Skip to main content
Loading

March Coffee Prices

During the month of March, the price of sun-dried commercial coffees has been gradually increasing – now reaching 122 Birr/KG in Guji region, an increase of 10 to 15 Birr/KG. from the previous month. On the other hand, this year’s March prices show an increase of 11 Birr/KG when compared to last year.

Ethiopia March Coffee PriceBecause of the credit crunch which resulted from shortages of bank loans, many industry analysts expected for prices of coffee to decrease dramatically in this coffee season. However, we are witnessing the opposite. The main reason for the increase in the prices of coffee is because many exporters who have contracts on their hand but are unable to secure bank loans are enticing coffee suppliers by offering them promissory notes at prices that are higher than the market price. Suppliers are handing over their coffee to exporters in exchange of a receipt which is used as a promissory note. This practice is not only creating a problem on suppliers and farmers which majority of them are unable to collect their money from exporters, but it is also creating a problem in the export market by creating an unhealthy competition between exporters – thereby, widening the imbalance between local coffee prices and export prices.

 

Introduction of Maximum and Minimum Purchase Prices

The Ethiopian Coffee and Tea Authority recently introduced a minimum and maximum purchase prices for coffees that are transacted via vertical integration. The prices are announced on a weekly basis. The Authority introduced this policy because it received large number of complaints from coffee suppliers for unpaid credit sales to coffee exporters. Under this new scheme, the Authority is approving and giving dispatches for transactions between suppliers and exporters who are able to show proof of payment transactions.

While this policy is expected to play an important role in making sure that suppliers are being paid for their coffee, it also has some drawbacks. One major weakness of this system is that it is based on outdated prices obtained during a market study made over two months ago by the Authority. For example, a washed specialty Yirgachefe coffee is currently sold for 6000 Birr/Feresula while the Authority’ set prices for the week of March 26 to April 1 st is 3989 Birr/Feresula. As a result of such price variances, many exporters are worried as to how the Revenue Authority will treat such transactions that were conducted above the maximum purchase prices.

It is important that the Ethiopian Coffee and Tea Authority takes immediate corrective actions on this issue by using updated market prices to set the maximum and minimum purchase prices as otherwise it will create rift between the Revenue Authority and coffee export companies eventually leading to additional problems in the coffee sector.

 

Logistic Problems

The Red Sea crisis still persists resulting in continued disruption of global trade. However, we are currently noticing gradual improvements in the logistics of some major Shipping Lines such as MSC and CMA-CGM which are continuing to transport containers with minor schedule disruptions – disruption of shipment schedules of up to 8 days are becoming common.

According to the Ethiopian Coffee Exporters Association, there are over 5,000 MT of Ethiopian coffee stranded in Djibouti. Containers from Maersk shipping lines account for the majority as it has completely halted its operations in Djibouti. The Ethiopian government is devising a plan to solve the problem, and have put three solutions on the table:

1) Use Ethiopian ships to transport the containers to a nearby port – most preferably Mombasa port;Logistics and Coffee

2) Start using Lamu port in Kenya, but major shipping lines are not allowing booking from this port; or

3) Use Mombasa port for the export of coffee. Though, Maersk quoted additional $3,500 per 20ft container for shipments departing from Mombasa port – making it more expensive for Ethiopian coffee buyers.

 

Eight Months Report

The Ethiopian Coffee and Tea Authority has released its eight months report. According to the report, coffee exporters were able to export 148.8 thousand tons of coffee, and generated $709.9 million USD during the past eight months of this fiscal year.

Last year, Ethiopia generated $780 million USD from coffee exports. When comparing this year’s performance with that of last year, there is a decrease in value totaling $70.1 million this year.

During this fiscal year, the Authority has planned to earn $1.75 billion USD by exporting 350,000 tons of coffee.Ethiopian Coffee - Eight Months Report

At KANYA Coffee Export, we are experiencing a record breaking year, and we are on track to achieve our goal of earning $3 million USD during this fiscal year. We have not only signed contracts with notable coffee buyers, but also have started shipping our coffees as per schedule.