Ethiopian Coffee Industry
Best-known Ethiopian Coffees:
Harar: produced in the eastern highlands, at altitudes of 1,510 to 2,120 meters above sea level. The bean is medium in size, with a greenish-yellowish color. It has medium acidity and full body, and a distinctive mocha flavor. Harar is one of the highest premium coffees in the world.
Wollega (Nekempt): produced in western Ethiopia. The medium-to-bold bean is mainly known for its fruity taste. It has a greenish-brownish color, with good acidity and body. Many roasters put this flavor in their blends, though it can also be sold as an original gourmet or special-origin flavor.
Limu: known for its spicy and winey flavor, and particularly popular in Europe and the U.S. Produced at altitudes of 1,400 to 2,020 meters above sea level, it has good acidity and body, and the washed Limu is one of Ethiopia’s premium coffees. It has a medium-sized bean, and is greenish-bluish in color and mostly round in shape.
Sidamo: this variety, accounting for 30% of all Ethiopian coffee production, has a medium-sized bean, greenish-grayish in color. Sidamo washed coffee, known for its balanced taste and good flavor, is called sweet coffee. It has fine acidity and good body, and is produced in southern Ethiopia, at altitudes of between 1,400 and 2,200 meters above sea level. It is always blended for gourmet or specialty coffee.
Yirgacheffee: this has an intense flavor known as flora. The washed to pay a premium for it. Between 80% and 85% of the coffee Ethiopia exports is sun-dried, while 15% to 20% is wet-processed coffee. Since consumer preference is for wet-processed coffee, Ethiopia intends to gradually increase its capacity for that kind of processing. Currently, Yirgacheffee is one of the best highland-grown coffees, grown at altitudes of between 1,770 and 2,000 meters above sea level. It has fine acidity and rich body. Many roasters are attracted to its delicate, fine flavor.
There are more than 400 coffee-washing plants throughout the country, owned by cooperatives, former state enterprises and private companies. At full capacity, these plants can produce about 52,000 tons of washed coffee per year.
Ethiopia has two auction centers-one in Addis Ababa and one in Dire Dawa-and auctions begin precisely at 2 p.m. weekdays throughout the year. From February to April, at the peak of the season, auctions are held twice a day. The sellers and their coffee-loaded trucks come to the auction centers, where samples are taken and visual inspections of the coffee are made before the auction takes place. After the highest bidder acquires a “lot,” the truck is driven to the warehouse, where the coffee is unloaded, weighted and paid for against the price agreed at the auction. In theory at least, export is prohibited unless the Coffee & Tea Authority’s grade and cleanliness standards are met.
“Every year, export volume is increasing, and yield is going up,” says Ethio-Coffee’s Yemane. “Our farmers are now getting 5.5 to 6.0 quintales per hectare, up from 4.7 five years ago. In Kenya, where they use fertilizers, farmers can get 12 quintales. But in Ethiopia, no fertilizer is applied to coffee. It’s all organic. Every peasant uses animal dung. We want to keep our coffee as it is, natural.” Ethio-Coffee is a division of Midroc, a large Ethiopian conglomerate whose 20 or so subsidiaries extend to agribusiness, construction and tourism. Midroc also exports flowers and vegetables to Europe and owns everything from a 2,000-hectare tea plantation to the Sheraton Addis, one of Africa’s most luxurious hotels.
Recently, Midroc decided to get into the coffee business, so it launched the Gemadro Coffee Plantation Project on a 2,300-hectare tract of land in the Kaffa-Shaka Zone of southern Ethiopia.
During the 1998-99 season, Ethio-Coffee planted 310 hectares with more than a million coffee seedlings from its own nursery, and planted another 400 hectares with two million seedlings in 1999-2000, bringing the total to 710 hectares. In the 2000-01 season, the company will plant another 300 hectares, for a total of 1,010 hectares. Total investment in Gemadro is around 30 million birr ($3.6 million), and the project employs 250 regular and 650 seasonal workers.
“The company is confident that it will, in the near future, emerge as a major foreign-currency earning member of the Midroc Ethiopia Group,” says a company report. Not far from Yemani’s office in downtown Addis Ababa-and within walking distance of a huge Marxist monument given to Ethiopia in the 1970s by North Korea-is the office of Abdulrezak Sherif, managing director of Ethiopian Commodities PLC.
