Group of Coffee Farmers Seeks More Direct Access to Export Market

By Issayas Mekuria
Addis Fortune

January 13, 2008

Thirty-three fledgling commercial coffee farms have established their own association - the Ethiopian Coffee Growers, Producers and Exporters Association - in a bid to sell their products directly to foreign importers without paying a cut to middlemen.

The Ministry of Justice (MoJ) granted a certificate in recognition of the Association on December 6, 2007.

The Association, comprised mostly of new farms, hopes to bring a landmark change to Ethiopia's export coffee business. Currently, producers sell their product to suppliers, facilitated by middlemen who exact commission, and then on to government auction centres. Finally, exporters buy at auctions and sell to foreign importers. Coffee leaves Ethiopian farmers about 17 cents per kilo, but nets the country on average 1.20 dollars per kilo. The Association hopes to narrow that gap.

"The trouble of farmers is not only Starbucks; exporters, brokers and policies and rules of the government are also part of their problem," a member of the executive committee of the Association told Fortune. "The main reason that we initiated the establishment of the Association is to make the producers beneficiaries of coffee revenues."

Ethiopia is one of the world's largest coffee producing countries. The country, which is also the birthplace of the stimulant, produces 4.6 million bags of coffee. Although over 30.9pc of export revenue was generated from coffee in 2006/07, earnings from coffee exports dropped by 26.2 to 68.2 million dollars in the second quarter of the fiscal year compared to the previous quarter, according to a statistics obtained from the Ethiopian Customs Authority (ECA).

The Association will push for permission for an individual coffee farmer to export coffee without any interlocutor. According to the article of Association, it is established to enhance the quality and quantity of coffee produced as well as to raise producers revenue.

According to the Ethiopian Investment Commission, 134 investors have been issued a license to cultivate coffee in large-scale commercial agriculture.

"Our priorities are to encompass these investors as well as small-scale coffee producing farmers and farmers cooperatives into our Association," Naser Abajobir, public relations officer and executive member of the Association, told Fortune.

Close to 95pc of the total coffee exports come from small-scale coffee growing farmers. These farmers are mostly members of one of three coffee cooperative unions: the Oromia Coffee Farmers Cooperative Union, Sidama Coffee Farmers Cooperative Union and Yirgachefe Coffee Farmers Cooperative Union.

This association is headed by Ashenafi Mammo (PhD) and his Deputy Seifu Woldemichael.
The Ministry of Agriculture and Rural Development (MoARD) has already given them a two-room office at its headquarters in Kazanchis.

"This is a temporary arrangement until we gain the financial capacity to rent our own offices," said Naser.

Ethiopia's first coffee association was the Ethiopian Coffee Exporters Association (ECEA), which was set up in 1968 to promote Ethiopian coffee worldwide. ECEA has 56 member companies.

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