Coffee Origins

Back from the Road: Idido Misty Valley, Shall We Meet Again?

3-11-10

After spending 4 days in Addis Ababa for the Direct Specialty Trade auction, the next leg of my trip was to spend some time with Abdullah Bagersh at his office in Addis, and then make my way down to his famous mills in Yirgacheffe. All I could think was that the next few days were going to be like hanging out with my favorite musician, and then going on tour with them. And for lack of more beautiful prose—I was stoked.

In his Addis office, Abdullah explained what he was working on for 2009/2010. He also explained a little bit of the history of his coffees and the Ethiopian coffee trade in general. During that conversation, it occurred to me that while I knew a few of the things that Abdullah was discussing, I wasn’t sure how much of the information has been passed along. With that – in accordance with how I like to start a trip report – I think a little history and back story is in order.

Everyone at the Counter Culture office, and maybe most in specialty coffee industry, knows the coffees Idido Misty Valley and Beloya. These two coffees have showcased a consistency and quality for 5 years that almost single-handedly raised the bar for how good a natural processed Ethiopian coffee can be. What I don’t think people know is that Abdullah and the Bagersh family have been in coffee for generations, and the majority of their business is exporting coffee, not producing coffee in the traditional sense. Speaking to that concept of being a producer, in the case of these coffees, it is a little bit different than we tend to think. Abdullah does not own a farm, but rather he owns the place where the coffee is processed – i.e. the facilities in Idido, Beloya, and his lesser known one at Michile. To get the coffee, he purchases coffee in cherry form from famers around these processing facilities. This type of structure is pretty common all over the world, and coffee buyers understand how big a role these mills play in the overall quality. The people that run facilities, like Idido, have to work with very small producers and help them produce perfect cherry. To guarantee they have access to this perfect cherry, they have to pay more than other mills in the area to ensure that the farmers bring the cherry to them. Then these mills take all the risk to prepare the coffee as best they can and sell it. In the case of Idido, it took Abdullah 8 years of perfecting the way he processed the coffees before he felt they were what he wanted them to taste like. So, after 8 years of Abdullah perfecting his technique and 5 years of Counter Culture purchasing and having this amazing product available, the trade platform for all of Ethiopia changed, making these coffees not possible. This happened not only to Abdullah, but to all owners of these processing facilities that did not own the land the coffee was grown on, or were not part of a cooperative. Coffee buyers who knew how important these places were for the coffee quality were outraged when this happened, and blamed this all on the inception of the Ethiopian Commodity Exchange.

