Viewpoints | Sep 06,2020
The last fiscal year was not a bad year for coffee. Registering a 12pc growth in earnings to fetch the country 854.2 million dollars, it managed to be one of the few markets that have survived the economic consequences of the Novel Coronavirus (COVID-19) pandemic.
But, output in terms of volume showed an even greater growth at 17pc. It is an imbalance that echoes the pessimism of industry insiders that are questioning the durability of this growth and the extent to which it is reflective of how Ethiopia’s main export commodity - which supports 5.6 million farmers - is faring.
Their apprehension has in part to do with a directive by the Ethiopian Coffee & Tea Authority that imposes a minimum export price weighed against global average prices for each of the different grades of coffee exported.
Having been issued late last February, industry insiders argue that this directive will affect competitiveness in the international market, but that “the impact of the directive will only be seen in the next few months.” A general manager of a coffee exporting of company believes this would be decidedly negative.
Burdened with this challenge, export volume declined in May and June by nine percent and 15pc, respectively, echoing the hardships felt by the country’s economy as the global economic slowdown takes its toll.
Another impact on the coffee market was a result of the COVID-19 pandemic. It has created delays in logistics and has not helped the erratic nature of the average global price. In the case of the latter, prices were seeing an acute rise beginning in October of last year, before they began to fall sharply in January 2020.
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