Local vs Global: What the Ethiopian Market Paradox Means for Green Coffee Buyers
International prices crashed but local cherry prices are slow to follow. Understand why this is happening and how this will affect the production of fully washed Ethiopian coffee.
Ethiopia Coffee Season Chart
Harvest: October to February
>> See the Exact Date for Each Coffee on Algrano.com!
How’s Coffee Production Coming Along in Ethiopia?
>> Learn More About Yirgacheffe Coffee and History.
What’s the Coffee Cherry Price in Ethiopia Now?
>> To Know What Has Changed, Check Previous Coffee Harvest Reports from Ethiopia.
- The commodity price boom in 2020 and 2021
- Inflation and cost of living crisis
- Market distortion caused by the Tigray war
- The explosion of the number of exporters since the establishment of vertical integration, which increased local competition and speculation
- The introduction of the Minimum Registration Price
What Is Vertical Integration?
It’s the name given by the Ethiopian Coffee and Tea Authority (ECTA) to a supply chain scheme approved in 2021.
The new regulation means that exporters can buy coffee directly from agrabes (ie. aggregators or small washing stations), bypassing the Ethiopia Commodity Exchange (ECX).
What Is Inflating Local Coffee Prices in Ethiopia?
>> Media Coverage on the Tigray War.
What Is the Minimum Registration Price?
Created by the Ethiopian Coffee and Tea Authority (ECTA) in 2020, it’s a price reference based on contracts submitted by exporters to the National Bank of Ethiopia (NBE).
Exporters submit contracts daily. The ECTA then fixes a minimum price for the next day according to the global weighted average contract price for different regions and grades.
If exporters sell coffee below the minimum price, they might suffer legal action from the Ministry of Trade.
We calculated it. It’s around US$10,00/kg of green coffee. Such high prices create expectations that linger beyond a remote price crash. “In Ethiopia, the New York price is not something people follow closely or use to base their activities on,” Takele says about the different reality lived by farmers on the ground.
How Are High Prices Affecting Exporters?
Speaking from Guji, Biniyam worries that many agrebes are still buying cherry at “unrealistic prices” and would expect the domestic price to drop to 40 birrs “but that’s unlikely”. He summarises the paradox: “The problem is that the prices in the local and international markets don’t match”.
When Should Roasters Start Buying Coffee?
All exporters we spoke to expect to see less washed Ethiopian coffee on the market.
>> Pre-order Samples of Fully Washed Ethiopia Here.
If Mebrahtu’s (left on the photo) projections are right, prices should have stabilised by January 2023. Once that happens, buyers tend to rush all at the same time (roasters and traders alike). So please don’t leave your orders to the last minute.
Luiza Furquim is the Head of Content at Algrano. Originally from Brazil, she worked as a reporter in Sāo Paulo before moving to the UK, where she became a specialty roaster.
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