Now let me back up a little further and explain how things worked before the Ethiopian Commodity Exchange. Before the exchange, there was an auction system. Producers would bring their coffee to the auction, and exporters would go to the auction and bid on the coffee. In the case of Abdullah, in particular, this was more complicated because in essence he owned two separate businesses. He owned Idido, Beloya, and Michile, on the processing/ producing side; but then he also owned an exporting business. More times than not, the Bagersh company would buy coffee from the auction and export it for customers. When Abdullah started producing amazing coffee out of Idido, Beloya and Michile a few years ago, he wanted to export it himself making things a little bit more complicated. To make it happen, Abdullah would first turn in his coffee from Idido, Beloya, and Michile to the auction like normal. Then because of the high quality of the coffee, he knew which coffee was his, thus it allowed him to purchase it as the exporter. Basically Abdullah was selling coffee to himself. (Talk about complicated and little bit strange.) While overall, this practice was maybe frowned upon in the auction system, everyone seemed to benefit. Farmers received higher payment for cherry, Abdullah was compensated for his hard work, and of course we were able to purchase amazing coffee and offer it to our customers. For those reasons this practice wasn’t really regulated. As time progressed though, officials thought the auction system was outdated and needed to be changed. When the update to the system was put forth last year, and the Ethiopian Commodity Exchange came to give real-time pricing, better grading, and better payment practices, it also did away with the loophole that coffees like Idido and Beloya were going through. While many Counter Culture people were saddened by this event and could certainly understand the outrage people felt in not being able to purchase particular coffees anymore, it was also hard to fault a system for more or less cleaning up a loophole. What was enlightening about everything Abdullah was talking about, is that Abdullah very much felt the same. He explained that, of course, it is very disappointing that he couldn’t export his own coffee but he would rather look forward to the future of Ethiopian coffee, roll with the punches, and see what IS possible than dwell on what isn’t. After the conversation with Abdullah, that was so fascinating I could probably write a few more pages on about it, I headed down to Yirgacheffe to see Idido and Beloya. Traveling from Addis Ababa to southern Ethiopia is simply amazing. You leave the high altitude bustling city, and after a very short time driving you enter the Rift Valley. The dry, barren terrain can only be described as resembling a completely different planet. Once you pass the city of Awasa, slowly every small town starts to come closer and closer to the idea of where you might think coffee would thrive. And then there is Yirgacheffe. Yirgacheffe just screams coffee, and I can see why 60 years ago someone decided this would be a great place to try to start doing a washed processed coffee. It is lush, beautiful, and certain parts make you dizzy thinking about the altitude. (We are talking over 2,000 meters.) My first stop after arriving in Yirgacheffe was the Idido Mill. As we passed tiny, little hut-like houses, I was wondering where the mill was going to be. Then, all of a sudden, we stopped. The Idido mill is smack-dab in the middle of these houses, almost perfectly integrated. Even though this time of year is the off-season, I was pretty excited to be at the mill. The first time I tasted coffee from Idido, I had one of those "AHA!" moments in my coffee career. It wasn’t because it was a natural processed coffee, but because of Idido I began to understand coffees that have been taken to a higher level of quality. For that reason, this coffee has held a very special place in heart. At the mill, I quickly got out of the car and took in all the scenery. Then I proceeded to ask the mill manager about 50 questions, which he happily answered, because I think he could tell how excited I was. After walking around the washed processing side and the natural processing side, and talking more about all the experimentation this mill has done over the years, there wasn’t much else to see so we quickly headed off for Beloya. When we arrived at Beloya the processing facility was basically in the middle of town, like Idido. There really could have been anything behind the corrugated steel gate. It is somewhat amazing that this hidden little facility in the middle of a tiny little town produces some of the most amazing coffees in the world. After walking around again, we all talked a little bit about the flavor differences between Beloya and Idido, and what could cause those differences. It is hard to settle on a varietal difference, although you can certainly see all types of coffee trees around this part of Ethiopia, but one thing we could settle on, was altitude. Idido Misty Valley which is known for its bright citrus, floral, and strawberry notes, is at a staggering 1941 meters (according to the altimeter we were using). Beloya, known for its deeper tones of just about every berry you can think of is just a little bit lower at 1771 meters. After postulating and talking about the coffee, there was only one question I had left: Would any of the coffee coming from Idido or Beloya be available this year? This is the question that I had been holding in for this whole time, not to mention for about a year before I even got here, and it just kind of rolled out. When the mill manger said very plainly, “Probably not,” I wasn’t really surprised. All I could think for a second was the word: brutal. Then I realized “probably” … isn’t exactly "definitely." So the conversation continued. You see, Idido and Beloya DID produce some very high preparation natural coffee, but for the most part the facilities were actually leased to other producers to do some washed coffee.

The problem is of course the same as last year. There really is no avenue for coffees from a privately owned processing facility to be sold directly and then exported. So maybe something will show up through some avenue we are not aware of yet, but I would say this is unlikely. What the focus of the conversation came to – and a topic that Abdullah talked about in Addis – was the possibility of getting the farmers around the mills to form a cooperative. If that were the case, Idido and Beloya could assist the farmers in processing, and then the farmers could decide whether or not they wanted to export the coffee through Abdullah. More than likely they would like to export through Abdullah, and a potential better chain would be established between the farmers, Abdullah, and the roaster. Over the next 5 or 6 months all we can do is hope that a structure like this will come together. In the meantime, our partnership with Abdullah is not totally lost. Like I stated in my last report about the Direct Specialty Trade auction, other ideas have cropped up. The next Direct Specialty Trade auction will be on April 8, and I am drying to see if Abdullah will represent other producers as the exporter of their coffee. Also, Abdullah is not opposed to buying great lots from the Ethiopian Commodity Exchange, and offering those to us as well. We will see.

