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Happy New Year

KANYA Coffee Export wishes our partners all over the world a happy and prosperous new year. We look forward to serving you better in the new year and forging stronger relationships. In this first newsletter of the year, we hope to share our views on the Ethiopian coffee market pertaining to current prices, quality of fresh crops, liquidity in the financial sector, and international policies that could affect Ethiopia’s coffee exports.

Coffee Price

The prices of red cherries are hovering around 50 birr per/kg in many parts of coffee growing communities. During the week of December 24-30, washing stations in Hambela Wamena Woreda were buying red-cherries at 48 birr/kg. Similarly, washing stations in Sidama – Bensa and Yirgacheffe – Idido area were buying cherries at 52 and 50 birr/kg respectively. This marks a meaningful reduction in coffee prices when compared to December of 2022, which saw prices soar to 80 birr/kg. The reduction of coffee prices is a welcome news to Ethiopian coffee exporters, as international buyers are more likely to be enticed with the relatively lower prices.

Coffee Quality

Ethiopian coffees are known for their unique tastes and qualities. As we start the new year, we are witnessing the same turn of events. The quality of coffees sold in many of the coffee growing regions are excellent. However, it is worth noting that coffee producers are experiencing lower yields than previous years. The unexpected rains, during what is commonly a sunny winter season, has shortened the flowering period – leading to fewer but crucial pickings.

Problems in Securing Bank Loans

Ethiopia’s economy continues to experience various shocks. Internal conflicts – coupled with the unwillingness of multinational financial creditors to provide grants and loans – has caused severe inflationary pressures on the economy. Consequently, the National Bank of Ethiopia has recently announced a policy directing local banks to cap loans to customers at no more than 14% above last year’s total loan disbursement.

While this policy is designed to curb inflation, it is already having negative effects on the coffee sector. Many producers have not been able to secure bank loans – leaving several washing stations to under-produce or totally close. We therefore anticipate that there will be a low supply of washed coffees in the export market unless the government takes timely action to reverse the situation.

EU Deforestation Law and its Impact on Ethiopian Coffee

In June 2023, the European Union (EU) introduced a new regulation to prevent the importation of commodities linked to deforestation with the aim of curbing forest loss, land degradation and biodiversity loss. EU Deforestation Law As over 40% of Ethiopia’s total coffee export goes to EU, the new EUDR regulation, which will kick-in for large companies on 29 December 2024 and for SMEs on 29 June 2025, is anticipated to bring undesirable consequences that could disrupt the whole coffee sector unless Ethiopian authorities start implementing the regulations set by the EU.

We are receiving information that some coffee buyers have already started scaling back on their purchases of Ethiopian coffee because the coffees they order now could find their way into coffee products sold in the bloc in 2025. Given the importance of coffee export to the Ethiopian economy, any potential decrease of exports, especially to the EU, could bring negative economic implications and we advise the Government to take timely action to avoid such potential problems.

KANYA Coffee’s Successes During 2023

KANYA Coffee had a very successful year during the 2022/2023 coffee season. We managed to break our record in terms of export revenues during this coffee season. Most importantly, we managed to forge relationships with large coffee buyers, who have the potential of buying more coffees for the 2023/2024 season.

Despite this success, we also faced a number of obstacles during the 2022/2023 coffee season. One of the biggest hurdles was the inflated coffee prices. In addition, unexpected rains in many parts of the nation made logistics and the drying process of our coffees very difficult to manage. Additionally, processing of our coffee in a rental facility was a major hurdle because we were forced to be on someone else’s schedule to have our coffee processed and bagged for export purposes.

For the new coffee season in 2024 and to better serve our partners, we are happy to announce that we have built a coffee processing facility in Burayu town – a city adjacent to Addis Ababa. This processing facility will start operation in February, 2024. We strongly believe that this processing facility will allow us to better control quality and deliver our products on a timely basis.

Furthermore, our Company has purchased one additional drying station in the town of Deri, Guji Zone. As this area is well renowned for its quality natural coffees, we are confident that the coffees we will export from this station will be our buyers’ favorite.