Why Ethiopia's Coffee Producing Regions Face Conflict Risk

Attacks in Ethiopia are putting its coffee producing regions under strain. An assault in the Arsi Zone of Oromia State on August 17 injured six civilians, including a local priest, with three more wounded; residents attribute it to the Oromo Liberation Army. In Amhara State, Fano fighters are pressing toward Bahir Dar, where grenade blasts have closed shops.

Federal forces have deployed more than 30,000 soldiers to confront Fano units in Gojjam. With currency depreciation, road blockades and the Red Sea crisis overlapping, costs rise and exports slow across the coffee industry. The unrest carries direct consequences for the areas where coffee grows and for national export earnings.

Recently, a deadly attack occurred in the Arsi Zone of Oromia State, Ethiopia, causing casualties, and the local security situation continues to deteriorate. Meanwhile, in the northwestern Amhara State, clashes between Fano armed groups and government forces have intensified, and tensions in the city of Bahir Dar have escalated. These turmoils not only threaten regional stability but also affect Ethiopia's important coffee industry. With multiple factors such as currency depreciation, road blockades, and the Red Sea crisis overlapping, coffee cultivation costs are rising, exports are hindered, and international influence is facing challenges. This article will review the latest conflict dynamics and their potential impact on the coffee industry.

According to reports from local Ethiopian media on August 17, the Arsi Zone of Oromia State suffered a deadly attack, resulting in 6 civilians injured, including a local priest, and another 3 people wounded.

Local residents identified the attack as carried out by an armed group called "Shane," also known as the Oromo Liberation Army. Currently, residents are increasingly concerned about the ongoing security issues in the area, where half is controlled by the Oromo Liberation Army and the other half is occupied by government forces, with conflict potentially breaking out at any time.

In addition, conflict has also emerged in the northwestern part of the country. According to reports from local Ethiopian media on August 16, the domestic armed group Fano armed forces are attempting to control Bahir Dar, the capital of Amhara State and the seat of the local government.

According to local citizens, grenade explosions have occurred frequently in some parts of Bahir Dar recently, and all shops in the city have been closed. Multiple local news media reported that there is a solid military base less than 30 kilometers from Bahir Dar.

However, the regional Peace and Security Office stated that Fano forces do not have the capability or power to infiltrate and control Bahir Dar, and federal and regional security forces are fully prepared to maintain peace and take "military action."

According to reports, the Ethiopian federal government defense forces recently deployed more than 30,000 soldiers under the leadership of three military generals, planning to defeat the Fano forces located in the Gojjam region. In response to the government defense forces, Fano forces announced restrictions on vehicle movement, allowing only ambulances to pass, with the aim of disrupting logistical supplies to government troops. Transport industry personnel and truck drivers are aware of and comply with this restriction, but Fano forces have not yet determined when to disarm.

It is understood that the biggest problem in Ethiopia currently is the severe depreciation of the exchange rate, which has led to rising local costs. Amhara State is Ethiopia's main agricultural and pastoral area and also a major grain supply region. However, the current closure of roads in some areas by Fano forces will affect the transportation of goods between regions and may lead to price increases.

Currently, due to the government's earlier new reform policies, Ethiopia's currency, the birr, has drastically depreciated, causing local product prices to rise significantly, especially imported goods. With ongoing civil war and road closures in some areas, the regional economy is greatly affected. Moreover, once a large-scale war breaks out, it will cause damage to roads, infrastructure, and supply chains in surrounding areas, affecting the country's coffee, grain, and other industries.

In addition, regarding Ethiopia's current predicament, coffee industry insiders say that cultivation costs are continuously rising, including people's living costs and fertilizers, and green coffee bean prices will continue to increase. At the same time, they worry that prices will rise too high, reducing traders' willingness to purchase and affecting the international influence of Ethiopian coffee.

In the past, wars in Ethiopia mostly occurred in the northern part of the country, while coffee-producing areas are located in the southern districts of the capital, Addis Ababa, and thus had not been directly affected before. This attack, however, has brought it close to coffee-producing areas, and the impact on the country's coffee industry cannot be assessed for the time being. In 2019, ethnic conflict in the region also escalated into regional unrest, causing hundreds of thousands of people to leave their residences.

Moreover, exports are still affected by the Red Sea crisis, and the export situation is slow. On August 14, the peace talks between Ethiopia and Somalia organized by Turkey ended. According to reports, progress was made in the second round of talks, but a final agreement needs to be reached in the third round. Therefore, Ethiopia still cannot use Somalia's ports, and the port tension issue cannot be effectively resolved in the short term.

The above content is compiled by CoffeeHunters, a coffee news website.