
Viewpoints | Aug 12,2023
Jun 19 , 2021
By Christian Tesfaye
Lately, coffee has been good for Ethiopia. Over the past three months, exports have been showing impressive growth, fetching 107 million dollars in March. The month after that, this reached 114 million dollars. In May, it outperformed records with 131 million dollars worth of coffee exported to the international market.
What is going on?
Characteristically, the authorities would say that it is more effective agricultural and supply chain policies. Indeed, the volume of the commodity being exported has increased. But it has more to do with the fact that every single bag of coffee beans is selling for higher than it used to last year—a consequence of providence.
Or, in Brazil’s case, bad luck. The South American giant is going through a drought, and as the biggest exporter of the bean in the world, there is currently a global coffee shortage. Arabica coffee is now selling for its highest price since 2016, according to Business Insider.
“Coffee prices [on average of all time] have risen nearly 70pc in the past year and currently trade around 1.66 dollars per pound,” reported the financial and business news outlet.
If the drought lasts through August, it bodes terribly for Brazil over the next year, but Ethiopian coffee producers have cause to celebrate. And, hey, it is not like Brazil, while a world leader in the export of the commodity, will have its economy hampered solely by this. It is an economy that has diversified, unlike Ethiopia.
But this is just one side of the story of global inflation and its impact on this country. It is not just a drought in Brazil that is pushing the global prices of goods and services. The primary driver is the United States. The Biden administration’s multi-trillion-dollar economic stimulus package is helping the country and the world recover rapidly from the pandemic-induced global recession. Unfortunately, it is also proving the Miltonian argument that increasing money supply is inherently inflationary, even for the US—the price of goods and services is increasing in the country, although it is yet to be seen if it is lasting.
Making matters worse is that as the global economy recovers and demand increases, supply is not catching up. Commodities such as lumber and copper are all rising. A shortage of semiconductor chips is impacting the production of devices that use electronic equipment, from cars to computers and smartphones.
More importantly for Ethiopia, there is a crippling shortage of shipping containers, also as a result of COVID-19. How this became a problem is too convoluted to explain here but let us just say that the uneven easing of restrictions across the world has meant that many containers are held up in all the wrong places.
When it comes to Ethiopia, this translates to the state monopoly Ethiopian Shipping & Logistics Service Enterprise tripling, in some cases, its shipping prices. The Enterprise is trying to lease or buy more containers, but fat chance it has as every shipping company worldwide is trying to do the same—a costly bidding war.
Just as a global chip shortage has meant that laptops and computers are more expensive—of course, only one factor among many, like the depreciation of the Birr—higher shipping tariffs mean that products would get more expensive here. Importers, manufacturers, distributors and retailers would transfer the inflated prices to consumers; a price for being a member, albeit tiny and mostly insignificant, of the global economy.
PUBLISHED ON
Jun 19,2021 [ VOL
22 , NO
1103]
Viewpoints | Aug 12,2023
My Opinion | May 29,2021
Featured | Sep 09,2019
Addis Fortune | Oct 30,2022
Viewpoints | Jun 04,2022
Commentaries | Nov 05,2022
My Opinion | Mar 18,2023
Radar | Jul 28,2024
Commentaries | Dec 07,2024
Viewpoints | Feb 04,2023
Photo Gallery | 148095 Views | May 06,2019
Photo Gallery | 138211 Views | Apr 26,2019
My Opinion | 134469 Views | Aug 14,2021
My Opinion | 131037 Views | Aug 21,2021
Dec 22 , 2024 . By TIZITA SHEWAFERAW
Charged with transforming colossal state-owned enterprises into modern and competitiv...
Aug 18 , 2024 . By AKSAH ITALO
Although predictable Yonas Zerihun's job in the ride-hailing service is not immune to...
Jul 28 , 2024 . By TIZITA SHEWAFERAW
Unhabitual, perhaps too many, Samuel Gebreyohannes, 38, used to occasionally enjoy a couple of beers at breakfast. However, he recently swit...
Jul 13 , 2024 . By AKSAH ITALO
Investors who rely on tractors, trucks, and field vehicles for commuting, transporting commodities, and f...
Aug 30 , 2025
For Germans, Otto von Bismarck is first remembered as the architect of a unified nati...
Aug 23 , 2025
Banks have a new obsession. After decades chasing deposits and, more recently, digita...
Aug 16 , 2025
A decade ago, a case in the United States (US) jolted Wall Street. An ambulance opera...
Aug 9 , 2025
In the 14th Century, the Egyptian scholar Ibn Khaldun drew a neat curve in the sand....
Aug 30 , 2025
At a high-profile event held at the Sheraton Addis last week, the launch of Dashen Ba...
Aug 30 , 2025 . By NAHOM AYELE
Ethio telecom, one of the long-standing state-owned monopolies, has publicly committe...
Federal education officials have issued a stern warning to private colleges, where a...
Aug 30 , 2025 . By BEZAWIT HULUAGER
The Ethiopian Insurance Corporation (EIC) delivered a robust pre-tax profit of 1.98 b...