Ethiopian seven-month coffee export earnings showed an increase but failed to hit the target for the period, according to a sector regulator.
The Ethiopian Coffee and Tea Authority (ECTA) says 126, 650 tons of beans worth 702 million US Dollars to the international market.
The revenue, the regulatory body said, showed an increase as compared to a similar month last year despite exporting relatively less volume.
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Speaking to a state-run EPA Tuesday, the Authority’s Market Intelligence Director Cheru Koru partly attributed the case to the emphasis given to exporting high-quality coffee.
Ethiopia, for the first time ever, shipped 300,000 metric tons of coffee valued at $1.4 billion to the global market last year.
At least 70% of the exported beans were third and above grade qualities, Cheru said, adding that this year’s ongoing efforts are focused to raise the share to 80%.
Still, both the volume and value of the seven-month export fell short of the targets authorities initially set at 181, 323 tons and $867.7 million.
In the global market, the price of arabica coffee enjoyed well above $2 per pound for most of 2022. However, improved production in some of the top coffee-producing nations coupled with a drop in demand from buying nations facing economic problems drove down the price in recent months.
The fluctuating price that dropped to $1.5 per lb a few months ago, improved this week, reaching $1.77 per lb last Wednesday.
Despite rebound, experts say the price will not go back to the high of 2022, putting Ethiopia’s two billion USD export revenue target for the 2022/23FY at risk.
Late last month, ECTA signaled concerns over rising rate of contract terminations induced by the fall in global market prices.
“Exporters have a large amount of export standard coffee in their stocks due to termination of contracts,” Adugna Debela, Director General of the Authority, said.
Exporters are also holding onto the beans they bought at expensive rates from local suppliers, instead of selling at lower prices.
The standoff prompted authorities to open discussions with both exporters and buyers to review their contracts with a view of shipping all beans in stock within three months, and boost export volume, according to Capital newspaper report last week.
”This is one measure to achieve our target,” Adugna said. The Authority’s goal for the current Ethiopian fiscal year is to export 360,000 tons of coffee and secure $2 billion in earnings.
‘New hearvest could boost export volume‘
Apart from resolving the contract issue, ECTA’s Market Intelligence director Cheru also believes a new round of coffee supply will bring the targets back on track.
Local suppliers and exporters often trash out contracts this month over a coffee supply from the Oct-Jan harvest.
This will render an opportunity to discuss new terms that reflect the price in the global market, Cheru said, and contribute to boost export in the remainder of the fiscal year.