For the past 10 years, Sherif has also served as chairman of the Ethiopian Coffee Exporters Association, whose 83 members represent 98% of all Ethiopian coffee exports by volume. In an interview, the 50-year-old businessman expressed little nostalgia for the 1975-91 military regime-also known as the Derg-when Mengistu kept a tight rein on everything in Ethiopia, including the coffee industry. “The regime followed a Communist philosophy. They monopolized the export business,” said Sherif, whose association was forced to operate clandestinely while the Marxists were in power. “The government corporation, Ethiopian Coffee Marketing Corp., exported 95% of all coffee and private firms exported the other 5%. In 1991, the new government took power, liberalizing trade and opening the market to competitors. In the last eight years, the private companies have grown to export 90% of all coffee.”
Today, he said, there are over 100 Ethiopian coffee exporters, compared to just 17 during the Derg. The largest is Nejat International PLC, with 11% of total exports, followed by government-owned Ethiopian Coffee Export Enterprise (8% of the total) and Moplace Trading Co. Ltd. (5%). “In the last ten years, production has grown because of the liberalization,” said Sherif. “Producers are happy because they’re getting a better price at the auction. There’s no interference from the government. Quality has improved, especially Ethiopian washed coffee. It used to be 10% of the total, but now it’s 35%. Now all our export coffees are examined by cup.”
On the other hand, says Sherif, exporters aren’t thrilled with coffee prices, especially over the last two years. “Most of the suppliers don’t want to sell their coffee for export. Ethiopia consumes 50% of its coffee production, and growers get a better price if they sell locally, because there is no export tax for local consumption,” he said. “If coffee prices continue like this, we don’t know what will happen. Maybe producers will switch to other commodities.”
In 1999-2000, total exports reached 115,000 tons, of which 32,000 tons represented washed Arabica and 83,000 tons unwashed. (For sake of comparison, in Kenya the ratio is 90% washed, 10% unwashed). This is important, because washed coffee generally earns a 25-cent premium above New York C, while unwashed gets 15 cents below. Sherif cautioned that for the 2000-01 season, “we think there’ll be a reduction in volume because of drought. In Sidamo, it will drop by at least 40%, though other areas like Jima and Wellega won’t be affected as much.” Sherif, who became general manager of Ethiopian Commodities in 1981 and acquired it from parent company Cargill two years ago, says Ethiopia ought to better exploit the fact that its coffees are 100% organic-a possible marketing advantage in the U.S.
“Specialty coffee is popular worldwide, but organic is much more preferable in the last five years,” he said. “Most of our farmers are small holders, and they’re not using pesticides or fertilizers. We’re trying to certify this as organic coffee. We hope we’ll get results in a few months.” Coffee still represents a relatively small part of overall trade between Ethiopia and the U.S.-only around 10% of the $30.2 million worth of goods Ethiopia exported went to the U.S. in 1999. That compares to 1997, when exports to the U.S. had hit a high of just under $70 million.
“Trade with the U.S. isn’t much, but compared to [U.S.-Ethiopian commerce during] the Marxist regime, we can say that it has increased dramatically,” says Mohammed Yahya Garad, trade and investment counselor at the Ethiopian Embassy in Washington. “During the 1980s, there were less than 20 U.S. companies operating in Ethiopia. Today, there are over 300.” Nevertheless, Garad says his country “hasn’t done a very good job” marketing its coffee. “It’s really the power of advertising that, for example, makes Colombian coffee famous,” he said. “Roasters know that Ethiopian coffee is superior, but they can’t sell it because there’s no demand at the consumer level. We are handicapped because we’ve not approached it systematically. We’ve been too timid to spend money on advertising. We need to take a systematic approach to the marketing of Ethiopian coffee in the U.S.
“We are trying to convince the coffee exporters as well as the Coffee & Tea Authority to spend money on smaller companies that can help them with marketing,” Garad continued. “The roasters tell us we have the best coffee in the world, and that it’s a shame we can’t sell more of it.” Sherif agrees.
“When you compare Latin American countries like Brazil, Costa Rica or Colombia, they advertise their coffees in a very nice way. But we are not strong financially,” he told us. “Two years ago, the Ethiopian government established an export promotion agency to promote our agricultural products. We’re doing our best, but we haven’t done enough.”
Larry Luxner, a regular contributor to the Tea & Coffee Trade Journal, is a Washington-based freelance journalist and photographer who writes frequently about Latin America, the Middle East and Africa. He can be reached via e-mail at email@example.com.
Tea & Coffee - February/March 2001
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