Ethiopia is forecast to produce 7.6 million bags (60 kilograms) of Arabica coffee in 2021/22 and is the world’s third‐largest Arabica producer behind Brazil and Colombia. Coffee production is vital to the Ethiopian economy and approximately 15 million people are directly or indirectly involved in the industry. In 2020, coffee exports totalled $800 million and accounted for over 25 percent of total exports.
These funds play an important role in the economy because the Ethiopian Birr is not a convertible currency and U.S. dollars are needed for transactions related to imports and other foreign debt obligations.

Coffee is primarily grown in the Oromia Regional State as well as the Southern Nations, Nationalities and Peoples Region. Within these regions, there are four main cultivation methodologies: forest, semi‐ forest, garden, and plantation. Forest coffee grows wild under the shade of natural forest trees and doesn’t have a defined owner.

In a semi‐forest environment, farmers remove select forest trees to balance the need between shade and sunlight and can claim ownership of the area by pruning and weeding once a year. Garden coffee is typically intercropped in the vicinity of a farmer’s residence and fertilized with organic material. Commercial plantation coffee covers large, well‐defined areas planted by private investors that often use fertilizers and other inputs to increase quality and yield for export markets.

Annual output grew by about 2 percent over the last decade, but yields have been stubbornly stuck around 14 bags per hectare while other top Arabica producers average yields that are 40‐60 percent higher. Improved crop management practices have not been widely adopted because 95 percent of production occurs on non‐commercial plots typically one‐half hectare or less.

Few non‐commercial growers are interested in incurring investment costs due to the informal nature of their growing method, while commercial growers note that 5 to 10 years are needed to realize a return on their investment.

Disease and substitution limit output expansion. Few non‐commercial growers use fungicides despite the presence of coffee berry disease, coffee wilt disease, and root rot disease, causing suboptimal yields.

To mitigate these losses, many farmers are either inter‐cropping coffee with khat or switching entirely to khat due to economic reasons. Khat is a legal stimulant that is relatively resistant to drought, disease, and pests. Also, it can be harvested three or four times a year and commands high prices in neighbouring countries, including Djibouti, Somalia, and Yemen.

Domestic consumption accounts for almost half of output, which is high for a major producing country, with many households consuming coffee two or three times a day. Coffee plays an important role in traditional and cultural gatherings and is consumed during most social occasions.

While away-from-home consumption has increased through the expansion of regular coffee shops, small roadside coffee stalls have become increasingly popular in and around major cities. These informal stalls serve coffee at a discount compared to coffee shops because they do not have the same fixed costs related to taxes, rent, and labour.

Because the stalls are not regulated, they often sell export‐quality coffee even though it is illegal to do so. By law, domestic consumption is limited to lower quality coffee that fails to meet the Ethiopian Commodities Exchange (ECX) export quality standards.

With such strong domestic coffee demand, the Government of Ethiopia is also motivated to adopt policies to increase the volume of exports to generate access to foreign currency. These competing interests sometimes put the Government and consumers at odds.

For example, because Ethiopia has a trade deficit and limited access to foreign currency, coffee traders have exported at a loss to gain access to U.S. dollars. These are then used to import products such as construction materials and vehicles to sell at much higher rates of return. In 2019, the Government made it illegal to sell coffee below the international price to remove this distortion from the economy.

The following year, the Coffee and Tea Authority coordinated with the National Bank of Ethiopia to establish the Export Coffee Contract Administration directive, which fixes a minimum coffee export price based on a global weighted average.

The Government has implemented other reforms to address challenges within the coffee sector. For example, the ECX was established in 2008 to reduce price volatility and incentivize farmers to plant coffee. However, its structure did not allow coffee traceability because deliveries were comingled into anonymous lots of standard grades, losing the ability to sell identity-preserved coffee.

Open dialogue between the Government and private sector identified this issue that was keeping participants from certifying coffee as organically grown, resulting in a series of reforms in 2017 that reestablished traceability to the washing station.

As Ethiopia moves forward with these reforms, it remains to be seen whether these actions result in rising production and trade.

