Read about Yuqi Sun’s experience in Ethiopia with the NYU Africa House!

“This past summer I accompanied Professor Yaw Nyarko, Founder and Director of the New York University Center for Technology and Economic Development (CTED), and Isaac Baley and David Johnson, two of Dr. Nyarko’s PhD students, on a week – long research trip to Ethiopia.

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Ethiopia, a country fraught with economic disparity, is largely dependent upon the growth of its coffee industry for its livelihood. The birthplace of coffee as we know it today, domestic production employs millions of citizens, and is a deep source of national pride. According to one local official we spoke with, roughly 25% of Ethiopia’s population depends either directly or indirectly on the coffee industry; and coffee exports account for 40% of the country’s total exports. However, for all its importance to the Ethiopian economy, coffee farmers still suffer from terrible living-conditions and measly economic returns on their hard work.

During the three harvesting season from November to January, farmers are busy hand picking coffee cherries from coffee plants, before carrying them to monstrous machines for de-husking. Some of the beans are then “washed” to remove the parchment and silver skins. The beans are then transported to warehouses where they wait for no more than 20 days before going to market. Around March, farmers begin purchasing new coffee seedlings and shade-providing trees with the money they earned from the previous harvest, and the process starts again.

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In 2008 Dr. Eleni Zaude Gabre-Madhin established the Ethiopian Commodity Exchange (ECX) with the aim of supporting this vital industry through a more institutionalized, or formalized, market structure. Its motivation was, and is, to benefit farmers and exporters from increased access to valuable market information; and in doing so, to further aggregate economic wellbeing of all actors involved along the supply-chain. Through the ECX’s ongoing efforts, Ethiopian farmers and traders, as well as foreign exporters, are now able to make more informed decisions in response to the domestic coffee market’s price and volume fluctuations.

For some time now, Professor Nyarko and NYU’s CTED researchers have been working closely with the Ethiopian Commodity Exchange, providing them with technical support on various aspects of their operations. For example, ECX relies on CTED to conduct extensive time-series analysis of their accumulated data on coffee prices, trade volumes, memberships, and signed contracts, so that it can better understand the international market in which it operates, and thereby more efficiently manage its development. One of the most recent such examples of CTED’s projects was to analyze original trade data which ECX provided on its washed coffee, to disaggregate it into six submarkets, and to then demonstrate a positive correlation between the different coffee prices in each submarket. CTED’s findings did not coincide with the ECX-staff’s general working impressions of their market volume data, prompting our trip to Ethiopia, and subsequently our trek to the remote coffee plantation fields where the production process begins.

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After speaking directly with local plantation experts about the entire process of cultivating coffee from planting, to harvest, to marketing, the CTED team was able to conclude that a certain portion of the procedure actually reduced the previously calculated trade volume by 20%! It is no wonder then that CTED’s findings did not match the ECX-staff’s perceptions of the data they were receiving on the harvest! Such instances of data misrepresentation are quite common, particularly in underdeveloped economies such as Ethiopia’s, where infrastructure is often lacking, and information transfer is highly inefficient.

I have heard it said that everyone who visits Ethiopia experiences her in a different way. For me, she was a study of stark contrasts. From the Edna Mall’s quaint Europeanized shops with French bay windows, its’ jazz bars, and chique cafes filled with stylish patrons, to the bumpy, unpaved and dusty road leading out to the coffee plantations, and to the coffee farmers we spoke with that struggle to make ends meet on a daily basis. Inequality rears its ugly head at every turn.

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My experience with Professor Nyarko, the CTED team, and ECX in Ethiopia was both enlightening and edifying. It profoundly shook my prior assumptions and economic views, and has undoubtedly had an impact on my academic career. As a second-year undergraduate student accustomed to pondering the intangible economic theories presented in textbooks, nothing could have prepared me for experiencing true economic progress first-hand.  Prior to ECX’s establishment, Ethiopian farmers lacked sufficient market information; they were unaware of the trends in international and local prices and were therefore subjected to the whims of price-making negotiators who profited greatly at their expense. The ECX has helped to solve this issue; to level the playing field, bringing greater returns to the farmers who need it most, and working towards creating a more equitable Ethiopian society.

Most of all, I would like to thank Professor Nyarko who provided me with this wonderful opportunity, and guided me throughout the research process. I would also like to thank Caroline Ackley, Flora Alipio, Liuba Grechen Shirley, Marian Tes, and all the others who not only made this experience possible, but also incredibly fruitful and enjoyable. And as a result of all that I have experienced, I want to thank Dr. Eleni Zaude Gabre-Madhin and the team at the ECX for their hard work, and for the strides they are making in Ethiopia.

Thanks again for a fantastic summer!”

– Yuqi
NYU – Undergraduate Class of 2015