Farming is Ashebir Haile's primary livelihood and the skill he has honed over the years. As the sole breadwinner for his family of four, the 45-year-old has tried his hand at cultivating various crops before ultimately settling on coffee in the SouthWest Regional State.

Unfortunately, Ashebir's efforts have been met with struggle this year. Despite his hard work and dedication, he has faced a steep decline in profits. Price offers from suppliers have plummeted by half to 30 Br a kilo, making it increasingly difficult for Ashebir to cover his daily expenses.

"My whole family depends on this harvest," Ashebir told Fortune.

His frustration is compounded by his inability to directly connect with buyers and the struggle to attract sufficient offers for the 28,000qtl of coffee produced on his four-hectare plot. But it does not seem to be only a growers' issue anymore.

Ethiopia's coffee exports are facing a crisis due to a combination of international and domestic factors, posing a threat to the country's primary commodity. The ongoing shipping crisis in the Red Sea coupled with diminishing global demand, regulatory scrutiny over vertical integration practices, and impending strict requirements for imported agricultural commodities under the European Union's Deforestation Regulation (EUDR), are all contributing to disruptions in the supply chain.

Last week, stakeholders from various sectors of the Ethiopian coffee supply chain convened at the Elily Hotel on Guinea Conakry Street to address the mounting challenges facing the industry. Gizat Worqu, general manager of the Ethiopian Coffee Association, painted a grim picture highlighting the declining demands.

Over the past two years, key importing countries such as Germany, Japan, Belgium, and the U.S., which collectively represent 60pc of the coffee export volume have reduced their demand by more than half. Germany's demand decreased by a staggering 36,000tns last year, while Japan's demand plummeted by 17,400tns. Japanese buyers specifically cited inflated prices, declining quality, and logistical delays as primary concerns.

"Coffee is facing a crisis," Gizat told Fortune.

The decline in demand has left many exporters grappling with excess coffee inventory as they struggle to compete in international markets amidst inflated domestic purchasing prices and increased production from countries like Brazil.

"There's a significant disparity between local minimum prices and international buying offers," Gizat said.

Price misalignment is recognised as a significant impediment for exporters.

Founder of Moye Coffee and board member of the Association Ahadou Wubshet stressed the importance of establishing a responsive supply chain. He said adapting to the fluctuating international coffee prices is vital for competition.

Total coffee exports last year saw a decline of 100 million dollars to 240,000tns, amounting to nearly 1.3 billion dollars. Ethiopia's ambitious plan to export nearly 1.7 billion dollars worth of coffee this year has faced significant setbacks in recent months due to the Red Sea crisis. As a result, over 3,000tns of coffee remain stranded in Djibouti ports, further exacerbating the issue.

The next three months are critical for the coffee industry as the peak season of exports needs a functional logistics corridor. One of the largest coffee exporters, Israel Degefa, CEO of the Kerchanshe Group, highlighted a growing reluctance among buyers to purchase Ethiopian coffee due to concerns about delayed shipments.

"They are shifting to other markets," he said.

Israel has been representing the Association in a new technical committee formed between the Ethiopian Maritime Authority, the Ministry of Transport & Logistics, and the Ethiopian Coffee & Tea Authority, aimed at addressing the issue. He anticipates ongoing discussions with Kenyan port officials and global ocean carriers could provide some relief for coffee shipments.

However, it is not without its challenges.

"Costs will significantly increase," he said.

Another set of concerns for the coffee industry raised at the meeting was the impact of the European Union's Deforestation Regulation (EUDR). It aligns with reaching goals for carbon neutrality by 2050, which requires a 55pc reduction in emissions over the next five years.

Elodi Ritzenthaler, a representative of the EU delegation, underscored their commitment to addressing biodiversity loss and greenhouse gas emissions through strict requirements for imported commodities, including coffee.

Under the EUDR, companies importing agricultural commodities into the European market are subject to stringent due diligence requirements. This includes geolocation requirements for products entering the market to ensure they are not linked to deforestation occurring after December 31, 2020. She said companies must conform to labour and human rights laws, including respecting the rights of indigenous communities.

"Compliance is the only way," she said.