U.S. coffee importers and roasters are worried that a new auction system in Ethiopia makes it almost impossible for them to buy coffee from the particular farmers whose beans they want.
The system, overseen by the Ethiopia Commodity Exchange, mixes coffee beans from different growers before selling them for export.
That’s a big deal to specialty roasters who prefer beans from certain growers and processors and sometimes have worked with them to improve quality.
During a visit to the Ethiopian exchange in February, one Seattle coffee importer became concerned about how the new system would work.
“We spent a whole day going through the phases of grief — anger, denial and acceptance — just trying to get our arms around what’s going on,” said Craig Holt, owner of Atlas Coffee Importers.
The new auction system and its implications are poorly understood, Holt and others said.
What they know for sure is that they’re unable to order many of the coffees they want.
Some have had trouble getting any coffee from Ethiopia, although it is not clear whether the new auction system is to blame.
Royal Coffee, an importer based in Oakland, Calif., has not received shipments from Ethiopia that ordinarily would have arrived by now.
“There seems to be a wrench in the gears,” Royal Coffee President Robert Fulmer wrote on the company’s blog. “To say there is confusion and chaos in Ethiopia is an understatement.”
Last month, Ethiopia closed the warehouses of six of its largest exporters, accusing them of hoarding coffee and contributing to a shortage of foreign currency.
Bloomberg reported last week that the government plans to start exporting beans itself.
The changes haven’t affected Starbucks, a spokeswoman said. The company buys coffee through the exchange and from cooperative unions and estates, which are allowed to sell directly.
The United States imports 12 million to 15 million pounds of Ethiopian coffee annually, less than 5 percent of that nation’s total coffee exports. Japan is the largest importer of Ethiopian coffee, taking about 66 million pounds a year, according to the Specialty Coffee Association of America.
Ethiopia’s new exchange estimates that specialty coffee, high-end coffee for which consumers pay a premium, represents about 3.7 percent of its coffee exports. Specialty coffee includes coffee bought by importers and roasters who have relationships with certain coffee growers.
The exchange said in a December paper on specialty coffee that it can hone its contract specifications to reflect geographic criteria and other refinements. For further traceability, “the direct channel by which growers can directly export coffee can be used,” the paper said.
Victrola Coffee Roasters in Seattle is among those counting on it.
Coffee buyer and head roaster Perry Hook is excited about a shipment of 2008 Ethiopia Natural Yirgacheffe Beloya beans that he just bought from the importer Ninety Plus Coffee.
He doesn’t have much hope of getting anything so specialized from this year’s crop.
“We’ll still buy Ethiopian coffee, because they have some of the best coffee in the world,” Hook said.
“It’s the specialty ones that can be tied back to specific producing areas and handled in specific ways that we’re not going to get [this year]. We’re just going to hope something happens down the road and that in 2010 we can get these kinds of coffee again.”
Government has no plans to nationalize coffee sector: Spokesperson
ADDIS ABABA (Bloomberg) — Ethiopia won’t nationalize its coffee exports after seizing the warehouses of six of the country’s largest exporters two weeks ago and suspending their export licenses, Communications Minister Bereket Simon said.
“I don’t think the government intends to nationalize anything around this issue,” Simon told reporters in the capital, Addis Ababa, today. “That is not required in order to solve the problem.”
Ethiopian Premier Meles Zenawi on March 19 accused exporters in Africa’s largest coffee producer of hoarding the commodity. The government last week said the state-run Ethiopian Grain Trade Enterprise, a grain importer, will take over the export of the beans.
The government will pay the proceeds to the coffee exporters, Simon said today. The country’s roughly 120 coffee brokers had a duty to export coffee for the good of the nation’s economy, he added.
“This is a commodity which we rely upon to get our foreign exchange,” Simon said. “If some of our traders are not acting properly in this respect, the government has to make sure the market functions properly.”
Weekly coffee trading volumes on the Ethiopian Commodity Exchange fell to 1,916 metric tons last week from 4,503 tons the week before the government seizures.
Ethiopia’s foreign exchange reserves fell to about $850 million during the past year, enough to cover only one month of imports. The country’s coffee exports fell more than 10 percent in the first eight months of the country’s fiscal year, which starts in July, to 76,674 tons.
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To contact the reporter on this story: Jason McLure in Addis Ababa via the Johannesburg bureau at [email protected].
