TOPICS• WHAT ECX BRINGS TO THE MARKET;• ECX’S VALUE ADDITION TO THE MARKET;
• THE GTP;• EXISTING INITIATIVES;• NEW INITIATIVES;• CONCLUSIONS.
I. What does ECX bring to the Market? Core Value Propositions
•Order
• Integrity
•Transparency
•Efficiency
How does ECX Bring Order?
• Through an organized trading platform;• Through standardized contracts and standardized products;
• Through a system of Membership based participation;
• Through formal rules and procedures;• Through monitoring and enforcement of compliance to rules;
• Through managing risks to the market;
How does ECX bring integrity?
•Through industry accepted grading and certification of the quality and quantity of products traded;
•Through warehousing of commodities traded(global std. inv. mgt.);
•Through enforcing fair competition and ethical business conduct;
•Through clearing all payments between buyers to sellers;
How does ECX bring transparency?
•Through rapid and reliable dissemination of market information to all actors- producers, processors…local, international;
•Through a system of industry-accepted product grades and standards;
•Through enforcing disclosure and audit reporting requirements for its Members;
How does ECX bring efficiency?
•Through the use of IT to promote an End-to-End system- from warehousing to trading to clearing and settlement of payments to delivery of commodity;
•Through a centralized trading platform offering low-cost service to all users;
II. ECX’s value addition to the Ethiopian coffee sector
• Secure inventory management in production area;
• Guaranteed warehouse receipts system; • Reduced mixing of coffee origins during the marketing process;
• Quality certification that preserves the origin of the coffee and establishes a finer distinction between coffee qualities;
• Trading system that ensures competition and transparency;
ECX’s value addition to the Ethiopian coffee sector (Cont’d)• Guaranteed/quick clearing and settlement;
• Aggressive market data dissemination- market actors benefiting from of both national and international prices;
• Through improved consistency of qualities enhanced competitiveness of Ethiopia in the world coffee market.
• Motivation for improved production;
• Increased producers’ share in the value of the beans-35% to 65%;
• Motivation of market players to come to the formal channel;
ECX’s value addition to the Ethiopian coffee sector (Cont’d)
III. The GTP
•The G.T.P. lays emphasis on the development of sustainable agriculture in Ethiopia, with ambitious targets
• Expansion of production• Conserving natural resources• Moving farmers into market-oriented production
GTP Forecasts For Coffee Production and Exports
Base year Year 1 Year 2 Year 3 Year 4 Year 5 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
Coffee production 341,000 405,790 482,890 579,468 695,362 831,000 ( in tons) Coffee exports( in tons) 172,210 221,115 283,907 364,531 468,052 600,970
Coffee export earnings ( mil in USD)
528,000 692,000 906,000 1,187,000 1,555,000 2,037,000
Growth Rate (%)Coffee production - 19 19 20 20 20
Coffee exports - 28 28 28 28 28
Coffee export earnings ( in USD)
- 31 31 31 31 31
Source: GTP main document and Policy matrix
IV. Existing Initiatives
• Rewarding Quality• ECX has created a Q contract which rewards quality
and incentivizes farmers and processors to produce quality coffee.
To close the gap b/n increasing dd for specialty coffee
• Direct Specialty Trade(DST)• Linking producers with international buyers;• ECX provides warehousing, quality certification and trading
venue;• International buyers have the option to purchase certified
and traceable coffee directly from producers;• Win, win, win solution to the producers, buyers, and the
market;
New Initiatives
• ECX is working with Sustainable Coffee Working Group in collaboration with IDH
• Purpose of SCWG-Identifying ways that sustainable coffee could be brought to market through ECX, and the existing marketing chain, given the volumes needed;
• The SCWG has been working during the last six months and will shortly be producing a strategy paper;
Starbucks and ECX Traceability Program
Date Program
Description
2010 Starbucks and ECX Traceability
Initiative
Signed an MOU to begin a traceability initiative;
2011-2012
ECX Pilot
Integration of GeoCertify traceability services into the ECX
GeoCertify scaled up to track all grades of coffee from the entire Sidama A and Yirgacheffe
Over 3 million kgs were tagged through this program
The program was proven scalable2012-
2013Market
Adaptation Next phase Starbucks and ECX to extend
traceability to the market-to the consumer globally
Starbucks and ECX to scale the program to capture more classifications.
VI. Conclusions
• ECX aims to strengthen and add value to the Ethiopian Coffee Sector;
• ECX as a dynamic and forward looking institution, is ready and willing to adopt to current global practices and initiatives-traceability, specialty issues;
• ECX recognizes that sustainability provides an opportunity to Ethiopia in providing the platform to major roasters and coffee traders in sustainable sourcing and corporate responsibility.