Friday, April 24, 2009

Fair Trade Coffee and the Ethiopian Yirgacheffe

Branding is a better solution establish fair trade for coffee export in Ethiopia, compared to the Ethiopian Commodity Exchange or other top-down pricing mandate. 60% of Ethiopia’s economy is supported by the sale of its coffee. Ethiopia is also the 6th largest coffee exporter in the world. Recently, 6 major coffee exporters in Ethiopia stopped exporting their goods due to the fallen prices. As a result, the Ethiopian government is in the process of prosecuting these companies for hoarding their commodity. The result of a license to trade suspension would be that the company exports would be turned over to a state-owned commodity exchange organization.

“In 2006 the Ethiopian government trademarked “Yirgacheffe,” the name of the country’s most celebrated coffee-growing region, hoping to use its cachet to help all their coffee exports. Then in December, the government mandated that all coffee growers sell their crops through the Ethiopian Commodity Exchange, to insure that all beans fetched an adequate price. Some antipoverty groups thought this would help all Ethiopiain coffee growers.

It meant, though, that coffee roasters in the United States and other coffee importing nations would not be able to buy from specific growers whose beans they prize the most. It effectively ends direct trade for single-origin and microlot coffee.” (Ethiopia Shuts Down Coffee Exporters, NY Times March 25, 2009)

Interestingly enough, the coffee from the Yirgacheffe region has been listed as a fair trade coffee before, at about $1.26 per lb. The expected rate of Arabica coffee trade in May however, will sell at $1.165 per lb. So the current coffee trade policy that Ethiopia is operating under does not necessarily exclude the possibility of fair trade coffee, but by killing the opportunity for direct trade, this possibility does not really support the export of fair trade coffee.

What has been working however, are branding initiatives on the part of coffee exported from the Yirgacheffe region. In 2007, Ethiopia began to explore branding, taking point from Starbucks, so that they could reap the benefits of a $10 per lb sale in the United States, or an estimated trade of $88 million yearly.

"The move could inspire producers of other commodities throughout Africa to harness branding and capture more value from the goods they sell to consumers in rich countries….It's quite innovative for a branding initiative to come out of the developing world," says Seth Petchers, the director of Oxfam America's coffee program. "It's about getting [farmers] to realize the value of what they have.” (In Trademarking its Coffee, Ethiopia Seeks Fair Trade Nov 9, 2007, csmonitor.com)

I think this is a fantastic solution, proven with two results: 1) Yirgacheffe coffee has become attractive and became a fairly traded coffee, and 2) If you go on to amazon, you can find Ethiopian Coffee at prices in the order of $10 per pound. And that is without shipping costs. Boyer’s Coffee Ethiopian Yirgacheffe, 2 16 oz bags are going for $15.25.

If the branding doesn’t persuade you, maybe the quality will: “Ethiopian Yirgacheffe is prized by connoisseurs for its delicate fragrance of orange blossoms, with an elegantly sweet and clean finish…..Ethiopia is the historic origin of coffee, and even today the breadth of its flavor experience is profound. Yirgacheffe charms you, with its high citrus notes and its deep bass foundations; its sensual wisp of flowers and its round body. A cafetiere of Yirgacheffe is a treat for the soul.” (greenmountaincofeee.com)

http://dinersjournal.blogs.nytimes.com/2009/03/25/ethiopia-stops-coffee-exports/

http://www.bloomberg.com/apps/news?pid=20601116&sid=aIQmZFWn085s&refer=Africa%5d

http://www.greenmountaincoffee.com/Coffee/FTOEthiopianY

http://www.globalexchange.org/campaigns/fairtrade/coffee/

http://www.csmonitor.com/2007/1109/p01s06-woaf.html

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