Addis Ababa ought to be among the best places in the world to get a cup of coffee. As the capital city of Ethiopia, which is the birthplace of coffee, it has the tradition and the heritage. Ducking down Bole Road, away from the construction sites that have sprung up all over Addis, you can find old-world establishments like Habesha where coffee means ceremony. The beans are roasted and ground in front of you, while you are wrapped in the fragrance of a small cloud of burning frankincense. The coffee is slow-brewed in a clay ‘jebena’ and served in tiny cups on ornate metal trays. The process is as patient as it is elaborate. But there is one nagging problem with it, as there is with most Ethiopian coffee in Ethiopia: the taste is not as good as it should be. It is the fault of the beans, which are typically second rate. Coffee is Ethiopia’s leading export, its foreign currency mainstay, and a product the government treats as a strategic asset. What this means in practice is that all export-grade coffee is indeed exported. The only beans left for Ethiopians themselves are those that are damaged by insects and moisture or cracked. When this vast country and its population of nearly 100 million people was poorer, the ban on local consumption of high-grade coffee was an irritant, but only for a relatively small proportion of society. However, after years of sustained economic growth, albeit unevenly distributed, it has become an issue for the increasing number of Ethiopians in Addis with the spending money and taste to demand better coffee. Ethiopia is Africa’s leading coffee consumer. Fikru Amenu, Deputy Director at Ethiopia’s Ministry of Agriculture, laid bare the tension at the World Coffee Conference in March: “The domestic price is higher than international prices. We are just trying to convince [the traders] to export, because of the harder currency.” The job of persuading traders is made easier by the existence of a considerable stick, as well as the carrot of price. Government restrictions on the domestic market include sanctions on the local sale of all but lower grade and damaged Arabica beans. Those caught breaking these rules face fines of US$2000 or up to five years in prison. An international coffee trader working across East Africa says the sanctions capture people’s attention but that the problems are similar to other producing nations with growing economies. “Where there is a large domestic consumption, for which Ethiopia is unique in Africa, there is a tension between the need for US dollar currency for imports, and the fact that coffee sold by the cup for consumption commands a premium price, so competes with exports.” “There is clearly a very vibrant domestic consumption in Ethiopia, and given that processing and roasting the beans is done at the household level, there are few additional local costs from bean to cup,” he says. “So, there is a constant tension between a push to see the best quality exported to achieve the greatest dollar income for the country, and the fact that the local market can often pay higher prices.” There are several strands to the Addis renaissance of interest in coffee. The classic upmarket option is Tomoca, which has been fresh-roasting beans and serving macchiatos in Addis’ central piazza since the 1950s. In the last five years, as urban incomes have risen, Tomoca has opened five more outlets across the city. As well as Tomoca, the “cultural” restaurants like Habesha, which primarily services foreign tourists there, is a Starbucks-style chain of coffee bars that began in the well-off suburb of Tele Bole. The green and white logo at Kaldi’s Coffee would be immediately recognizable to Western consumers. The CEO, Tseday Asrat tried to open a Starbucks franchise at home after making regular trips to the US with her husband, an airline pilot. The American giant said no thanks. Her response blended local tradition — the name Kaldi is that of the apocryphal goat herder in the Kaffa region, whose goats discovered coffee by chewing the beans and becoming curiously energetic — as well as hip imported style. Aside from the borrowed branding, the chain has grown from a single outlet in 2005 to more than two dozen, with stores outside Addis and a dairy business to supply milk. The third strand is the roadside coffee ceremony ‘jebena buna’ in Amharic, where an often traditionally-dressed woman roasts and grinds before serving from the clay jug. The cheapest of all are the street sellers who pour small cups from a thermos. A Tomoca macchiato goes for 12 birr (US$0.60), a jebena buna roughly 5 birr (US$0.25), and the thermos option is just 3 birr (US$0.15). The growing caffeine buzz was killed at the beginning of the year when the government announced its intention to increase exports by 45 per cent in 2016. “Coffee exports will increase 45 per cent to over 260,000 tonnes this year,” Trade Ministry spokesman Shimelis Arega said in a statement that took local traders by surprise. “Incentives will help achieve this goal, and they will include marketing linkage, loans for coffee exporters and processors, and the promotion of the Arabica coffee that the country exports at trade shows abroad.” The vague sounding explanation as to how a step change in exports would be achieved made no mention of cracking down on domestic consumption. But traders have been nervous nonetheless. The US Department of Agriculture forecasts for 2016 contain no hint of a huge leap forward in production. Its forecast for Ethiopia’s coffee production in the fiscal year saw it climbing slightly upward despite the El Niño drought, but overall expected it to remain steady at 6.5 million 60-kilogram bags (390,900 metric tonnes). “Coffee exports for the current and outward year are forecast to remain largely unchanged at around 3.52 million bags (212,000 metric tonnes), which is a little more than half of total production,” the USDA concluded. When Mr Amenu