Detailed Explanation of Ethiopian Coffee Trading System: The Relationship Between Ethiopian Coffee Bean Prices and Quality

Ethiopian Coffee Export Systems and Traceability

For professional coffee knowledge exchange and more information on coffee beans, read on.

Under Ethiopian regulations there are three coffee export systems: (1) the largest system, private processing plants exported through ECX bidding; (2) the cooperative system; and (3) the single farm system. Of the three, cooperatives and single estates can export directly without going through ECX bidding, and they offer complete and reliable traceability and product history.

Even so, trace the chain back to its source and cooperatives still ultimately collect cherries from small farmers for centralized processing, so they are not 100% traceable. Single farms represent the only path toward the next generation of traceability.

Ethiopia Commodity Exchange (ECX)

The Ethiopia Commodity Exchange (ECX) was founded in 2008 by Eleni Gabre-Madhin, a former senior economist at the World Bank and director of the International Food Policy Research Institute (IFPRI). Its original purpose was to establish Ethiopia's, and indeed Africa's, first commodity exchange, introducing pricing mechanisms, warehousing and logistics, real-time communication, and other modern trading rules and technologies to change Ethiopia's agricultural market, which suffered from high transaction risks and high transaction costs, and to build an effective, reliable, and transparent commodity market.

ECX was widely praised at its inception and was seen as a way to revolutionize Ethiopian agriculture, reducing famine and poverty. In the past, Ethiopian farmers often struggled because of overwhelming media coverage. ECX claimed that through rural cooperatives it provided market access to over 2.4 million small farmers.

ECX's coffee trading model works roughly like this. First, farmers sell coffee cherries to local washing stations, and some washing stations pay higher prices to buy better-quality cherries. The washing stations send processed green beans to delivery station warehouses.

ECX acts as a "distribution center" and achieves the following:

1. Better price protection: it buys coffee beans from farmers at constant and relatively favorable prices, then stockpiles them;

2. Coffee grading: higher quality commands higher prices;

3. Timely information: coffee farmers can immediately get trading prices, regional processing stations, regional coffee warehouses, and other information by phone;

4. Building warehouses and processing plants: as of 2012, Ethiopia had 56 warehouses across 17 locations, with 9 locations holding coffee warehouses, which reduced transportation costs.

Take the Yirgacheffe region as an example: the delivery station is Dila, where green beans are labeled by production area and graded by bean quality and cupping results. The higher the overall quality, the higher the selling price. Traders buy green beans through ECX, but the packaging will at most indicate the production region and village, such as "Yirgacheffe: Konga" or "Yirgacheffe: Kochere."

Ethiopian Coffee Cooperative Names and Introductions

Farmers' Cooperative Union

To make direct export easier for farmers' cooperatives, the various cooperatives have established their own cooperative unions. Ethiopia now has 6 cooperative unions:

- Oromia Coffee Farmers Cooperative Union (OCFCU)

- Sidama Coffee Farmers Cooperative Union (SCFCU)

- Yirgacheffe Coffee Farmers Cooperative Union (YCFCU)

- Kafa Forest Coffee Farmers Cooperative Union (KFCFCU)

- Bench Maji Coffee Farmers Cooperative Union (BMCFCU)

- Tepi Coffee Farmers Cooperative Union (TCFCU)

The benefit of cooperative unions is that they unite scattered small farmers and cooperatives into a large collective to take part in international projects, such as Firetrade, providing a unified export contact for buyers. A certain percentage of harvest income is paid to cooperatives, which deduct management fees, retain a portion for community development, and pay the remainder to small farmers. Small farmers earn income more stably and conveniently to cover planting and living costs, which is why more and more small farmers are willing to join cooperatives.

Ethiopian Coffee Cooperative Details

Sigiga Cooperative (1600-2500m)

Production Region: Gedeo-Kochere
Members: 1862 people
Soil Type: Red-brown soil
Certifications: Fair Trade, UTZ sustainable farming, Organic coffee

Finchewan Cooperative (1450-2000m)

Production Region: Gedeo-Wenago
Members: 1271 people
Soil Type: Red-brown soil
Certifications: Fair Trade, Organic coffee

Konga Cooperative (1750-2300m)

Production Region: Gedeo-Yirgacheffe
Members: 1556 people
Soil Type: Red-brown soil
Certifications: Fair Trade, Organic coffee

Hafursa Cooperative (1750-2300m)

Production Region: Gedeo-Yirgacheffe
Members: 1975 people
Soil Type: Red-brown soil
Annual Green Bean Production: 798,000 kg
Average Farm Size: Maximum 4 hectares, approximately 600 kg per hectare annually
Facilities: Washing station
Certifications: Fair Trade, Organic coffee