Overall, being able to talk with Abdullah and seeing the mills has been eye opening. Ethiopia without question has the most potential out of any country to produce amazing coffee. I am convinced that while the way coffee is traded here can be challenging, good things are coming, and hopefully a more transparent system with better logistics will continue to emerge. So, to answer the question: Will we see Idido again – I think without a question we will. Likely, it will not be exactly like it was, but hopefully it will be a new and improved partnership, and I can only wait for that time to come.

-Tim

Back from the Road: Addis Ababa, Ethiopia, The Direct Specialty Trade Auction

3-5-10

As a few of you know, about a year ago and half ago Ethiopia radically changed the way coffee was traded throughout the country. A trading platform called the Ethiopian Commodity Exchange (ECX for short) emerged and the old auction system was done away with. The new system focused on real-time pricing and trading broken down for virtually every unique region and processing style within Ethiopia. While the new ECX system vastly improved some aspects of coffee trading, it also produced some limitations. One of the limitations was that traceability to a specific lot or producer became much more challenging because different producer’s lots were not necessarily kept separate. Another limitation was that any certification, organic or otherwise, could no longer be attached to the coffee, again because the coffee was being traded in grades and not by a specific producer. Understanding that the exchange was a good platform for many coffees – but that there needed to be another venue for high quality, traceable, and certified coffees for specialty coffee buyers – the leadership of the ECX started building the framework for a branch of the exchange to make those things possible. And this is how the Direct Specialty Trade auction was born.

To make the auction a reality in such a short time, the leaders of the ECX – in particular, a gentleman named Bemnet Aschenaki – have been visiting as many producers as possible from all over the country looking for the best coffees. The idea is that the coffees they found would be separated and set aside at ECX warehouses around the country. Then, international buyers would have the opportunity to taste these hand-selected coffees and purchase them transparently through the Direct Specialty Trade auction. This system gives producers the opportunity to market their coffee to buyers they never would have had access to before. It also provides a transparent contract with the buyer that stipulates exactly how much of the purchase price will go to the exporter and, more importantly, how much will go to the producer. For Counter Culture, seeing this new platform in action was a can’t-miss opportunity and, of course, also a chance to purchase a spectacular lot of coffee. The first thing to do was to taste the coffees that ECX scoured Ethiopia for.

On the Morning of February 16th, I made my way to the ECX’s main facility in Addis Ababa for a full day of cupping coffee. The ECX was able to assemble 44 different coffees for this first auction, and this was my opportunity to cup through them all. Having that many coffees to cup in one day can be somewhat daunting in any circumstance, but especially cupping at origin. Many cupping labs at origin lack the necessary protocol or equipment to keep everything consistent, and when things are not consistent it can be hard to gauge to quality. Prepared for possibly one of the longest cupping days of my career, I was overjoyed when I walked into a brand new and meticulously organized cupping lab that we would be using. All the coffees buyers were quickly able to dive into cupping and after a solid 7 hour day of tasting we now had a very good idea what the Direct Specialty Trade auction had to offer.

After the cupping, all the buyers met with Dr. Eleni Gabre-Madhin, CEO of the ECX, and all the producers that were selling their coffee in the auction to talk about how the bidding process and logistics of the coffee being sold was going to work. One of the major challenges of the auction was that many of the lots represented less than the standard shipping amount; so a few options needed to be discussed. For instance, did buyers want to take the extra expense for shipping less than the standard amount of coffee – adding an extra 20% or more to the cost? Or did it make more sense to work with the producer to purchase more coffee outside of the auction and ship it with coffee from the auction? Or was it possible to purchase coffee from a few producers and have them work to ship all of their coffee together? Those questions are what I like call the somewhat boring side of coffee sourcing, but in reality without figuring them out before the auction, it could make or break what is bought and at what price it could be purchased. After 3 hours of discussing protocol and logistics and getting everything out on the table, the only next step to take was to see the auction live the next day.

