Coffee, Ethiopia’s leading export earning commodity, saw its export volume and value decline during the first half of the fiscal year. This reverses a trend that has taken place over the past few years.
The Ethiopian Coffee and Tea Authority’s (ECTA) report indicated that the exported volume of coffee in the first six months of the budget year, which runs from July 8 to January 8, stood at 103,445 tons.
This is a decrease of over 28 thousand tons compared with the target. In terms of percentage the performance is about 78 percent of the target.
The report indicated that the volume has also shrunk by 4,194 tons or close to four percentage points when compared with the similar period of the 2017/18 budget year. During the stated period the authority planned for coffee exports to earn USD 475 million. Instead they only brought in 70 percent of that amount or USD 334 million.
The revenue also declined when compared with the first six months of last year by USD 49 million or 12.5 percent.
In recent history, export earnings and volume would grow every year so this is unexpected.
November is part of the bean harvest season but that month experienced the lowest performance in both value and volume.
The authority’s six-month report which was 31 pages long indicated that the value earned in August met 87.5 percent of the target. During that same month, the volume was the highest, meeting 93 percent of the target. The November performance was 62 and 51 percentage points of the target by volume and value respectively.
Saudi has stood as the top destination taking 21 percent of the total volume and 18 percent of the revenue, while Germany followed at 16 and 14 percent of the shares by volume and value in the stated six months. Japan took third place at 12 percent and the US, Belgium, South Korea, Italy, Sudan, Australia and France were four through ten respectively.
The stated ten countries consumed 84 percent of Ethiopian coffee in the past six months and contributed to 81 percent of the revenue from USD 334 million of total earnings. The report indicated that in the top ten destinations consumption has declined by four percent compared with a year ago and the revenue went down by 14 percent.
The US purchased 31 percent less coffee during this period which contributed to a decline in revenue by 29 percent.
The consumption of Germany, which is also a hub of Ethiopian coffee for the region and one of the top buyers of Ethiopian coffee, went down by 25 percent of volume and 29 percent by revenue. Volume exported to France has also declined by 18 percent which contributed to a value drop of 34 percent, while Italy’s consumption also was reduced by three percent of volume and 17 percent in value.
The consumption of the other major destinations Japan and Saudi Arabia, Sudan, Australia has increased significantly despite the revenue from Saudi declining by four percent.
Kerchanshe Trading Plc, Tracon Trading Plc and Adem Kedir Haji (Hora Trading) were the three top exporting companies respectively during the stated period. Mulege, a prominent coffee exporter, Abbahawa Trading Plc, Oromia Coffee Farmers Cooperative, Sidama, Coffee Farmers Union, Arfasa Trading, SA Bageresh, and Ethiopian Trading Business Corporate ranked four through ten respectively on the top exporter’s list. In the past six months, 278 coffee exporters were engaged in the coffee export business, according to the report.
The ten exporters exported 40 thousand tons of coffee in total and earned USD 126 million which took up 39 percent and 38 percent of the share respectively from the total export and earnings for the period, while top 20 exporters have exported and earned over half of the total trading.
The report indicated that the top 20 exporters have contributed 54 percent of the value and volume of the total coffee business.
The minority, 64 percent or 178 exporters, took only 9 percent in volume and 8 percent of value. One of the challenges coffee is facing is the growing number of new exporters, attempting to get hard currency as opposed to trading it for traditional business reasons.
The new exporters have created confusion in the coffee sector and escalated the price of the product locally while exporting it at a lower price just to get foreign currency to feed their original importing business.
The well organized report of ECTA has also compared the international coffee price with the first six months of the current budget year with the same period of the last budget year.
The table contrasts the half year monthly trading of the New York Coffee Exchange with the past budget year and it showed that the price has declined for the current budget year significantly.
For instance, in July 2017 a ton of coffee was traded at USD 4,199, while it was USD 3,664 in July 2018 which is a 16 percent decrease.
On the international market on average in the last six months the price of coffee has declined from 24 percent to 9 percent compared with the six months of the past budget year.
The authority, which also follows the spice sector also stated that in the first six months close to USD five million was secured from export which is half of the target.
The other product that ECTA follows is tea. During the stated period, 984 tons of tea was exported and earned USD 1.6 million which is about half of the target.