Understanding traceability and the coffee supply chain in Ethiopia has always been challenging, but even more so over the last 10 years with the introduction of the Ethiopian Commodity Exchange for coffee. I think it’s easiest to understand it by really getting to know each of the players. Once I did this, it was much easier to understand how they’re interconnected.

Small-holder farmers
Small-holder farmers produce a majority of the coffee in Ethiopia on very small plots of land, often called gardens. By themselves, the only thing they can do is dry the cherry (natural process) and sell to local markets for local consumption. They may be able to get a better price by selling fresh cherry to a washing station or cooperative. The local demand for coffee in Ethiopia is pretty high, so selling coffee to a washing station for potential export isn’t always a clear advantage. The price paid for fresh cherry is fairly competitive in most zones that are known for quality, like Yirgacheffe, Guji, and Kochere. In these areas, many washing stations will offer a better price for fresh cherry that is evenly picked. In these areas, it is really up to the farmer as to where and how they want to sell their cherry. 

Some will do the extra work of picking ripe cherry and bringing it to a washing station that will offer a better price while others will choose to sell their crop as easily and quickly as possible, forgoing a potential better price for faster access to cash. Small-holder farmers are also often referred to as farmers and out-growers. 

Wild/forest grown coffee pickers:
Some of the coffee in Ethiopia, especially in Kaffa, is forest grown. In these areas, locals can buy permits to pick the coffee and then bring it to a washing station, cooperative, or naturally process it on their own. During my trip, it was expressed to me a few times that what really makes Ethiopian coffee so truly unique is the variety of the coffee. The hundred (maybe thousands) of naturally growing varieties create a flavor profile that is uniquely Ethiopian. So, these wild and old trees do produce a valuable product, hence the allure for people to buy a permit to pick these wild, forest coffees. The wild, forest coffees (as well as those old trees on private farms), will grow quite tall until they eventually get too tall and tip or split. So, it’s quite common practice to prune these trees regularly to keep them healthy and viable. 

Estates
Some coffee in Ethiopia is produced on larger privately-owned farms that have their own washing stations. Hambela Estate in Alaka is a good example of this. There, they have a washing station and a large amount of coffee growing on the land. These estates may also buy cherry from surrounding small-holder farmers as well and act very similar to a privately-owned washing station.

Privately-owned washing stations
Privately owned washing stations (wet mills) are abundant in the best growing regions of Ethiopia. These stations will buy fresh cherry from small-holder and forest pickers in the area and either wash the coffee or put it through the natural process. So, it may be clearer to call these “collection stations,” as not all of the coffee is washed. Farmers either bring their cherry to the washing station, or as I’ve found on my trip, many buying stations have daily routes to pick coffee up directly from farmers to expedite transit times and difficulties. The end product of these stations is dried coffee in parchment or dried cherry. Either of these products still needs to be prepared for export, and therefore require a buyer (exporter) to do so. 

Ethiopian Commodity Exchange (ECX)
When first established, the ECX required all washing stations to submit their coffee to the ECX where it would be graded and marked only with its region. The coffee lost all specific traceability. The advantage here is that the coffee was sold based purely on these marks (grade and region) and so the prices offered were quite fair and even among a region, preventing washing stations from being taken advantage of by buyers who may have understood more about the quality of the coffee than the stations themselves. This scenario allowed the exporters to reap all the extra profit from high quality coffees. The ECX also prevented vertical integration by foreign countries. Before the ECX, foreign companies could control all aspects of the coffee trading process except growing, taking most of the profit from the production of coffee outside of Ethiopia. There have always been ways to legally circumvent the ECX - these have usually had lot size minimums and the need for a dedicated foreign buyer for these lots. This way around the ECX (sometimes called the “second window”) is becoming a bit easier as the production size required is getting lower and there are more and more exporters making connections with foreign 

buyers. Continued demand from farmers and the improvement of technology within the ECX have led to much better traceability. This year, coffees sold through the ECX are also now able to be traced back to the specific washing station and can convey specific lot info. 

Exporters:
Exporters, often referred to as buyers in Ethiopia, buy coffees from the ECX and prepare them for export. This includes dry milling to remove the parchment or dried cherry, sorting, cleaning, and packaging for transits. Exporters then need to find an importer or entity that wants to buy the green coffee. With the opening of the second window and better traceability through the ECX, many exporters are also starting to buy washing stations. 

Cooperatives:
Farmers can also join together to create a cooperative that acts much like a washing station. The difference is that a cooperative will ideally pay members twice - once when they turn in their cherry and again if/when they make a profit on selling their parchment and/or dried cherry. Cooperatives can also buy cherry from small-holder farmers or wild pickers, but they will not offer the second payment/membership return to them. Cooperatives seem like an obvious win, but what sometimes happens is that cooperative members will often sell their best cherry to a different washing station where they can fetch the most money and only sell a small amount (as little as 30%) to the cooperative in hopes that the cherry bought from small-holders will boost the price. A big reason why this work around often happens is that the second payment back from the cooperative is made quite convoluted by the union system. 

Unions:
Cooperatives are required to be part of a union. The big advantage of this setup is that it allowed for better traceability than the early stages of ECX. The coffee unions act as they exporter for cooperatives and will prepare the coffees for export (“dry mill”). The unions will export the coffee using the cooperative name, giving a decent amount of traceability by doing so. While these unions are run by democratically elected officials, they are often huge entities, and the existence of corruption is all but accepted in Ethiopia. This is particularly interesting in the west, where Technoserve set up a large number of cooperatives. The unions were quite adamant that this coffee still be sold through them, so Technoserve agreed (for many good reasons tied to the need to have a route to sell the coffee for export). While Technoserve was active in the cooperatives, the price being returned to the small cooperatives was phenomenal - farmers were easily earning three times as much for their cherry than in the past. Chiri cooperative, who we sourced coffee from for a couple of years, is a great example of this work. Unfortunately, as soon as the Technoserve project ended (it was always meant to be a temporary bridge to improved systems), the payments back to the farmers greatly plummeted. I heard a report that it was sometimes twelve times less than when Technoserve was active. As a result, a number of the cooperatives are leaving the established union and creating their own. I got to taste coffee from one of these new unions, Katamadura.