How Is Ethiopia's Coffee Production Expanding?

Ethiopia aims to earn more than US$2 billion from coffee exports in the 2024/25 fiscal year by expanding cultivation area and trade scale. The Ministry of Agriculture says the goal is both volume and quality to stay competitive globally. In October alone, ECTA reported exports of about 35,000 tons, roughly 15,000 tons more than a year earlier, with earnings above US$150 million.

Over the past five years Ethiopia has planted billions of coffee trees and begun introducing mechanized operations to build a climate-resilient economy. The sector still faces price swings, exchange rate risk, and uncertainty from a new pricing mechanism. The Ankara Declaration with Somalia is expected to open maritime corridors and ease logistics bottlenecks for exports.

Ethiopia is committed to expanding coffee cultivation area and trade scale, striving to achieve coffee export revenue exceeding US$2 billion in the 2024/25 fiscal year. Over the past five years, the country has planted billions of coffee trees and introduced mechanical assistance, with export volume in October of this fiscal year showing significant year-on-year growth. However, the industry still faces price fluctuations, exchange rate risks, and uncertainties brought by the new pricing mechanism. Meanwhile, Ethiopia and Somalia signed the Ankara Declaration, which is expected to open up new maritime corridors and alleviate logistics bottlenecks for coffee exports. This article will review the latest developments and prospects of Ethiopia's coffee industry.

Recently, media reports stated that Ethiopia is planning to further expand coffee cultivation area and trade scale. The country's Minister of Agriculture said that Ethiopia's goal is not only to become a major coffee producer, but also to leverage increased yield and quality to gain a leading position in global market competition.

To realize this vision, the Ministry of Agriculture is focusing on ensuring that coffee production is sufficient to meet global challenges, emphasizing that this will help the African coffee industry maintain competitiveness and flexibility in the global market. The Minister also pointed out that Ethiopia will enhance its export value through coffee production, both in terms of quality and quantity.

Over the past five years, Ethiopia has planted billions of coffee trees according to established plans and began introducing mechanized operations, aiming to maintain coffee production and build a climate-resilient economy. Results have begun to show this year. According to data released by the Ethiopian Coffee and Tea Authority (ECTA), in October the country exported approximately 35,000 tons of coffee, an increase of about 15,000 tons compared with the same period last year, with foreign exchange earnings exceeding US$150 million, an increase of US$62.08 million year-on-year.

ECTA also stated that the coffee sector's export volume and export value for the month reached 176% and 144% of their targets, respectively. Since the start of the 2024/25 fiscal year in July, Ethiopia's coffee supply to the global market has grown significantly. In the previous fiscal year (July to June of the following year each year), the country's coffee export revenue was US$1.43 billion, and this fiscal year is expected to set a new revenue record.

Based on this, the Minister of Agriculture said that Ethiopia's targeted coffee export revenue for the 2024/25 fiscal year could exceed US$2 billion. The ministry is committed to improving product quality, market access, and welfare levels, and will cooperate with various countries to seek sustainable solutions to the problems facing the African coffee industry.

In addition, recently Ethiopia's Prime Minister and the President of neighboring Somalia, under the mediation of Turkey's President, signed the Ankara Declaration in the Turkish capital Ankara, announcing the promotion of peace and cooperation. The incident originated in January this year, when Ethiopia reached an agreement with the government of the Somaliland region, exchanging a lease of the Port of Berbera in the Gulf of Aden for Ethiopia's recognition of Somaliland as an independent state in the international community.

The Somali government was dissatisfied with Ethiopia's signing of the agreement with Somaliland, believing that it violated Somalia's national sovereignty. Due to Somalia's protests, Ethiopia ultimately could not obtain access to the new port, and relations with Somalia, Egypt, and other countries continued to deteriorate.

Until recently, with Turkey's assistance, Somalia and Ethiopia signed the Ankara Declaration. Both sides reaffirmed respect for each other's sovereignty, unity, independence, and territorial integrity, and Somalia agreed to provide Ethiopia with reliable and secure maritime access, while Ethiopia needs to respect Somalia's territorial integrity. In addition, the two sides will launch technical negotiations before the end of February 2025 and complete and sign a final agreement within four months.

This will greatly enhance Ethiopia's import and export business. Previously, Ethiopia mainly relied on Djibouti Port in neighboring Djibouti, but that port has been affected by the Red Sea crisis, leading to a sharp reduction in docking vessels and affecting Ethiopia's import and export business. Reports indicated that large quantities of Ethiopian coffee were piled up at the port docks and could not be exported. However, this situation will be resolved soon.

However, Ethiopia's coffee industry still faces many challenges at present, the most important being price fluctuations. It is reported that due to the country's new fiscal policy earlier in July, the Ethiopian currency fell sharply. Although this is beneficial to exports, it also led to rising prices in the country, continuously increasing cultivation costs, and coffee prices rose accordingly.

In addition, the country has recently been introducing a new pricing mechanism for green coffee bean exports, which will set coffee prices based on Arabica coffee futures prices on the New York ICE Intercontinental Exchange and exchange rates. But at the same time, international futures prices are highly unstable, with fluctuations of more than 80% so far this year, which also leads to instability in export revenue and affects the country's coffee competitiveness.

For domestic coffee enthusiasts, Front Street Coffee recommends continuously paying attention to production-area developments and price trends for Ethiopian coffee, and promptly seizing the opportunity to buy high-quality Ethiopian beans.

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