Why Do Coffee Producing Regions in Ethiopia Face New Pressure?

Fighting between Ethiopian government forces and anti-government Fano forces in Amhara State has lasted for days, spreading from Metema and Armachiho toward Ankober, less than 100 kilometers from Addis Ababa. Fano forces are estimated at nearly 500,000 troops and control most rural areas of the state, an important grain-producing region.

Ethiopia's coffee industry is squeezed from both sides: the birr's sharp depreciation lifts export competitiveness, while the Red Sea crisis cuts throughput at the Port of Djibouti and raises domestic operating pressure. After Somaliland's election results were announced, new variables in the regional political landscape may shift Ethiopia's port dilemma.

The military confrontation between the Ethiopian government forces and the anti-government Fano forces in Amhara State has lasted for many days, with the flames of war spreading from the northern Metema and Armachiho areas to the vicinity of Ankober, less than 100 kilometers from the capital Addis Ababa. The Fano forces are estimated to have nearly 500,000 troops and control most of the rural areas of the state, and Amhara State is precisely an important grain-producing region of Ethiopia. At the same time, the sharp depreciation of the birr and the Red Sea crisis causing a decline in throughput at the Port of Djibouti have left Ethiopia's coffee industry struggling forward between enhanced export competitiveness and increased domestic operating pressure. After the results of the Somaliland election were announced, new variables have emerged in the regional political landscape, which may bring a turning point for Ethiopia's port dilemma.

According to Ethiopian media reports, in recent days government forces and the anti-government Fano forces have engaged in fierce exchanges of fire in Metema and Armachiho in Amhara State. Local sources revealed that the conflict between the two sides has continued for six days, and no official notification of casualties has yet been issued.

Other reports say that fighting has also broken out in Ankober and surrounding areas less than 100 kilometers from Ethiopia's capital Addis Ababa, where Fano forces are trying to seize control of the area. A public relations officer of the Fano forces confirmed in an interview that the fighting has lasted for some time, but did not disclose specific casualty figures. According to local residents, the exchanges of fire are mainly concentrated in rural areas.

At the same time, the fighting in the Gojjam area has never subsided, and both sides are still engaged in fierce confrontation. Some reports indicate that Ethiopian government forces are gradually falling into a passive position in the area, with more and more soldiers choosing to desert. Even the deployment of drones and armed helicopters has failed to turn the situation around. There are also reports that Fano forces once shot down a combat helicopter, and Amhara State remains under blockade.

Looking back to August 2023, the Ethiopian government announced a state of emergency in Amhara State and claimed that the Fano forces issue would be resolved within weeks. However, more than a year later, the intensity of the conflict has not decreased but increased, and the Fano forces have continued to grow and gained broad public support locally.

Although the government has deployed elite troops and heavy equipment, it has still been unable to suppress the momentum of the Fano movement. It is currently estimated that the Fano forces have nearly 500,000 troops, control most rural areas of Amhara State, and have begun to push their scope of activity to within 100 kilometers of the capital Addis Ababa. It can be said that the economic lifeline of the state is already in the hands of the Fano forces.

Amhara State is one of Ethiopia's main grain-producing regions, where grains, pulses, and oilseed crops are widely grown, playing a decisive role in the country's food supply. But now that multiple rural areas of the state are controlled by Fano forces, the transportation of grain and other goods has been severely disrupted, and prices in the capital and southern regions have risen accordingly.

To make matters worse, after the Ethiopian government introduced a new foreign exchange policy in July this year, the Ethiopian currency, the birr, depreciated sharply, and the current exchange rate has fallen to 121 birr per US dollar. The prices of imported goods have soared accordingly, further pushing up local price levels.

Focusing on Ethiopia's proud coffee industry, international coffee prices are currently at a high level, and the depreciation of the birr has instead given Ethiopian coffee a stronger price competitive advantage in the international market, which is not a bad thing for exports. However, coffee producers still have to face practical difficulties such as continuously rising domestic prices and blocked export channels.

As a landlocked country, Ethiopia's foreign trade is highly dependent on the Port of Djibouti. However, hit by the Red Sea crisis, the throughput of the Port of Djibouti has already fallen by 10%, and the export of agricultural products such as coffee has been significantly affected. Although Ethiopia previously signed an agreement with Somaliland to obtain a new port, it has never been implemented due to condemnation and obstruction from Somalia. However, the situation seems to have taken a turn recently.

The results of the Somaliland regional election were announced a few days ago, and the Ethiopian government and some US officials both congratulated the election on social media. This means Somaliland is expected to gain recognition from the United States and the international community and thereby become an independent country. This change will have a profound impact on Ethiopia and the entire Horn of Africa.

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