Ethiopia’s coffee industry is a vital source of revenue for the country and has been instrumental in putting Ethiopia on the map as a top producer of high-quality coffee.
One of the reasons for Ethiopia’s success in coffee export is the country’s diverse range of coffee varieties. Ethiopia is home to over 2 million smallholder coffee farmers, and each farmer grows a unique variety of coffee. This diversity allows for a range of flavors and aromas, making Ethiopian coffee highly sought-after by coffee connoisseurs around the world.
Additionally, Ethiopia is the world’s leading producer of Arabica coffee, which is considered to be the highest-quality coffee in the world.
Ethiopia’s coffee production accounts for around 4% of the world’s total production. Coffee from Ethiopia is exported to dozens of countries, with major markets in Germany, the United States, and Saudi Arabia.
According to the International Coffee Organization, Ethiopia’s coffee export decreased by 8.6% from 2016 to 2017. This decrease is due to a number of factors, including the country’s political instability and economic challenges. Additionally, the country’s coffee export has also been affected by the increasing demand for specialty coffees from other countries, such as the United States and Europe.
In recent years, however, Ethiopia’s focus on coffee export has resulted in a dramatic increase in its export rate. In 2019, Ethiopian coffee exports reached a record high, reaching over 820,000 metric tons. In 2022, coffee export reached a new record high, exporting 300,000 tons of coffee worth 1.4 billion dollars.
In recent years, Ethiopia’s coffee export performance has been on the rise. According to the International Coffee Organization (ICO), Ethiopia’s coffee export revenue increased by 15% in the 2019/2020 fiscal year, reaching a total of 1 billion dollars. This growth is attributed to an increase in the volume of coffee exported as well as an increase in coffee prices.
Recent alterations to the law and business practices have boosted coffee’s export performance. For farmers and exporters alike, the legalization of vertical integration is just one of the recent reforms that has improved their bottom lines. Efforts to modernize logistics services and make loans more accessible to coffee exporters and suppliers are also contributing to improved trade performance, according to officials at the Ministry of Trade & Regional Integration officials.
The Ethiopian coffee export industry has seen a lot of success, but it still has its share of difficulties. Lack of infrastructure is a major problem, making it hard for coffee farmers to transport their products to buyers. Additionally, small-scale farmers account for the vast majority of production in Ethiopia’s coffee export industry, which is already highly fragmented. This hinders farmers’ abilities to reach out to buyers and secure adequate compensation for their coffee.
The fluctuation of international market prices is a recent challenge for the coffee export industry. The price of coffee remained at $2/lb for the majority of 2022, which was one of the major reasons for Ethiopia’s strong export performance the previous year. However, prices have been falling since October, reaching a two-year low.
Prices are falling as a result of high production from Brazil, the world’s largest producer of coffee, combined with a global economic downturn that has caused a drop in demand.
Building upon the success exhibited in the previous year, the Ethiopia Tea & Coffee Authority had set the goal to earn close to two billion dollars from coffee export in the 2022/23 fiscal year.
The half-year export performance of Ethiopia shows the plan is proving to be challenging to achieve.
Exports of coffee totaled 117,000 metric tons during the period, bringing in USD 663 million. This is up from the prior year but still well short of the target for the year.
Despite these prevailing challenges, Ethiopia’s coffee industry has a bright future, and with the right investments and initiatives, the country has the potential to become a leading player in the global coffee market.
