Coffee traders can now send all grades of coffee beans to the global market, in contrast to the previous law that allowed them only to export the top four grades of coffee, according to a new directive issued by the Ethiopian Coffee & Tea Authority. Farmers and exporters can also directly ship the beans without going through the trading floors of the Ethiopian Commodity Exchange (ECX).

The new scheme allows fifth grade and under grade (UG) coffee beans, which up until now have only been supplied to the local market, to be exported. Coffee quality experts at respective regional offices of the Authority will determine the grade of the coffee. The Authority at its head office issues permits to the exporters every year, while regional offices are delegated to grant export permit to farmers who have at least two hectares of farmland. The Authority sets standard prices on a weekly basis.

The change is aimed at boosting export volume and foreign currency earnings, according to Hairu Nuru, market information & regulatory director at the Authority, which plans for the commodity to bring in 1.7 billion dollars from the export of 312,000tn of coffee this year. In the past fiscal year, the exported 271,000tn of coffee generated 854 million dollars, over one-fourth of the total export earnings of the country.

"There is a demand even for the lowest Ethiopian coffee grades in the international market," said Hairu. "We've been receiving repeated calls from exporters."

In a country that has 418 licensed exporters, 5.5 million household growers, and is known to be the origin of coffee, the commodity had not been benefiting the economy as much as expected due to quality problems.

The coffee bean that reaches the central market at the ECX has been mixed and loses its quality and traceability, according to Hairu.

"Letting all of the export of coffee pass through the ECX has also inflicted negative impacts on the sector in terms of the quality and price of export coffee," he said. "The price of Ethiopian coffee on the international market was declining since the coffee changed from a specialty into a commodity at the ECX."

Netsanet Tesfaye, corporate communications manager at the ECX, disputed this, saying that they do inspections to make sure the coffee is traceable and that no coffee is mixed at the warehouses.

"The specialty of coffee might be lost when the coffee has passed out of the ECX," he said.

The new system is also aimed at driving intermediaries out of the value chain by shortening it, according to Hairu, who said that the farmers had not been benefiting much from their product. He stated that the farmers got only 40pc of the total revenues generated from the coffee sector, and the remainder was going to intermediaries.