Gizat Worku
Ethiopia is Africa’s largest coffee producer and the world’s fifth-largest exporter of Arabica coffee. Over six million farmers in Ethiopia are now engaged in coffee production. Among many agricultural products, Ethiopia’s number one source of export revenue, generating about 30–35 percent of the country’s total export earnings, is coffee. All the coffee produced in Ethiopia is of the Arabica variety.
So far, concerned stakeholders in the area have been promoting Ethiopian coffee to the rest of the world. One of the players is the Ethiopian Coffee Association (ECA). The association was founded in 1969 by major Ethiopian coffee exporters as a non-profit and major promoter of Ethiopian coffee in the international market.
As of June 2020, ECA has 258 members, providing for more than 85% and 90% of the country’s coffee export share in terms of value and volume, respectively.
The Association is representing Ethiopian coffee sector value chain actors, from smallholder coffee farmers to exporters. It is a member of SCA, AFCA, and SCAJ at the international level and comprises most Ethiopian smallholder and commercial coffee farmers, processors, roasters, and exporters.
The Ethiopian Herald spent half an hour with Gizat Worku, Ethiopian Coffee Association General Manager, to understand the European Union Deforestation-Free Product Regulation (EUDR) and the international conference and exhibition, organized by the Africa Fine Coffee Association (AFCA), that is going to take place in Addis Ababa, and other issues directly and indirectly related to coffee. Have a nice read.
Could you tell us about the newly enforced European legislation that prohibits the import of coffee from countries that clear forests? What is the impact of the legislation, especially for developing countries like Ethiopia?
The EU Deforestation-Free Regulation (EUDR) is the new EU initiative to limit deforestation caused by forestry and agricultural activities all over the world. The new regulation will see new mandatory due diligence requirements for EU businesses due in 2024, massively expanding upon the scope of, and eventually replacing, the EU Timber Regulation (EUTR).
As we all know, Europe is one of the largest importers of commodities linked to deforestation, including 50% of the world’s coffee and 60% of all cocoa. These commodities alone accounted for over 25% of global tree cover losses from 2001 to 2015. With such a significant role in the market, the deforestation regulation aims to reduce the impact that products bought by EU citizens have on the world’s forests and woodland areas. It is critical for the route to net zero, and the EU hopes to lead by example. Similar regulatory requirements could follow in other markets, including the UK.
The EU defines those obligated by the EU Deforestation-Free Regulation (EUDR) as ‘operators’ and ‘traders’. Operators (companies that first place products in a single market) will be required to implement due diligence on their supply chains to ensure they are deforestation- and forest-degradation-free, while traders will be responsible for storing and sharing information on their supply chain with operators.
The proposed deforestation-free regulation targets those commodities and some of the products derived from them, like chocolate, leather, and furniture, with the greatest impact on deforestation.
The EUDR was ratified in 2019. Assisted with satellite photos, the legislation has been implemented since the end of 2020. This is just to demonstrate that they are buying an agricultural product free from deforestation. Product checking will begin at the beginning of 2025. The coffee ordered now may arrive on the European market when the legislation is practically applied, as the coffee export process takes longer. The regulation may manipulate our export trade. Thus, the coffee that we sell today should be free from deforestation.
The other thing is due diligence. The product should be free from any sort of illegal activity, such as child labour. The government should provide evidence and document scrutiny for all things, which is not that hard. Even EUDR itself would not be such a difficult task, especially for Ethiopia, as we do not plant coffee on deforested farmland.
In Sidama State, for instance, a firewood tree is planted every year, and the people cut it down to use it for firewood. However, this has happened on the border of the land, which is not convenient for coffee farming. When the satellite photo is taken, it is imperative to provide a guarantee that the coffee produced there is deforestation-free.
The thing that makes us bother is that when a coffee buyer purchases a coffee, he or she should register the agricultural land on which the coffee grew. Thus, the agricultural land geographical coordination indication should be registered. When it is above some hectares, the land may have the structure of a triangle, rectangle, or polygon, and the spot of each coordinate has to be registered. To do so, you need to have an instrument that shows the geographical indication. The farmer is also expected to provide information to the buyer about the coffee farm; the buyer should carefully register the information and transfer it to the exporters.
To do the task following the required procedures, needs a huge amount of capital, knowledge, and material as well. If the EU goes as per its plan, things may be intricate as it is one of the top coffee importers from Ethiopia. Just six years ago, it was the EU that bought 50 percent of coffee from Ethiopia. So it is impossible to leave this market or replace it with others. To tell you the truth, the markets in the EU, USA, and Japan are unswerving.
What inspired the EU to come up with this legislation?
The driving force behind the passing of this law is climate change. The ever-increasing impact of climate change is directly correlated with deforestation. So, they do not want agricultural products growing on a degraded farm. The law listed ten items. Cattle, coconut, coffee, palm oil, rubber, soybeans, and wood are the products mentioned in the EUDR. Ethiopia is now exporting soybeans, coffee, and cattle. Concerned stakeholders need to work hard on the aforementioned products. We do not have a problem fulfilling the criteria set by the EUDR; we may face a challenge on how we can elucidate them as we meet the criteria, as it is not an easy job. It requires a lot of expenses.
When we take coffee, for instance, registering the geographical indication of more than six million farmers is a very hard task. At present, let alone coming up with data, the contraband work in Ethiopia is a daunting challenge for coffee exporters. As they begin to counter-check the coffee before they buy it, there is a threat that it may affect the export of coffee. To do it perfectly, it is imperative to make ourselves ready by deploying personnel and the desired technology. As the task will be done continuously, we have to prepare ourselves for tough challenges.
Who is responsible for doing the aforesaid tasks?
