Ethiopian Farmers

USDA FORECAST: ETHIOPIA COFFEE PRODUCTION TO INCREASE AT MY 2022/23

The United States Department of Agriculture forecasts that Ethiopia will produce 8.25 million 60-kg bags of coffee (495,000 tonnes) at mid-year 2022/23, 100,000 bags more than the current 2021/22 coffee production estimate.

Ethiopia is home to more than 15 million smallholder farmers who depend on coffee as their main source of income. The total amount of coffee exported from Ethiopia in the most recent fiscal year was 4.70 million bags (282,000 tonnes). The country’s biggest export markets in 2020/21 were Germany, Saudi Arabia, the United States, Belgium and Japan. In mid-year 2021/22, 3.45 million bags (207,000 tonnes) are expected to be consumed locally.

Production

The weather in 2021/22 was generally favourable throughout the production year, and insect and disease infestation in the coffee-growing areas was minimal. The delayed rains in the southern areas also did not have a significant impact other than prolonging the harvest in the region.

Ethiopia is the world’s third largest Arabica coffee producer and, as of 2022, Africa’s largest coffee producer, with production slowly increasing from 6 million to over 8.15 million bags over the past decade. The world’s first Arabica coffee was also introduced by Ethiopia.

Coffee production is expected to increase by 100,000 bags to 8.25 million bags (495,000 tonnes) in 2022-2023, provided the weather is favourable, insect and disease pressure is low, and there is adequate rainfall. In 2020/21, the coffee production estimate was revised upwards to 8.15 million bags, compared to the 2019/20 projections of 7.6 million bags.

In the middle of the 2020/21 coffee growing season, rainfall and distribution were normal to above average, the report said.

Consumption

Ethiopians are among the largest coffee consumers in Africa, and the trend of coffee consumption in the country is growing at a steady pace. Domestic coffee consumption is estimated at 3.5 million bags (210,000 tonnes) for MY 2022/23. For MY 2021/22, estimates are local consumption at 3.45 million bags (207,000 tonnes).

Coffee consumed on the local market is mainly coffee that has been rejected or that does not meet the requirements of the Ethiopian Commodity Exchange (ECX) export quality standards (this is according to Ethiopian law). However, selling their coffee domestically can often be more profitable and certainly provides faster cashflow after taking into account the work involved to export coffee.

Trade

According to a report by the Ethiopia Coffee and Tea Authority, Ethiopia’s coffee export earnings increased by “$274 million [to] more than half a billion US dollars in the first half of the current 2021/22 fiscal year.” The country currently exports more than 1,000 tonnes of coffee per day.

Ethiopian coffee production is mainly for export and domestic consumption, with only 5% going to the black market and cross-border trade. In January 2022, Ethiopia, in collaboration with the Ethiopian government and the United Nations Economic Commission for Africa (ECA), sold about 11,200 bags (672 tonnes) of coffee online on China’s largest e-commerce platform, Alibaba.

Ethiopia’s increased coffee exports are due to frequent droughts and frosts, which have reduced the quantity and quality of Arabica coffee production in South American coffee-growing regions.

Policy

Under the minimum price regulation for coffee, exporters are required to sell their beans at or above a certain minimum price. If exporters offer less than the required price, the government and the Ministry of Trade will take legal action.

The severe shortage of foreign currency in the country prompted the National Bank of Ethiopia (NBE) to restrict exporters’ access to foreign currency. Exporters have voiced their dissatisfaction with this directive and have made demands for the 20% ceiling to be raised.

Photo from Emily Garthwaite

Author

  • Dhanliza Cellona

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    Dhanliza is a writer based in the Philippines with more than 10 years of experience in editing and writing a wide range of content. She has written over 200 articles for a Japanese pop culture magazine and SEO articles for different clients from the US and the UK.

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