How conflict and currency reform lift coffee cultivation costs
Escalating fighting between Fano forces and government troops in Ethiopia's Amhara State, along with an economic blockade and soaring local prices, is pushing up coffee cultivation costs. Ethiopia's foreign exchange reform has sharply weakened the currency, and the Red Sea shipping crisis has raised import and export expenses, prompting a higher minimum export price for coffee.
Ethiopia is one of the world's major coffee producing regions, so turmoil there affects the wider international market through export volumes and pricing. Reports cite at least 72 civilian deaths and accuse government forces of seizing fields, crops, and livestock. With fighting in areas such as Dembesha and Feres Bet, supply uncertainty is likely to continue.
The conflict between Fano armed forces and government troops in the Gojjam region of Ethiopia's Amhara State continues to escalate, with Fano vowing to retaliate against atrocities committed by government forces against civilians. This civil war has not only caused heavy casualties but also led to an economic blockade and soaring prices in the region. Meanwhile, Ethiopia's foreign exchange reform has triggered a sharp depreciation of the exchange rate, and the Red Sea shipping crisis has pushed up import and export costs. Under these multiple pressures, the country's coffee cultivation costs continue to rise, and the minimum export price for coffee has been raised accordingly. As a major global coffee-producing region, the turmoil in Ethiopia is profoundly affecting the international coffee market.
Recently, Ethiopian media reported that the leader of Fano armed forces in the Gojjam region of Amhara State publicly stated that he vowed to retaliate against the killing of civilians by government troops.
The head of the Fano forces' political department posted a statement on social media, saying his forces were forced to take retaliatory action. The statement listed multiple actions by government troops in the region, including massacring unarmed civilians, mass detaining citizens, converting churches and monasteries into military camps, and destroying and seizing farmers' fields, crops, and livestock.
These claims corroborate reports from local sources and human rights organizations over recent months. Over the past year or more, Fano forces and government troops have been continuously clashing. Although government troops deployed heavy equipment such as drones and combat helicopters, they were still unable to suppress Fano's offensive, so government troops began to adopt a series of harsh measures in the region, reportedly resulting in at least 72 civilian deaths.
In addition, the Fano forces leader also accused the government of imposing an economic blockade on the people of Amhara State and controlling and restricting certain basic commodities, especially in areas with frequent fighting such as Dembesha and Feres Bet. The leader warned that if government troops do not stop such actions, Fano forces will take retaliatory measures to compensate for losses and continue fighting on the front lines.
However, earlier, the Commander-in-Chief of the Ethiopian National Defense Force and other senior military commanders held a meeting with Amhara State government officials, after which they announced that government troops plan to "completely defeat" Fano forces by the end of December to end the regional conflict, otherwise the defense force will withdraw from the area.
The country's security situation remains grim, and the ongoing fighting in Amhara State has severely disrupted residents' normal lives and economic development. If Fano forces launch retaliatory attacks against government troops next, the situation could deteriorate further. Although the current clashes are mainly concentrated in the Gojjam region, this area is not far from Ethiopia's capital Addis Ababa, and there is a risk that the fighting could spread to the capital.
For a long time, Amhara State has been a major grain-producing region in Ethiopia, but the state has recently been under blockade, keeping domestic prices high. Coupled with Ethiopia's new foreign exchange reform in July this year, the exchange rate has fallen sharply, and local prices have soared, with some commodities rising by 50% to 100%. The latest statistics show that Ethiopia's consumer prices rose 16.1% year-on-year in October.
Meanwhile, the Red Sea crisis continues to impact the country. According to reports, Yemen's Houthi armed forces recently attacked a US Navy destroyer and three other vessels in the Red Sea. The Houthis claimed the operation used 16 ballistic missiles, one cruise missile, and one drone, all of which accurately hit their targets.
One of the attacked vessels was a container ship owned by shipping giant Maersk, flying the US flag and mainly serving the route between the Port of Djibouti and Salalah Port in Oman. According to the latest statement from US Central Command, US vessels successfully intercepted multiple types of weapons launched by the Houthis, ensuring the safety of the ships. However, this incident also shows that Red Sea shipping still faces high risks, and vessels have to continue diverting their routes, keeping shipping costs persistently high.
For Ethiopia's coffee industry, rising prices, a falling exchange rate, and soaring import and export shipping costs have jointly pushed up cultivation costs, and Ethiopian coffee prices have risen accordingly. The latest minimum coffee export price published by the Ethiopian Coffee and Tea Authority shows that prices have increased by 2% across the board.
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The above content is compiled by CoffeeHunters, a coffee news website.