Resa Cooperative (1000-1400m)

Production Region: Gedeo-Wenago
Members: 2719 people
Soil Type: Red-brown soil
Equipment: Two sets of coffee processing equipment
Certifications: Fair Trade, Organic coffee

Addis Katema Cooperative (1000-1400m)

Production Region: Gedeo-Wenago
Members: 891 people
Soil Type: Red-brown soil
Facilities: Washing station
Certifications: Fair Trade, Organic coffee

Biloya Cooperative (1600-2500m)

Production Region: Gedeo-Kochere
Members: 1203 people
Soil Type: Red-brown soil
Equipment: Two sets of coffee processing equipment
Certifications: Fair Trade, Organic coffee

Worka Cooperative (1650-2700m)

Production Region: Gedeb
Members: 305 people
Soil Type: Red-brown soil
Annual Green Bean Production: 457,000 kg
Average Farm Size: Maximum 4 hectares, approximately 699 kg per hectare annually
Facilities: All processing equipment
Certifications: Fair Trade, Organic coffee

Koke Cooperative (1750-2300m)

Production Region: Gedeo-Yirgacheffe
Members: 828 people
Soil Type: Red-brown soil
Equipment: One set of processing equipment
Certifications: Fair Trade, UTZ sustainable farming, Organic coffee

Hama Cooperative (1600-2500m)

Production Region: Gedeo-Kochere
Members: 1505 people
Soil Type: Red-brown soil
Equipment: One set of processing equipment
Certifications: Fair Trade, Organic coffee

Chichu Cooperative (1410-2000m)

Production Region: Gedeo-Dila
Members: 1675 people
Soil Type: Red-brown soil
Average Farm Size: Maximum 4 hectares, approximately 591 kg per hectare annually
Equipment: One set of processing equipment
Certifications: Fair Trade, Organic coffee

Michile Cooperative (1410-2000m)

Production Region: Gedeo-Dila
Members: 1206 people
Soil Type: Red-brown soil
Average Farm Size: Approximately 592 kg per hectare annually
Equipment: One set of processing equipment
Certifications: Fair Trade, UTZ sustainable farming, Organic coffee

Hase Haro Cooperative (1450-2000m)

Production Region: Gedeo-Wenago
Members: 1519 people
Soil Type: Red-brown soil
Average Farm Size: Maximum 4 hectares, approximately 591 kg per hectare annually
Equipment: One set of processing equipment
Certifications: Fair Trade, Organic coffee

Dumerso Cooperative (1750-2300m)

Production Region: Gedeo-Yirgacheffe
Members: 246 people
Soil Type: Red-brown soil
Equipment: Two sets of processing equipment
Certifications: Fair Trade, Organic coffee

Tumticha Cooperative (1410-2000m)

Production Region: Gedeo-Yirgacheffe
Members: 960 people
Soil Type: Red-brown soil
Equipment: Two sets of processing equipment
Certifications: Fair Trade, Organic coffee

Aramo Cooperative (1750-2300m) (90+ Chibi production area)

Production Region: Gedeo-Yirgacheffe
Members: 2254 people
Soil Type: Red-brown soil
Equipment: Two sets of processing equipment
Certifications: Fair Trade, Organic coffee

Edido Cooperative (1750-2300m)

Production Region: Gedeo-Yirgacheffe
Members: 1044 people
Soil Type: Red-brown soil
Equipment: One set of processing equipment
Certifications: Fair Trade, Organic coffee

Adame Cooperative (1000-1400m)

Production Region: Gedeo-Wenago
Members: 533 people
Soil Type: Red-brown soil
Equipment: One set of processing equipment
Certifications: Fair Trade, Organic coffee

Belekara Cooperative (1000-1400m)

Production Region: Gedeo-Wenago
Members: 685 people
Soil Type: Red-brown soil
Equipment: One set of processing equipment
Certifications: Fair Trade, Organic coffee

Adado Cooperative (1200-1700m)

Production Region: Sidamo-Bule
Members: 1128 people
Soil Type: Red-brown soil
Equipment: One set of processing equipment
Certifications: Fair Trade, Organic coffee

Haru Cooperative (1200-1700m)

Production Region: Gedeo-Yirgacheffe
Members: 1187 people
Soil Type: Red-brown soil
Equipment: One set of processing equipment
Certifications: Fair Trade, Organic coffee

New Coffee Trade Regulations

In July 2017, two new coffee trade regulations may change this situation, giving coffee farmers the right to sell their coffee to coffee processing plants within 3 days before the beans arrive at ECX warehouses.

