1. Lot Traceability and Quality Differentiation Presented by Carl Cervone TechnoServe Ethiopia Email: ccervone@tns.orgccervone@tns.org

2. IN ETHIOPIA, LOT TRACEABILITY BEGINS AT THE WET MILL (FOR WASHED COFFEE) Exhibit A: No lot separation -Parchment stored in piles / LIFO system -Benefits: low cost / easy to manage -Drawbacks: no quality differentiation, risk of theft, no tracking of ratios during the season Exhibit B: Simple lot separation -Parchment stored in labeled bags / FIFO system -Benefits: quality can be differentiated, reduced risk of theft, ability to track ratios during the season -Drawbacks: higher cost / more difficult to manage

3. “LOT SEPARATION” SHOULD BE PRACTICAL FOR THE PRODUCER MetricUnitSmallMedLarge Avg output number of trucks (150 bags parchment) per coffee harvest <33-1010+ Avg output number of bags parchment (60kg) per coffee harvest <450 450 to 1050 1050+ Standard lot size bags parchment (60kg)75150450 Standard lot size minimum export bags green (60kg), milled to zero defects and screen size 15-18 50100300 Standard lot size number of lots per shipping container (300 bags green) 631 Avg outputnumber of lots per coffee harvest<63-103+ Should aim for at least 3 different lots and up to 10… of high grades only!

4. THIS “LOT SEPARATION” METHOD MEANS THAT SOME LOTS WILL BE FILLED VERY QUICKLY AND OTHERS WILL TAKE LONGER Week of harvest Lot 1 Lot 2 Lot 3 Lot 4 Lot 5 Lot 6 Lot 7 Lot 8 Lot 9 Lot 10 (Low Grades)

5. THEN COMES THE CUPPING / QUALITY EVALUATION OF EACH LOT Week of harvest Lot 1 Lot 2 Lot 3 Lot 4 Lot 5 Lot 6 Lot 7 Lot 8 Lot 9 Lot 10 (Low Grades) 82 Thin, insect- damage 86 Clean, bright 88 Clean, bright, floral 89 Clean, bright, floral 80 Sour, ferment, baggy 90 Wow!! Taste of Harvest 88 Clean, bright, fruity 87 Clean, good body 84 Fruity, some over-ripe n/a Yuck!

6. FINALLY, YOU CAN MAKE MARKETING / BLENDING DECISIONS Week of harvest Lot 1 Lot 2 Lot 3 Lot 4 Lot 5 Lot 6 Lot 7 Lot 8 Lot 9 Lot 10 (Low Grades) 82 3 rd Blend 86 2 nd Blend 88 Top Blend 89 Top Blend 80 3 rd Blend 90 DST or special buyer 88 Top Blend 87 2 nd Blend 84 3 rd Blend n/a Local Market

7. OFTEN TIMES, THE EXTRA EFFORT WILL RESULT IN ADDED VALUE Base price (all coffee blended together) Top lot (10%) Top blend (30%) 2nd blend (20%) 3rd blend (30%) New avg price

8. EVEN WITHOUT A HIGHER AVERAGE PRICE, THERE ARE OTHER BENEFITS OF LOT SEPARATION Quality problems can be identified and hopefully rectified in the future, e.g., first pickings usually have a lower ratio and poor cup profile, so cherry price should be lower You can prevent theft – ensures coffee is weighed / quantified in storage, and missing coffee can be spotted from open bags Monitoring ratios and qualities during the season will give you a much better understanding of the interaction of natural and operational (man-made) variables, allowing you to better manage your business FIFO (First In, First Out) system is generally a better warehouse management system (than Last In, First Out – LIFO), since it ensures more consistent freshness / moisture content / quality levels

9. IT IS IMPORTANT TO FIND AN ECONOMICAL BALANCE BETWEEN QUALITY DIFFERENTIATION AND COST-EFFICIENCY Cost-efficiency Quality differentiation Coops in prime high altitude growing areas Big traders of unwashed Djimma 5 types

10. THANK YOU!