Coffee in Ethiopia typically follows one of two paths: estate coffee or collective lots. The easier to understand (but much rarer to encounter) is the path of estate coffee that is grown and sold under the name of the estate. The supply chain for Ethiopian estate coffees is similar in large part to the supply chain in Central America in that farms are owned either by wealthier Ethiopian nationals or by Ethiopian nationals in partnership with international investors. Just like any farm in Central or South America, these farms employ pickers and processors at market rates.
The second way that Ethiopian coffee is collected is through either formal or informal co-op situations. In some cases, these are formal cooperatives made up of constituent members who share in the ownership and decision making of the business. In other cases, a washing station, usually owned by an exporter, acts as an informal cooperative at which small farmers can sell their cherry. This is the most traditional and common case for Ethiopian coffee, and coffees from this sort of production range from high-end grade one (G1) coffees to internally used UG (ungraded) lots. Coffee from washing stations or co-ops then can flow directly to an exporter, or it can be sold on the Ethiopian Commodity Exchange (ECX) to any registered buyer.
This year, however, the ECX has changed several of their rules in ways that make it easier to export and track the movement of microlots. The ECX has opened new remote trading centers in cities such as Hawassa, which is much closer to producing regions such as Yirgacheffe. They have also opened up the minimum bag quantities that can be bought and sold on the exchange, officially allowing for trackable microlots as small as one bag from washing stations, not just self-contained estates.
In anticipation of those changes, Ally Coffee partnered with our good friends and exporters at Tracon Trading in Addis Ababa to buy coffees through a new microlot program at four of their washing stations in Yirgacheffe: Chelelektu, Biloya, Hafursa Waro, Chelchele. In the first year of the program, 50 small-scale farmers sold their total production at a premium. Their coffee was then processed as either Washed or Natural and was tracked by fermentation tank and/or drying table.This first-time program allowed us to collect data on everything from exact elevation at which the coffee was grown to specific fermentation and drying timelines. Additionally, it allowed Ally to pay an extra premium directly to the farmers in the program, a significant percentage increase over the cherry price farmers are paid when contributing to community lots.
