greater,” he said speaking to reporters on Thursday in Addis Ababa.
Aided by EXC short messaging on the global prices Ethiopian farmers are now making informed decision, which is helping them to get better prices for their coffee. Every month ECX is getting a million SMS requests on the global price of coffee from smallholder farmers, according to Mr. Ermias Eshetu, CEO of ECX.
“Ethiopian coffee varieties in most cases are categorized are specialty coffee, which we have not been able to market. Now there is a potential to be able to identify that particular variety. So that farmers can earn more for their hard work,” Mr. Ermias said.
Reports show that coffee farmers in Ethiopia were getting less than 10 percent of the profit from their beans, which is finally sold for up to $3 per cup in coffee shops abroad.
Promoting Ethiopia’s different coffee origins such as Yirgachefe is important for the country in order to make them specialty and get paid more for, according to Vanessa Adams, Director of the USAID-funded Agribusiness Market Development Program, which arranged coffee farm visit of the traders in collaboration with ECX.
“Some coffees have different flavor profiles and qualities. We all talk about Yirgachefe or Harar, the ones which are the most recognized. But there are other coffee origins in Ethiopia; there are Sheka forest coffee, Fugi, Wollaita, Amaro, Limu, Nekemt. Those who live here know that, but the world doesn’t know,” she said, stressing for the need continue promoting origin, increase investment in washing, storage and bigger coffee farms as among the major contributors to increasing farmer incomes.
For now, whether promoting specialty coffee based on their origin can reverse the declining income of Ethiopia from coffee export and become free from negative effects of the fluctuating global coffee price, is yet to be seen.
“Things are moving in the right direction already and I think it will continue to. To be honest I think