Sunday, April 14, 2024
Money TalksGlobal coffee crisis hits again, Ethiopia readies to take advantage

Global coffee crisis hits again, Ethiopia readies to take advantage

Once again, coffee is making headlines all over international media for another round of an inevitable price hike to take place globally. Consumers in coffee importing countries are being informed to pay higher prices for their daily routine of sipping a cup of coffee.

The blame since last two years has been placed on low production of coffee from the world’s largest producer, Brazil, due to the vast frost hitting coffee farming regions. It is followed by severe droughts in various parts of the world. The crisis is reported to be the highest in half a century.

Right before the frost crisis in Brazil, total production was 3.7 million tons in the country, but production fell short of nearly a million the next year, dropping to 2.8 million tons. The crisis is continuing and production is expected to drop again this year, bringing another burden for the consumers in price hikes.

The average coffee price in 2020 was USD 1.1 per pound, with a little difference in the years before that. This has doubled as of the current month in the global market. In few months, the increase is expected to equalize the historic-high price recorded in the year 2011, USD 2.5 per pound.

The story is different in Ethiopia.

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Coffee remains to be a primary source of forex for the country. Agriculture in general is the mainstay to the export income for Ethiopia, but coffee contributed over a third of the total USD 4.12 billion the country generated in the last fiscal year.

It was generated from exports of 300,000 tons of coffee, achieving 140 percent of the target. Authorities want more. The plan for the new fiscal year is to earn nearly USD two billion by exporting over 360,000 tons of coffee. Officials are even reaching to areas that are not known for coffee production to take an advantage of the global situation.

During the Meher season of 2020/21 fiscal year, over 5.8 million quintals of coffee was cultivated in Ethiopia, growing by a million quintal comparing to the previous year. The growth is also attributed to the actions the government took for almost two years since it began convincing farmers who never thought of cultivating the crop on their farmland.

According to Shafi Oumer, marketing development and inspection deputy director at the Ethiopian Coffee and Tea Authority, his office is doubling down on supporting production of coffee in regions that are not known for coffee production previously.

For the last two years, the Authority has been providing trainings, marketing integration and coffee seedlings to farmers for more production of the commodity in regions such as Amhara, Benishangul Gumuz, and Gambella.

The data from the Ethiopian Statistics Service (ESS) alone speaks volume. Coffee production previously dependent in Oromia and Sidama, regions that still dominate for about half of the total coffee produced in the country, will soon have competitors.

The Amhara Regional State cultivated about 95,536 quintals of coffee on 13,027 hectares of land, with a yield of 7.33 quintals per hectare during the Meher season in the year 2020/21. Production saw a 55 percent spike from the previous year, though there was a decline in the number of small holding farmers harvesting coffee.

“The Authority has focused on some major works. The first is scaling up the productivity of coffee in the areas where coffee is produced largely via a full package approach,” said Fikadu Deferes, representative of the Authority’s extension director.

The other major work is expanding the plantation of coffee in areas where the farmers were not accustomed to the cash crop. These include pocket areas in Amhara, Benishangul Gumuz, and the newly established South West regional states.

These are among the few where some seedlings of coffee were planted and that the Authority is planning to expand more with cluster farming approaches, according to Fikadu.

“We conducted various surveys with regards to the potential of the region and identification of the gaps before proceeding to the plantation, especially in Amhara region,” Fikadu said.

It had been reported that some areas in the Amhara Regional State such as Ayehu, Finote Selam, and Gojjam have massive potential to produce coffee beans, on the same level as Oromia and Sidama.

One of the special features of coffee plantation in the Amhara region, as Fikadu mentioned, is that the places have bigger potentials to farm the beans through irrigation schemes.

The region also started exporting coffee through cooperatives with their own brand name. One of them is Zege Coffee. The cooperative, Zege Coop, was first to export coffee from 20 cooperatives established under the Amhara Coffee Farmers’ Cooperative Union (ACFCU), legally formed and registered in 2015.

From private companies as well, Ayehu Coffee, owned by Midroc Investment Group’s Ethio-AgriCeft, is one of the pioneers to plant and export coffee from the region.

Shafi disclosed that Ethio-AgriCeft has been working on expanding coffee production in the region boldly. He added that this region as well as Benishangul Gumuz and Gambella have come forward to engage in the production of the cash crop.

The Ethiopian Commodity Exchange (ECX) had been seeing coffee beans at its windows directly sourced from Amhara region in the last two years. This news was welcomed by the Exchange’s officials for its bigger potential to increase exchanges in their windows.

However, trades via the vertical integration broadened the export market of coffee in Amhara as well, according to Netsanet Tesfaye, communications director at the ECX.

“Buyers in the international market enjoy Zege Coffee greatly, but the cooperative exports it mostly through vertical integration to their own market,” Netsanet said.

The Authority along with regional agricultural bureaus supports the coffee growers in scaling their capacity, followed by inspection and market linkages.

Earlier this month, Amhara Agriculture Bureau announced that over 4.8 million hectares of land have been farmed in the region during the just ended fiscal year alone.

During the same year, over 33,334 hectares of land was covered with coffee seedlings through irrigation. Cluster farming of coffee covered 5,000 hectares of land in 21 Woredas, with Guangua being one of them, cultivating coffee on 1,400 hectares of land.

Contributed by Elias Tegegn and Samuel Bogale

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Video from Enat Bank Youtube Channel.


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