spoke in March and lowered the export target to US$880 million – still a jump of $100 million from the year before – it seemed a tacit acceptance that no major boost in production would be forthcoming. But it did suggest that local consumption would have to take the hit. “If you tell an Ethiopian not to drink coffee, no one will listen to you,” Wondwossen Meshesha, the 28-year-old operations manager at Tomoca Coffee, told the Wall Street Journal. Like everything else associated with coffee in Ethiopia, government restrictions are nothing new. Unlike other African nations, where coffee was taken and cultivated by slaves, it is a country that has naturally consumed coffee since time immemorial. There were restrictions of consumption in Harrar, the southern highlands of Ethiopia now known as the Oromia region. The name of Harrar lives on in the famous walled city and in the sought-after Harrar beans, wild and exotic dry processed, natural Arabica coffee that commands high prices now as then. In the 19th century the coffee trade was so lucrative that it was preserved for export. By some estimates, coffee provides eight out of ten jobs in Ethiopia and more than 80 per cent of export income. It also raises up to a third of the country’s foreign exchange. This is money that the government is counting on to top up soft loans from China and the World Bank as it embarks on massive infrastructure projects, including a string of dams along the Blue Nile, designed to deliver the electricity needed to industrialise the country. Despite a decade of growth, which the World Bank has measured at more than 10 per cent annually, there are considerable tensions in a society led by a government that conducts elections but has only known one party rule since ending a civil war in the 1980s and which models its development on China. Recent expansion of the capital into the Oromia region has been drawing large protests since November, 2015. The deaths of 55 people in a stampede at an Oromo religious festival turned anti-government protest in October 2016 took the death toll to roughly 500. A state of emergency has been imposed and demonstrations, social media and several television stations have been banned, while a curfew has been imposed and gestures such as the crossed arms displayed by Feyisa Lilesa, the Olympic silver medalist at Rio, have also been prohibited. While coffee is not directly connected to the political troubles, the turmoil will make it harder to strike a balance between hard currency needs and sensitive handling of the domestic market. A local coffee trader and producer, who preferred not to be named, says that local demand was not going to diminish easily. “What has become a trend that seems to increase the local consumption, is the appearance of local traditional coffee shops, that serve coffee from a Gebena, to many, many people in a day,” she says. “You do not need anything to have such a coffee place, not even a shop as such. People do it in the streets, or under tin roofs. And it is very popular. More people now have the personal income to afford this luxury of having coffee outside their homes, and can even pay a hefty amount for green coffee locally.” The value structure of the Ethiopian coffee market is unusual, as it has higher levels of consumption than most other producer nations. No one sets the prices as such, a trader explains, but the price increases at each step. The farmer will set the price initially for the green beans, then the processor of the coffee and then finally the exporter who buys the coffee from the processors, and will determine the export price based on the product’s value on the local market, and the current prices on an international level. Putting aside the current political unrest, the international trader says that local demand should not be treated as inherently a bad thing: “I see it as positive for the country as a whole, as the premiums in the international market for Ethiopian coffees are partly supported by the local market. “It is quite a political issue, and at times hard to gauge to what extent punitive measures taken against companies accused of selling export coffee internally are based on real economic damage to the country, or simply based on this as an excuse to make a point.”
Both the local and international traders agree on the issue of quality. “Finally the whole world recognises it,” says the local producer-trader. “Ethiopia has the finest coffee, in terms of quality and cup profile. We now have the knowledge and the money to prepare the coffee in such a way that these qualities are not only preserved but accentuated.” Some traders nonetheless say that heavy-handed government involvement has led to bad export practices, which has penalised the value of exports when compared with regional rivals Kenya and Tanzania. Most observers agree that the real room for growing the value of Ethiopian exports is to focus on improving quality and opening the way for more specialty sales as well as expanding production, which is complicated by existing tensions of land rights. The reality of most coffee farming in Ethiopia, as in much of the rest of the world, is that it is carried out by smallholder farmers, for whom access to cutting-edge equipment and practices, as well as loans, is out of reach. Improved “fathering” practices, the pruning and taking care of the plant, to ensure maximum productivity and health, are now being more widely followed at several notable producers. As well as its rising reputation for quality, the other trump card for Ethiopian coffee is the focus on organic products in wealthier consumer markets. “There are no fertilisers used in Ethiopia,” says the local trader. “We support organic farming, as this brings better prices. In addition it assures product quality as fertilisation affects quality and taste.” GCR IMAGE: Shutterstock.com/Bluerain
Market Reports
Discontent brewing in Ethiopia