The next day, after all the buyers and sellers settled in auction room floor, the auction bell was rung by Dr. Eleni and the very first Ethiopian Direct Specialty trade auction was officially was under way. In the middle of the auction pit (a sunken octagon-shaped part of the auction floor) the first seller stood awaiting open outcry bids for their coffee. For a brief second everyone held their breath and looked around the room. Then bids started going back and forth among the buyers. As the price rose modestly, you could hear people murmuring around the room. After a short time, bidding came to a close and everyone looked over at the auctioneer. The auctioneer then revealed that the seller’s reserve price had not been met. The high bidder and seller negotiated, but could not agree on a price and the coffee went unsold. For the first three coffees this was the outcome. The next five coffees were not bid on at all. Again on the ninth coffee up for bid, the buyer and seller again could not agree upon a price and the coffee went unsold. The tenth was not bid on. Things were starting off slowly, and everyone around the room was starting to get nervous. Being the very first auction of its kind, the kinks needed to be worked out. One of the causes to the slow start was that the quality level, while still very high, represented a greater range than what many buyers in the room were interested in, and many of the first auctioned coffees were in the lower quality range. Also because there was no history for this type of coffee sale, the price levels for what buyer and seller thought was fair needed to come together. So, after a very slow start where almost a fourth of the total coffee went unsold, on the 11th coffee up for bid, the DST auction finally had its first sale. A loud cheer came from the crowd and some of the tension relaxed. The next 20 or so coffees auctioned were hit or miss with six total sales.

The last 10 coffees, however, were a different story. The last 10 coffees represent some of the higher quality coffees the auction had to offer and bidding was much more aggressive. Going back to all the tasting I did of those 44 coffees, one coffee really hit the right notes. That coffee was from the Adado Co-operative (not Idido, just for clarification) in Yirgacheffe. The coffee was sweet, very floral with a good hint of citrus. It is our kind of coffee from Ethiopia. And, now, after waiting for 41 coffees to go through the auction, it was finally time for bidding. I stood hovering over the pit as the bidding started on the Adado Co-operative coffee, and quickly realized that I was not the only one who liked this coffee. Bidding quickly rose higher than all the other coffees in the auction. Four separate buyers bid back and forth until the price forced two to drop out. Still on the floor bidding on behalf of Counter Culture and a few other roasters was Timothy Chapdelaine, a long time importer partner of ours. He bid without hesitation all the way until he reached our cutoff – MORE than 20 percent higher than any other coffee in the auction. In the end someone wanted this coffee just a little bit more than we were willing to spend for the quality, so we would be going home without a purchase.

After the last two coffees were purchased and the auction came to a close, there was a big sigh of relief around the room. While the auction started out very slow, and of course there are many things to work out, I still believe buyer and seller alike saw it as a small success. Overall, 16 coffees sold for a very good average price above the market with the Adado Cooperative lot considerably higher. Also after the bidding session, a great opportunity to talk with producers came up. The conversations I had revealed that some producers were disappointed with the results, in particular a few that received no bids for their coffee, but that even those producers still had great optimism for the system in the future. Their hope was that the ECX would learn from this auction and iron out the system.

One other interesting outcome from the auction was that a partner of ours, Abdullah Bagersh, had the chance to represent another producer's coffee as the exporter. Because Abdullah is not only well-respected for producing great coffee and for making coffees better through his meticulous export preparation, the coffee he represented received the third highest bid at the auction. While that was great in itself, after the auction Abdullah received many phone calls from other producers asking him to represent their coffee in a the next Direct Specialty Trade auction. So, about a month from now the second Direct Specialty Trade auction is going to take place, and from what I understand the bar is going to be raised on quality, logistics and bidding will be better figured out, and the exporters who we love to work with will hopefully have more coffees to represent at the auction. I don’t know what everyone else thinks, but I believe we might be bidding again.

-Tim