In late 2007 and early 2008 as I was writing “God in a Cup,” the Ethiopian coffee industry experienced what amounted to a market collapse. Vast amounts of coffee that had been purchased by buyers in the US, Europe and Asia were never shipped out of Ethiopia or were shipped many months late after the beans had lost much of their lovely fragrance, taste and freshness. These events are dramatically described in my book.
In 2008 sellers and buyers scrambled to put the broken market back together.
Now the Ethiopian government is in effect re-nationalizing its coffee industry–coffee is Ethiopia’s most important export. The re-nationalization appears to be slamming the door on specialty buyers who in recent years have roamed Ethiopia in search of small lots of super high quality coffee from small Ethiopian farms and cooperatives for which they have paid $3 a pound and up.
Under the new system private sellers are banned. These “privates” have had their licenses to operate taken from them. They are no longer legally allowed to buy, process and market small lots of super expensive coffee.
Instead, the government has created a controlled commodities market on which virtually all Ethiopian coffee will be sold. (Some large, government-friendly cooperatives will apparently continue to have some autonomy.) Under the new rules, coffees from 24 different geographic areas will be aggregated, cupped and graded together. All coffees from, say, Yirgacheffe Area A, Yirgacheffe Area B, Harar and so forth will be slotted into one of nine different quality grades and sold together. Which means that the farmers working in particular cooperatives will no longer be able to increase their earnings by adopting improved agricultural practices and growing better coffee.
This notion–that farmers who work harder and produce better coffee ought to be paid more is the core notion of the specialty coffee industry. Everything else that specialty buyers and roasters are attempting to accomplish flows from this basic premise.
Instead of super high prices for a small number of coffee farmers, the Ethiopian government has decided to focus on gaining higher prices for all its coffee. A similar strategy was adopted some years ago by the Colombians: coffee buyers tell me this strategy resulted in the lowering of standards at the very top of Colombian coffee quality pyramid, but it has significantly raised the price of the mass of Colombian coffee. Since Ethiopia has something like one million coffee farmers, this strategy makes a certain sense. But it it fails to address the most fundamental issue besetting Ethiopian coffee farmers: low productivity. When coffee is aggregated and sold in mass lots, it is hard to identify factors that will motivate farmers and cooperatives to improve agricultural practices –thereby increasing productivity. Perhaps this will come.
8 thoughts on “Ethiopia: Slamming the door on specialty coffee buyers”
And this guy (Meles Zenawi) has MBA and is said to be “the best in his class of graduating.” Theory and practice…so different in Ethiopia…what a shame.
Knowing how Woyanes have been operating for the last 20 years, I have no confidence in them what is so ever that they will do something to benefit all Ethiopians. It seems always how it is going to help and improve the Woynes lives and the greater Tigrae at the cost of hard working poor Ethiopian tax payers and hard working farmers. My great grandfather like many millions of Ethiopians gave their lives for their beloved country during Italian war so their children and grand children could live in their own country in peace, harmony and dignity with pride without being slaved by foreign invaders, but unfortunately, the Ethiopian born hoodlum Woyanes are acting like foreign invaders. I hope the end of woyanes is near for the sake of Ethiopia and all Ethiopians.
This is economics masturbation. I guess we have to try what may work, though I completely disagree in snatching property from hard working greedy business people. What is right though and how do we gauge it. The West, with all its Nobel prize winner economists hasn’t figured out how to get out of financial crisis ;therefore, we just have to take it from one perspective, trial and error. In the end every thing is destined to correct itself.
Having found and purchased a few coffees from the superior lots, shipped as estate or single origin coffees, and tasted their amazing quality, this is MOST disappointing news. Typical of how government functions….. in nationalising any industry, the mass least common denominator generally prevails. Those who, last year, had learnt what to do to result in truly superior product will, this year, find their efforts count for naught. We who had come to expect, and count upon, the superior products such growers could produce, will not be able to find this quality of coffee when it is all thrown into the same hopper and blended. What this means is that we, for certain, will not be spending any significant money on high quality Ethiopian lots this year… there will be none. I can get a similar profile from Tanzania, Zimbabwe, Rwanda, even India and Papua New Guinea, for far less…….. so why spend more to get less?
When the market ceases to function at all, all bets are off. At least for a while. In the USA we are practically nationalizing our banks at the expense of shareholders, competition, etc.
It seems a bit of a disconnect to be worrying about specialty markets when the fundamentals aren’t even working properly yet.
This shows how desperate Woyanne and their money laudering machine EFFORT are for money, they were fat making money off donated food and funds, now that free money is drying up and they are grasping at any revenue making enterprise the rest of Ethiopians had.
Add to that the looming defeat they are facing all over Ethiopia, this action is not a surprise but a perverse logical act of the desperate Woyanne, the next step is to accelerate shipping every revenue generating industry to Tigray so they can retreat there as a final act of dismatling Ethiopia as we know it today.
This unrealistic Abay Tigray dream will turn to a nightmare when the people of Ethiopia turn on these tribal fascists, even the people of Tigray will not stand for this because they never benefited from this tribal junta save for those few tribalists who are living off the backs of the Ethiopian peoeple as a whole, thier dream will turn to a nightmare soon!
there are, as usual, so many undercurrents here. at one level is the attempt to raise coffee prices for all ethiopian farmers. that is a good goal. but the way chosen to go is going to ultimately hurt both the growers who try to make a better (more valuable) product, and all farmers will itimately suffer as specialty buyers move to other, more evolving origins. the more subtle undercurrent is political control. this looks a lot like another move to consolidate political control in addis ababa at the expense of semi-autonomus regional governments, gaadah and other forms of traditional administration.
To Tom:
Coffee is the world’s second most valuable traded commodity, behind only petroleum. There are approximately 20 million farmers and coffee workers in over 50 countries involved in producing coffee around the world. What happens on coffee farms and in the governments of coffee nations affects the economy more than textiles, coal, or anything else besides petroleum.
Ethiopia consumes more than half of the coffee that it produces, which leaves only a minority of that coffee to be exported. Of that minority, Ethiopia has some of the most sought after coffees (i.e. Yirgacheffe), as well as some of the most unpalatable Arabica available. Columbia, the political model which this new system imitates, currently has the reputation of the world’s leader in consistent mediocrity. Even an above-average Columbia Supremo may be marketed as “a good doughnut coffee”.
People aren’t going to pay for a good doughnut coffee to be transported halfway across the world, and my customers certainly won’t pay anything near the price of my Yirgacheffe for a mix-and-match graded coffee simply called “Ethiopia 1”. If wine was sold the same way that this new model proposes to sell coffee, then you would walk down the shelves and see “French Wine Gr.3” and “Italian Wine Gr.1”, and every bottle would be as consistently mediocre from year to year as a Coca-Cola.