Ethiopian Single Farm Coffee System

The single farm system has actually existed in Ethiopia, but its share has stayed low, and traditionally it belonged to large commercial batches that did not emphasize quality. With Ethiopia's emergence in the third wave of specialty coffee over the past two to three decades, alongside traditional coffee practitioners, a group of innovators influenced by Western culture has gradually appeared, hoping to bring change to the industry. Besides traditional exporters investing in production areas, a wave of people returning from Europe and America to invest in their hometowns has also been drawn in.

How important is the single farm system, which we will temporarily call the Single Farm Project (SFP)? We all know Ethiopia is dominated by small farmers, but the small farmer system cannot achieve complete traceability.

Single farms are the only answer to all these problems. Single variety batches, special processing method batches, customized batches, and other concepts that matter greatly in specialty coffee development all rely on this system.

For example, the Sidamo natural processed "Horse" bean belongs to a single farm, the micro-region Hambella estate.

Ethiopia Hambella Single Farm - Benti Nenqua Village

Ethiopia Hambela Benti Nenqua G1

Country: Ethiopia
Region: Oromia Region
Zone: Guji Zone
Woreda: Hambela Woreda
Kebele: Benti Nenqua Kebele
Altitude: 2,150 meters (processing plant GPS measured height)
Variety: Ethiopian Heirloom
Annual Rainfall: Approximately 1,500 - 2,000 mm
Processing Plant: Hambela

Ethiopian Coffee Bean Brand Recommendations

FrontStreet Coffee's roasted Ethiopian coffee beans offer full guarantees in both brand and quality. More importantly, the value is outstanding: a half-pound (227 grams) package costs only about 90 yuan. At 15 grams per cup, one package makes 15 cups, or about 6 yuan a cup. Set beside coffee shops selling cups for over 100 yuan each, this is a genuinely conscientious recommendation.

FrontStreet Coffee Recommendation

Ethiopia is the birthplace of coffee and home to countless native heirloom varieties, a treasure land that lets drinkers follow its flavors faithfully. The natural entry point is FrontStreet's washed Yirgacheffe, where you taste clear jasmine and a bright citrus acidity; the famous Yirgacheffe is a small southern town, spring-like all year round, wrapped in mist, cool and humid, where thousands of coffee trees flourish and give the coffee its distinctive interweaving of floral aroma and fruit acidity, light and elegant with a tea-like body that drinks like a clean, refreshing lemon tea.

Because most Ethiopian coffee is grown on smallholder plots and delivered to village processing stations, cooperative lots are common, such as FrontStreet's Gudingding, Worka, and Konga cooperatives. Gudingding sits in the Worka area at Yirgacheffe's southeastern edge and was originally part of the Worka cooperative under the Yirgacheffe union YCFCU. As demand for traceability grew and single-origin lots were unearthed one by one, Gudingding, with about 300 member farmers, became an independent cooperative in 2012. Since the fruit is stripped of its pulp before drying, the coffee's own aroma comes through clearly: citrus and lemon tones with elegant white floral notes, bright and delicate overall. For contrast, FrontStreet's sun-dried Red Cherry is processed differently: damaged or moldy fruit is removed, the rest is dried in the sun for two weeks until the sugars and essence have seeped into the bean and moisture falls to 12%, then the hardened pulp, mucilage, and pod are scraped off with a hulling machine, the beans checked for density and color, and the last defects picked out by hand. The result is pristine and full of fruit aroma, with peach, cocoa, honey, and lemon.

FrontStreet's sun-dried Huakui comes from the Hambella area of Guji in Sidamo, where the farm spans 200 hectares and uses traditional natural processing; to prevent mold or earthy off-flavors, workers dry the ripe fruit on raised beds for 21 days, turning it to dry evenly and removing flawed beans every three to five days, then hull the dried fruit and sort once more. Because the fruit and skin stay on through the whole drying, a medium-light roast brings out a light fermented wine aroma, florals, citrus, and mango, with honey sweetness, cocoa, and a little spice, a thick body, and a long finish. FrontStreet's Sidamo sun-dried Hamashu comes from the same Sidamo region, where the Hamashu processing plant has become a fixture on Ethiopian green bean award lists, focusing on the JARC 74 series of disease-resistant varieties; the 74158 is a smaller bean with vivid floral and fruit notes, smelling of perfume lemon, strawberry, and starfruit and tasting of strawberry, starfruit, and green grape before gentle florals surface. Finally, FrontStreet's Kafa forest coffee is unlike the backyard smallholder model: Kafa is best known for wild coffee, with trees growing in shade at 1400-2100 meters, where the untouched ecosystem, microclimate, red soil, and plentiful rain create an excellent environment. Roasted medium-light, it carries clear white floral notes when ground, bright lemon acidity, sweet orange and bergamot on the palate, and a faint melon and nut sweetness in the finish, with a green-tea-like body.