As we head into the Ethiopian New Year with new energy and drive, let's take a look at the 2022/23 year of coffee, filled with both major accomplishments in terms of outstanding harvest quality and complications, With the country being in a turmoil of instability and multiple other factors that were later on solved. This article spotlights, from the best coffees we sourced to issues encountered both locally and internationally in multiple aspects of the industry.
The volume of exported harvest, compared to the prior harvest year, has shown a decrease. The main cause was not production wise but the case of price soaring. While the local coffee price had a major increase, the global market was declining which limited the coffee export to an extent. The imbalance between these two factors caused the volume to decrease. The economic instability and inflation of the country also lead farmers and middlemen to hold onto their coffee and store it, hoping for its value to increase. Meanwhile, excessive competition among suppliers/brokers and exporters leads to higher prices.
The major issue faced was the shift in climate conditions in March that caused a rainfall that was more than 300 percent above average. It caused flooding, damaged infrastructure, agriculture and driving displacement. The damage of the infrastructure, especially the damage on the driving routes had a huge effect on the shipment of coffee. The roads to the coffee origins posed a huge safety hazard, which made the shipment of coffee very difficult. Even in this challenging situation, our trucks worked hard to arrive on time but were still subject to delays.
Coffee production regions also faced the heavy rainfall, leading the beans to absorb excess moisture. This inadvertently led to warehouse issues where the harvested coffee couldn’t be exported and started to over fill. As a short term solution, remote heaters were used in addition to using sun exposure in our Addis Ababa facilities to dry the beans and gain the desired level. For the long term, we are building a new warehouse at the moment where the temperature can be controlled as desired and upgrading the current one’s . These preparations are expected to be completed next year.
The other factor was the coffee certification process. Starting from April 2023 the Ethiopian coffee and tea authority made a new reform on coffee testing and approval to be done at facilities in their own respective regions. Lack of operational efficiency within these new regional facilities caused a large waiting queue of up to 5 days, which only took a day by the previous system.
Security challenges in Ethiopia, especially in transportation, also posed a significant risk. To protect our coffee from theft and ensure its safe delivery, we reduced outsourcing and relied more on our own trucks. However, this affected our coffee output. Seeing that, we started outsourcing trucks again with additional control measures to minimize the inconvenience.
In other news, the Ministry of Trade imposed a new 15% tax on coffee that is stored undelivered for over 12 months, as holding on to coffee without transporting it will be punishable. The government passed this initiative to increase exports, attract foreign exchange, and strengthen the local currency.
We had some of the best coffees from the past harvest, such as the well renowned Karamo & Hamasho with their outstanding cup, but also lots from Bochesa and Rumudamo from the Arbegona area were coffees that wrecked our standards in a very intriguing way. The next is our Bombe Lot with its sweet, tropical fruit, and creamy body then last but not least comes Shantawene.
This erratic climate changes has had a noticeable impact on both quality and quantity on the coming harvest. We’re expecting the volume to be about the same as last year's harvest due to the heavy rainfall which hindered the flowering of our coffee plant.
This year we had only 1 flowering term in comparison to up to 3 flowering terms in the previous harvest seasons. As a result, this year's harvest is expected to exhibit a higher level quality than that of last year's. The coffee flowered in one term and all ripened within the same time.
Our processing facilities are preparing the bedding stations for the coming station as cherries are ripping as we speak. In addition to that Our farms are removing weeds and other invasive plants to help our coffee have an even and healthy growth.
In recent news, Aiming to incentivize exporters and boost Ethiopia’s export competitiveness in international markets, The National Bank of Ethiopia (NBE) has passed a decision on August 2023, that Ethiopian exporters can now retain a higher percentage of their foreign currency earnings.
Previously, exporters were required to surrender 70 percent of their earnings to the central bank, keeping only 20 percent and surrendering the remaining 10 percent to commercial banks. However, the NBE has decided to double the retention limit, allowing exporters to keep 40 percent of their foreign exchange earnings. This decision is expected to have new exporters join the industry and increase the already high demand of coffee to rocket and its prices to soar.
Brazil is the 1 coffee provider in the world and as such is taken as the benchmark for the coffee market, if the amount of Robusta coffee produce is high, then the coffee market will get saturated and that will lead to the global prices of Arabica coffee going down, and if the Robusta produce decreases the Arabica price rockets because of the scarcity caused.
Also, the state of European countries being at war and the global inflation is having specialty coffee being taken as a luxury and more countries are seeking the commercial coffee for its cheaper price even though it is lower in quality than the specialty coffee.
All in all we had a good year, we harvested great coffee, met wonderful people, built lasting relationships and learned from the problems faced in order to prevent them from happening again. We thank all our wonderful coffee community for a successful year and look forward to the coming years.