ECX’s Role in Coffee Market Diminishes

Ethiopia’s modality for coffee exports has shifted from the Ethiopian Commodity Exchange (ECX) to vertical marketing. During the 2020/21 Ethiopian fiscal year that ended June 30, 2021, over 90Pct of the 248,000 tons of coffee was exported through the new modality which is outside of ECX’s platform—earning the nation a record high income of USD970 million. This value has only been in the range of USD600 to 800 million during the past decade. The price of regular Ethiopian coffee also jumped in the international market from USD2,800 two years ago to the current USD4,000 per ton—a surge of 35Pct. Specialty coffee fetched around USD70 per kilogram. However, USD370 per kilogram was the winning bid of the Cup of Excellence coffee auction.

Under vertical marketing, coffee growers and suppliers can export directly to international buyers, without ECX involvement in which exporters had to purchase beans from the exchange—the first modern coffee market platform designed ten years ago.

“Under the ECX model, exporters approve high grade samples. However, the actual bulk coffee they receive is of low grade due to various malpractices at ECX warehouses where top-of-the-line coffees were replaced with second-rate beans. There were huge differences between samples and lots. Now grading is done through the Ethiopian Coffee and Tea Authority (ECTA), without ECX’s intervention. Over 90Pct of Ethiopian coffee exported this year was processed through the vertical marketing model,” Adugna Debela (PhD), Director General of ECTA, told EBR. Also, “under ECX’s model, you pay for loading, unloading, warehouse rent, and commission for transaction facilitators. Prices are high through ECX, yet neither the supplier nor exporter benefits. ECX’s role will keep on diminishing unless it reforms its system.”

However, suppliers and exporters who still prefer to transact through ECX can source coffees from ECX.