Exchange Not Exacting Enough with Its Coffee for English

Browse along the coffee shelves in a British supermarket and one finds that buying their favourite beans is no longer a simple matter of the taste and price. These days, the importers and roasters are likely to tell more about the ethics of their business than the flavour of their products, ELIZABETH BLUNT, SPECIAL TO FORTUNE, reports from London.

Addis Fortune

November 30, 2009

This is true across the whole range of price and quality, from top-of-the-range specialist coffees to mass-market brands like Lyons and Nestlé. With just a little help from Nescafé and its partners, a community of farmers in a coffee-growing region in Ethiopia have been working to improve their own lives, and the lives of their children.”

Supermarket brands are no different. Sainsbury’s packaging for its Ethiopian coffee promises a “FairTrade” guarantee that its farmers in Sidamo receive a fair price for the coffee they grow, while Waitrose claims on the packaging of its Mocha Sidamo that, “While the quality of our coffee is important, the welfare of the people growing it for us is equally so.”

Some of this concentration on ethical marketing has certainly been forced by “FairTrade” campaigners. Philip Schluter, who represents Schluter Ltd in the UK, told Fortune that Oxfam’s campaigns and the film “Black Gold” had had a clear effect, and the message had hit home particularly forcefully in the case of coffee.

“There is such a stark and obvious contrast between the price the customer pays for a single cup in a fashionable coffee bar, and the price that is paid to the farmers,” he said.

As a trader, he points out that Oxfam tends to understate the cost of all the processes which lie between the farm and the cup, but concedes that selling coffee to customers is not just about the taste, it is also a lot about the “story” behind the beans.

From the point of view of producers like Ethiopia, this emphasis on responsible sourcing and a fair price can only be welcome, but it does mean that modern British coffee companies can be fussy customers, needing to know not just where their coffee comes from, but who grows it, how it is grown and exactly how much the farmers are paid.

And this is where some importers at least have been running into problems with Ethiopia’s new marketing system which, they say, just does not give them enough information. The customers who are not happy with the Ethiopian Commodities Exchange (ECX) form a relatively small, but very profitable segment of the British market, according to one regular buyer of Ethiopian coffees.

The majority of the volume of coffee coming into Britain – 80pc or more – was never really traceable all the way to the farmer anyway, so for those buyers nothing has changed. Their only problems might have been temporary ones if the exporters they normally bought from were among those who had their licences revoked last year.

And some importers buy direct from cooperatives, and that is still allowed. Those who are having problems are those who want the very best coffee and who want it to be traceable, and who have previously relied on exporters who work directly with the farmers. They can still buy good coffee through the ECX, but they no longer have the same “story” about the farmers it comes from. Perhaps only 10pc of buyers are having these problems, but they are the cream; they pay a big premium to get the beans they want.

Ethiopia is an important source of “certified” coffees. There is already evidence that one buyer for a large quantity of certified organic coffee has switched away from Ethiopia and is buying instead from another African country.

Most buyers, however, seem to be biding their time, waiting to see whether promised improvements will allow them to work within the new system. This is particularly the case with the blenders, for whom changing the composition of their blend is a major thing, especially when they have been using a coffee like Sidamo, which has a very distinctive taste.

One thing which is clear is that coffee companies in the UK place a high value on Ethiopian beans.

“Ethiopian coffee is popular and it is a very important to us, so distinctive, and with a wonderful floral flavour and citrus notes coming through,” Steven Macatonia, of Union Hand-Roasted coffee, told Fortune.

And again the “Story” is important.

“Ethiopia is the place that coffee originally comes from, and enthusiasts understand and appreciate that."

Union Hand-Roasted has until now been buying its coffee directly from groups of farmers in the Yirgacheffe area, with whom it has built up a direct relationship, and this means it has not, so far, been affected by the operations of the commodity exchange.

But, says Macatonia, the ECX rules have hugely affected the traceability of individual lots, making it much harder to know where exactly the coffee comes from. And he says he has not heard from anyone what the benefit of the new system is - at least as far as producers and buyers are concerned. He would like to broaden the range of Ethiopian coffees that Union sells, but he does not think he can source them through the ECX, even if they offer high quality beans.

“In effect these are anonymous coffees, and we would not ever buy anonymous coffee,” he said.