A government body is responsible for this, as the EUDR maker is also a European Union. Private coffee-producing companies may apply the regulation by registering their own and selling it. There should be a responsible authority that combines and does all activities.
Is there any value that EUDR adds to the coffee export trade?
No, it may not add value. However, the process may add value. You can make it traceable. One of the reasons for to increase in coffee was traceability. If we can do it carefully, we can ensure the traceability of our coffee. If your product is traceable, you can talk about quality and sustainability, but they cannot coincide with this. Traceability is not a guarantee of quality. In general, traceable coffee increases the price of coffee. This task will incur additional expenses, which, in other words, will elevate the price of coffee.
Is there any fund that Ethiopia can get to apply the system?
We expect funds from the EU, as it is a shared issue. We produce, and they buy. They are buying to meet the demand, but it is not ours. We also produce coffee to sell and earn an income. I assumed that they might support it. They are now following up on what is going on here. European representatives came here, and the issue was discussed in a range of places. Concerned bodies are meeting and discussing the issues. The awareness is already created, and the remaining thing is who does what. How much it costs and how long it takes. We have to provide an answer to this. I don’t know if the Europeans will assist with projects related to this or not. But they should support us.
If this project starts to be implemented, will the coffee supply to the world market decline?
If every supplier does not meet the EUDR criteria, the coffee supply will dwindle. However, the pain will be on our side; this may be an easy task for others. We required registering the data of more than six million coffee growers who have been producing from a plot of land for the owners of large-scale farming. If we take Vietnam, the country prohibits coffee exports from deforested land.
On the other hand, they have large-scale coffee growers. This makes the task easier. Countries that have supplied a huge amount of coffee to the world market do not have a great number of farmers like us. The big challenge is coming in front of us. The European buyers are worried, as they will be held accountable by the law if they hold a coffee that does not meet the criteria as of the end of 2025. According to the law, these buyers will be forced to pay four per cent of their annual sales. Thus, the buyers will not buy the coffee that does not meet the EUDR criteria.
Addis Ababa is preparing to host an international coffee exhibition and conference in February. Who is the organizer of the meeting, and what benefit will Ethiopia get?
The African Fine Coffee Association (AFCA) is the organizer of the meeting. AFCA, based in Uganda, has 11 member countries. It is an association established by the East African countries. The African Fine Coffees Conference & Exhibition is Africa’s largest coffee trade platform, bringing together over 2,000 regional and international coffee professionals, including producers, traders, and roasters. Public and private sector officials, as well as governments and NGOs, take part in the annual event.
This year, AFCA is excited to announce its partnership with the Inter-African Coffee Organization (IACO), the Robusta Coffee Agency of Africa and Madagascar (ACRAM), and the Ethiopian Coffee and Tea Authority (ECTA) for the grand occasion of hosting the event’s 20th edition in Addis Ababa, Ethiopia, from February 6th to 10th, 2024. The theme “Specialty Coffee at Origin” sheds light on the high-quality coffees being grown and consumed in producing countries. It also invites coffee professionals to explore Ethiopia, the land of origins.
In this landmark 20th edition, the event promises a lineup of esteemed international and regional speakers, an expansive exhibition hall, engaging workshops, exclusive B2B cupping sessions, and vibrant social events! Additionally, we are proud to host the Africa Youth Barista Championship and the regional Taste of Harvest Competition.
Hosting such an international coffee exhibition and conference is quite imperative to promote Ethiopian coffee, as the main coffee buyers will come to Ethiopia and meet our coffee traders. The paper presented at the conference is expected to illuminate challenges and find the best solutions. A coffee safari—a tour of coffee growing—is also part of the summit. The conference is a good opportunity to prop up Ethiopian coffee as the world economy is going down.
Except for consumers, all coffee stakeholders, including coffee buyers and sellers, international NGOs, government bodies, and coffee buyers drawn from Europe, America, and Asia, are expected to participate in the conference. Coffee growers from African countries will also be part of the conference by promoting what they produce in a booth rented for this purpose. Those who produce equipment related to coffee will also prop up their products in the exhibition.
Other contests, such as the Taste of Harvest, which is a coffee taste championship between African coffee growers who won the competition held in their respective countries, are also expected to identify the champion of the year. There is also a contest between African baristas.
To make the conference successful, the national committee led by the Ethiopian coffee authority was established and was doing various tasks to make the conference successful. Now exporters are renting a booth to promote themselves.
The African Fine Coffees Exhibition has increasingly been regarded as pivotal in providing a unique opportunity to exhibitors showcasing the best coffees and affiliated services in the African coffee sector. The exhibition floor provides ample opportunity to network with coffee luminaries from all over the world. This will be the perfect platform for gathering valuable coffee information, building trade relations, and facilitating buyer-and-seller interaction.
How do you see its activities related to the coffee export market?
Exporting is not an easy task; you always have it in your pocket. It is a wage of fatigue. The situation we are in is very challenging. Starting with the Ukraine war, the conflict in Yemen and the conflict instigated between Israel and Hamas are some of the hindering factors. Everywhere you go, there is a high cost of living due to inflation, which is alarming. These are some of the factors that grip the coffee market.
Thanks to the almighty, the price of coffee is recovering as of November, which is encouraging. The issue of quality is left for a future discussion. Our product is now entering the market. So, always, we need to do our utmost to satisfy our customers, including Saudi Arabia, America, Japan, Germany, Italy, France, South Korea, and so on. A pound of coffee is sold for 1.86 USD cents at the New York C. The price set in New York (C) serves as the initial selling price for Arabica coffee. As per the coffee type, we set the price above or below the price set in New York-C.
Thank you very much.
It is my pleasure.
BY GIRMACHEW GASHAW
THE ETHIOPIAN HERALD SATURDAY 30 DECEMBER 2023
