Eroded Coffee Traceability and Its Impact on Export Coffee Prices for Ethiopia
In December 2008, the Ethiopian Commodity Exchange (ECX) opened a new coffee platform that has transformed Ethiopia’s coffee trade. The way ECX handles coffee in a commodity fashion has eroded traceability, a characteristic sought after by overseas coffee buyers. This paper traces the forces that give rise to the commoditization of coffee. An empirical analysis using a dataset on export coffee transactions supports the view that eroded traceability suppresses the export price of non-traceable, ECX-sourced coffee, relative to fully traceable coffee. The cumulative monetary is estimated to be 280 million USD, equivalent to 26% of farmer’ farm gate income from coffee.
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