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Bob Benck: Inside the Ethiopia Commodity Exchange

Bob Benck and Fitamo Simano of the Shoye Co-op

I arrived a day late due to a missed connection in Frankfurt, Germany. Fortunately, Continental Airlines was graceful enough to give me a day room at a nearby hotel along with a stipend of 30 euros. I was turned loose in Frankfurt with about thirteen hours to do as I pleased. First a quick nap and then some local food and bier of course. I found a nice little non-descript place and ordered a bowl of hare stew and a pilsner.

Once again energized, I made my way back to the airport to embark on the second red-eye flight. Twelve hours later and finally in Addis Ababa, I relaxed and looked over some of Ethiopia import/export numbers. I like numbers because they always tell a story and here is what I have learned so far regarding Ethiopia. 25% of all export earnings for Ethiopia is generated by coffee. 10% of the total government revenue is coffee. Of all the coffee production in Ethiopia, 65% is naturally processed leaving 35% as washed coffee. Generally the prices paid for washed coffee is lot higher. Wednesday was the Direct Specialty Trade launch. There were 44 coffees in the auction, 26 of them sold. Pricing ranged from 2.50/lb up to 4.00/lb. There were reserve prices on many of the coffees which I am told were a little too high and prevented many from being sold. Quality reviews were mixed. Participation was somewhat low but good considering how quickly the DST was put together. I imagine this will change as buyers, exporters, and producers gain familiarity with the system.

I keep asking myself about how the Kenyan government auctions went in its infantile stages. I have heard that currently nearly 70% of Kenyan coffee production makes the specialty grade. Things will improve from a logistical and quality standpoint. Change is hard, it takes time.

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