Falling coffee prices rattle Ethiopian exporters

(Photo: Anteneh Aklilu)

The fall in international coffee price raises rate of contract terminations of coffee export as the Ethiopian Coffee and Tea Authority (ECTA) signals concern citing that the authority in talks with buyers to finish exporting stored export standard coffee within 3 months.
“As a result of decrease in the international coffee price, export volume has also decreased,” said Adugna Debela /PhD/, head of the authority, indicating that the past six months have shown slight decrease in volume while revenue showed increments of 80 million dollars from last year but still only meeting 67 percent of the target.
In the first half of the fiscal year, the country exported 117,000 tons of coffee worth USD 663 million as the authority target to generate USD two billion over the course of the current fiscal year by exporting 360,000 tons of the beans.
“Due to international price decrease exporters are hoarding their coffee as the price they get locally is expensive than the international price they anticipate to sell to, rendering them to hold on to the coffee for speculated increase. We are working to improve the situation by engaging with different stakeholders including buyers,” said the ECTA head.
As data shows, a pound of coffee cost USD 2.5 during a year back. However, the number now has dropped to USD 1.5, a decrease of $1 per pound and almost $2 per kilogram of coffee.
In the first half of the fiscal year, 288 contracts with 181 exporters were terminated, according to the authority.
“Exporter have large amount of stocked export standard coffee due to termination of contracts. We are in discussion with buyers to solve the matter and to increase the volume and with exporters to review their contract,” said Adugna, adding, “We believe in the two or three months exporters will finish exporting coffee they have in their backlog stock due to termination of contacts. This is one measure to achieve our target.”
The cost of the item has decreased by 50% on the international market since last year. Less purchasing power has caused a decline in interest from buying nations. Ethiopia’s attempts to make money off the commodity are hampered by both of these circumstances. Brazil is also making a return after suffering a frost disaster that destroyed its coffee plantations.
“There is no shortage of supply and volume, however, due to the situation there is a slowdown in the interest of buying countries which we have to wait until situations improve,” Adugna emphasized.
“Ethiopian coffee is one of the best qualities in the world and we are always improving. We believe that having high quality would get us to increase the revenue even though volume shows decrease from last year,” he further explained.
Throughout the course of the preceding year 2021/22, for the first time ever, coffee exporters came together to supply the global market with goods valued USD 1.4 billion from the exports of 300,000 metric tons of coffee.
Also Ethiopia was able to earn USD 1.75 billion from exports during the first half of the 2022–2023 fiscal year, according to the Ministry of Trade and Regional Integration.
Exports of manufactured goods, dairy and meat products, electric power, and mining products each contributed 10%, 2.9%, 2.9%, and 6.62% of the total revenue, respectively, while exports of agricultural commodities generated 77.23% of the overall income.
According to the Ministry, the nation met 76% of its export goal during the previous six months. It cited poor global demand and smuggling of agricultural goods into neighboring nations as reasons why the goal export volume was not reached.