Ethiopia Coffee Report: Challenges and Opportunities Amidst Specialty Demand

Ethiopian coffee has long been celebrated as one of the finest in the world, coveted by coffee enthusiasts for its unique characteristics and high quality. However, the latest USDA Foreign Agriculture Service (FAS) report reveals that the Ethiopian coffee sector faces significant hurdles, including climate change, trade barriers, and shifting agricultural practices. In this blog post, we delve into the key findings of the report and explore the potential implications for Ethiopia’s coffee production and exports.

Climate Change and Its Impact:

The report highlights the susceptibility of the Ethiopian coffee sector to climate change, particularly concerning the dominant arabica variety grown by small-scale farmers. Climate change and deforestation have already exerted a negative impact on coffee farming communities, resulting in stress on coffee plants and late harvests due to insufficient rainfall. To build resilience for the Ethiopian coffee economy, relocation of coffee farms and implementing climate-smart agriculture practices are deemed essential.

Shift Towards Resilient Crops:

In response to the challenges posed by climate change, some coffee farmers in the eastern and southwestern parts of Ethiopia have opted to abandon coffee cultivation in favor of more resilient crops with higher short-term economic value. Khat, a drought-tolerant plant used as a stimulant drug, has gained popularity due to its ability to withstand adverse conditions. While this shift may offer short-term economic benefits, it raises concerns about the long-term environmental and health consequences.

Production and Export Projections:

Despite the obstacles faced by the Ethiopian coffee sector, the FAS report forecasts a marginal increase in coffee production and exports for the 2023/24 period. Total coffee production is estimated to reach 8.35 million 60-kilo bags, slightly higher than the revised estimate for the previous year. Similarly, coffee exports are expected to rise to 4.83 million bags, indicating a modest improvement from the preceding year.

Key Importers of Ethiopian Coffee:

Germany is anticipated to remain the top importer of green arabica coffee from Ethiopia, having imported 20% of the exported share by volume in 2021/22. Following Germany, Saudi Arabia (13.7%), Japan (10%), the United States (9.3%), and Belgium (8%) are other significant importers. Coffee stands as Ethiopia’s primary source of export revenue, contributing to approximately 30-35% of the country’s total export earnings, according to the report.

The Rising Demand for Ethiopian Specialty Coffee:

Amidst the challenges faced, Ethiopian specialty coffee continues to garner increasing demand and popularity on the international market. The country’s higher quality status is attributed to the implementation of best agricultural practices, meticulous harvesting and processing methods, and stringent quality control measures. In this ideal model, the additional income generated from specialty coffee cascades throughout the supply chain, benefiting coffee farmers as well.

The Ethiopian coffee sector faces formidable challenges, with climate change and shifting agricultural practices impacting its long-term sustainability. Nevertheless, the rising demand for Ethiopian specialty coffee presents an opportunity for the sector to prosper and support the livelihoods of coffee farmers.