Over 5 million Ethiopian farmers to benefit from IBM’s ECX traceability system

The ECX traceability system will encompass over five million smallholder farmers engaged in producing multiple commodities traded at the ECX. The system, which will begin by piloting with coffee, is expected to increase exports of high-quality Ethiopian coffee world-wide and enhance market access for specialty coffee from Ethiopia.

The launch event was held in Hawassa City, located 270 km South of Addis Ababa. The objectives, scope and functioning of the initiative was made public by ECX to representatives from the Ministry of Trade, Ministry of Agriculture and Natural Resources, suppliers and exporters, development agencies and the private sector.

The traceability initiative is led and owned by ECX, which contributed $1.4 million USD toward the total project cost of $4.5 million USD. The project came to fruition in collaboration with USAID, which contributed $1.8 million under its Agribusiness Market Development activity, and Nestle, Jacobs Douwe Egberts (JDE), Mother Parker’s Coffee & Tea and The Sustainable Trade Initiative (IDH), who jointly contributed $1.3 million through the Sustainable Coffee Program.

Dennis Weller, Mission Director of USAID Ethiopia, remarked, “USAID has been supporting the coffee industry in Ethiopia, from farm-gate to final market, for many years. We are very excited about the launch of this innovative, multi-stakeholder traceability initiative that marries market development and ground-break technology to meet international demands and strengthen the entire value chain.”

“True traceability goes beyond the commodity’s type or origin to tracing where the commodity has been. We wish to track the footprint of our coffee and where and when it was washed, stored, who sampled and graded it, and when it was shipped. All of these facts will help improve our ability to move commodities traded within the exchange and create premium value for all stakeholders in the value chain,” explained ECX CEO Ermias Eshetu.

Buyers of commodities have become more discerning and willing to pay for quality, environmentally-friendly and origin-specific commodities. Additionally, international buyers are increasingly demanding transparency and accountability within supply chains, so as to ensure the quality, consistency and safety of their products. To meet these demands, ECX and other partners are implementing a wide array of new initiatives, including electronic tracking of bags, innovations in washing and processing, and streamlined storage and transportation processes.

The new tagging system—running on IBM and Frequenz IRIS technology—links bags of coffee traded through the ECX to one of over 2,500 geo-referenced washing, hulling and cleaning stations located in Ethiopia’s southern, central and western coffee growing regions.

“The traceability system will utilize IBM’s powerful cloud platform, analytics and mobile to provide ECX with continuous real-time data insights that enable the system to learn and predict the quality of Ethiopian coffee based on local growth and processing conditions.” said IBM General Manager for East Africa, Nik Nesbitt. “The system will analyze incoming client coffee quality needs and match that with the needs of buyers across the globe.”

Improvements in sustainability and traceability incentivize farmers to use the best techniques to grow and harvest different commodities. Innovations in processing stations and ECX laboratories also guarantee world best practice methods are used to grade and certify commodities before they are traded on the ECX platform.

As Linda Butler, coffee sustainability manager at Nestlé, stated, “Nestlé welcomes this key development toward a successful future for the whole of the Ethiopian coffee industry, from farmers to exporters. Supply chain transparency, the foundation which sustainability is built upon, will enable consumers all around the world to learn more about this great coffee producing nation, farmers to be rewarded for excellence in coffee quality, and roasters like us to collaborate in a meaningful way with farmers and key partners to increase productivity, efficiency, quality, social and environmental conditions, building together better living conditions in coffee communities.”

The traceability system will be in place for this year’s coffee harvest, and will soon be implemented for other commodities, opening a new chapter in Ethiopia’s commodity trading history.