November 1st-2nd The Coffee Report: Full Circle at the ECX.

Everything is traded. The ECX is the Ethiopia Commodity Exchange. From the ECX website, "ECX assures all commodity market players the security they need in the market through providing a secure and reliable End-to-End system for handling, grading, and storing commodities, matching offers and bids for commodity transactions, and a risk-free payment and goods delivery system to settle transactions, while serving all fairly and efficiently."

At the most basic level, the ECX is meant to efficiently receive, process, sell and distribute coffee. In reality, the ECX increases efficiency in transacting coffee internationally while decreasing quality and traceability. The system operates when farmers sell to a mill, the mill sells to the ECX, the traders buy from the ECX, the exporters buy from the traders and the exporters sell to foreign buyers. Many of these positions overlap, so traders are sometimes exporters and more commonly mill operators are exporters. Mill owner-exporters have difficultly ensuring the quality of their exports. When he sells his coffee to the ECX, then wants to export that amount of coffee he will have to rebuy a blind coffee lot from the ECX (not guaranteed or likely to receive their coffee). Here is an example, assume you sell 30 bags of immaculately prepared Natural G2 Yerga Cheffe, to the ECX, to export 30 bags of Natural G2 Yerga Cheffe, you would purchase 30 bags of Natural G2 Yerga Cheffe, then wait to receive any coffee graded Natural G2 Yerga Cheffe. There is a way to receive your coffee, although receiving your coffee is not guaranteed, but requires the use of a back door, hand shake, kick back system.

One of the most controversial functions of the ECX is their blending of traceable coffees into single regional offerings. For example, the ECX will receive all natural Yerga Cheffe, grade them and treat them as one homogenized lot according to grade, then add (if they choose) any coffee from other regions "having Yerga Cheffe flavor." (This system is similar to the US commodity system.) No consideration is given to quality of preparation outside of Natural or Washed. This has lead to numerous complaints regarding excessively high grading of coffees and that the lower brand of specialty grade coffee should actually be graded a grade lower. These complaints from abroad and within Ethiopia are very slowly having an affect on a system, which is a mere 1000 days old.

As a side note, the ECX is an open-cry marketplace where traders shout prices at each other and deals are sealed with a High-5! Seriously!