SOURCE:https://brandspurng.com/2021/06/22/ethiopia-world-arabica-coffee-producer/

We praise God for them. God bless the business

BrandSpurNG:
Ethiopia is forecast to produce 7.6 million bags (60 kilograms) of Arabica coffee in 2021/22 and is the world’s third‐largest Arabica producer behind Brazil and Colombia. Coffee production is vital to the Ethiopian economy and approximately 15 million people are directly or indirectly involved in the industry. In 2020, coffee exports totalled $800 million and accounted for over 25 percent of total exports.
These funds play an important role in the economy because the Ethiopian Birr is not a convertible currency and U.S. dollars are needed for transactions related to imports and other foreign debt obligations.

Coffee is primarily grown in the Oromia Regional State as well as the Southern Nations, Nationalities and Peoples Region. Within these regions, there are four main cultivation methodologies: forest, semi‐ forest, garden, and plantation. Forest coffee grows wild under the shade of natural forest trees and doesn’t have a defined owner.

In a semi‐forest environment, farmers remove select forest trees to balance the need between shade and sunlight and can claim ownership of the area by pruning and weeding once a year. Garden coffee is typically intercropped in the vicinity of a farmer’s residence and fertilized with organic material. Commercial plantation coffee covers large, well‐defined areas planted by private investors that often use fertilizers and other inputs to increase quality and yield for export markets.

Annual output grew by about 2 percent over the last decade, but yields have been stubbornly stuck around 14 bags per hectare while other top Arabica producers average yields that are 40‐60 percent higher. Improved crop management practices have not been widely adopted because 95 percent of production occurs on non‐commercial plots typically one‐half hectare or less.

Few non‐commercial growers are interested in incurring investment costs due to the informal nature of their growing method, while commercial growers note that 5 to 10 years are needed to realize a return on their investment.

Disease and substitution limit output expansion. Few non‐commercial growers use fungicides despite the presence of coffee berry disease, coffee wilt disease, and root rot disease, causing suboptimal yields.

To mitigate these losses, many farmers are either inter‐cropping coffee with khat or switching entirely to khat due to economic reasons. Khat is a legal stimulant that is relatively resistant to drought, disease, and pests. Also, it can be harvested three or four times a year and commands high prices in neighbouring countries, including Djibouti, Somalia, and Yemen.

Domestic consumption accounts for almost half of output, which is high for a major producing country, with many households consuming coffee two or three times a day. Coffee plays an important role in traditional and cultural gatherings and is consumed during most social occasions.

While away-from-home consumption has increased through the expansion of regular coffee shops, small roadside coffee stalls have become increasingly popular in and around major cities. These informal stalls serve coffee at a discount compared to coffee shops because they do not have the same fixed costs related to taxes, rent, and labour.

Because the stalls are not regulated, they often sell export‐quality coffee even though it is illegal to do so. By law, domestic consumption is limited to lower quality coffee that fails to meet the Ethiopian Commodities Exchange (ECX) export quality standards.

With such strong domestic coffee demand, the Government of Ethiopia is also motivated to adopt policies to increase the volume of exports to generate access to foreign currency. These competing interests sometimes put the Government and consumers at odds.

For example, because Ethiopia has a trade deficit and limited access to foreign currency, coffee traders have exported at a loss to gain access to U.S. dollars. These are then used to import products such as construction materials and vehicles to sell at much higher rates of return. In 2019, the Government made it illegal to sell coffee below the international price to remove this distortion from the economy.

The following year, the Coffee and Tea Authority coordinated with the National Bank of Ethiopia to establish the Export Coffee Contract Administration directive, which fixes a minimum coffee export price based on a global weighted average.

The Government has implemented other reforms to address challenges within the coffee sector. For example, the ECX was established in 2008 to reduce price volatility and incentivize farmers to plant coffee. However, its structure did not allow coffee traceability because deliveries were comingled into anonymous lots of standard grades, losing the ability to sell identity-preserved coffee.

Open dialogue between the Government and private sector identified this issue that was keeping participants from certifying coffee as organically grown, resulting in a series of reforms in 2017 that reestablished traceability to the washing station.

As Ethiopia moves forward with these reforms, it remains to be seen whether these actions result in rising production and trade.

SOURCE:https://brandspurng.com/2021/06/22/ethiopia-world-arabica-coffee-producer/

Awesome! The Ethiopians have done well in properly positioning
and branding their coffee industry
for local and global competitiveness.