Ethiopia

If one looks back into the past of the Ethiopian coffee trading community, one discovers "Good old days!" of considerable presence and affluence. The community was once very large, rich, and world-known. Existing copies of the long extinct Ethiopian exporters magazine show the numerous faces of traders whose names were once legendary, and even glimpses of those particularly grand occasions when the coffee trading community would host the old Emperor himself. 

The glittering scene vanished with brutal finality after the revolution in 1974. During the 17 years of communist rule, the Ethiopian coffee trading community shrank to such negligible force that it was consigned to history by most people in the global coffee business. At one time in the late 1980s, only about eight private firms were still at least marginally active, and their communal share of the Nation's coffee exports dipped to less than 10%.

Such feebleness in recent times makes ongoing renaissance in private Ethiopian coffee exporting all the more amazing. With the change in government in the early 1990s and, even more importantly, the shift back to a free economy, by 1992 the coffee industry's recovery had begun. Although political turmoil and military activity between 1990-1992 had a disastrous effect on coffee exports the recent re-invigorated and liberalised coffee market, supported by a vibrant and growing private sector, promises to be a more and more stable origin in the years to come.

A few years before the revolution, the authorities had developed a rather primitive but practical and efficient auction system in Addis Abeba. The provincial dealers who bought coffee from small growers in their home regions trucked it into a central depot and the coffee was literally sold off the truck within 48 hours and promptly delivered to the buyer's factory or warehouse. Although crude compared with the very sophisticated methods of the Nairobi Market, the scheme worked amazingly well. 
The coffee, once it has reached the Addis market after having been bulked by the dealers into 10-ton lots, is too low in grade to meet the minimum export standard. It is the function of the exporter to pick and screen their raw material and make up larger lots of exportable quality coffee usually known as "usual good quality" (U.G.Q.) or type 5 (the government standard). 

Following liberalisation in the early 1990's private exporters were encouraged to compete with the restructured state exporter, ECEE, which was expected to be phased out. 

Since 2002 however some structural changes in the commercialisation of coffee have been taking place in Ethiopia. The major evolution from selling coffee through an auction to an open market, is in a trial period to evaluate if the new system works. This liberalisation of the market entails that minimum prices are no longer set or required for registration. A minimum price is still being published however purely as an indicator. With this new rule, the local exporter can register his sales without having to take a minimum price into account. In reality, the prices registered by the different exporters are very similar and in line with the indicative prices. One of the most obvious reasons being that every exporter tries to get the best price possible for his coffee.
What still remains in place from the old system are the registration procedures. That is the registration with the National Bank who issues the export licenses on the one hand and the one in the auction where volume and price are registered on the other. This auction registration can be done at a maximum of 6 months in advance and is always at a fixed price. Statistically, the coffee sold in the auction still represents more than 90% of the total volume exported. The National Bank also still requires payment with a letter of credit, mainly to ensure the declaration of US Dollar revenues. The registration is moreover a kind of safety net for both buyer and seller who can present their dispute to the Department of Coffee and Tea.
Nevertheless, a certain flexibility in the auction registrations has been implemented. Some small quantities of special grades, organic, shaded grown, ... are sold directly without being auctioned. The price and quantity are still registered in the auction for future reference. A new regulation is also in place for mixing different grades (ie Sidamo and Yirgacheffee). Mixing different grades was not allowed in the past but is now accepted with some specific quality requirements. Before export, all coffees are checked by the Department of Coffee and Tea to verify if the quality meets the minimum standards.