Jacques Chambrillon, Director Belco East Africa
The 2021/22 harvest is coming gradually to an end, to the rhythm of the different appellations and altitudes. Exports of Kaffa have already begun, and the Sidamo, Yirgacheffe and Guji harvests, further south, will finish nearer the end of the mont
The Ethiopian industry is facing lots of challenges this year. The political situation, with the civil war, is posing many difficulties in much of the country. The economic and social climate has deteriorated dramatically because of current events and hyperinflation, with monthly rates ranging recently between 30 and 50%. Given these difficult circumstances, our Belco team in Addis Ababa has pulled out all the stops and is adapting as best it can to ensure quality sourcing, and to follow up exports in an equally complicated logistical context. Fantanesh and Naomi are overseeing quality, Shambe and Meded are in the field, and Bethel is focusing on logistics and marketing. They are giving it their all to continue supplying our European specialty roasters with quality coffees.
Two things have fuelled the recent inflation: the global rise in coffee prices, and the local context, impacted by the effects of the civil war, the inflation in local goods (particularly foodstuffs) and the Ethiopian industry reforms.
→ Our main challenge has been to manage the inflation in production costs and cherry prices.
One important aspect of the export regulations has placed strong inflationary pressure on the price of export coffees. Ethiopia is a country that suffers structurally from a shortage of foreign currency, particularly US dollars. Traditionally, exporters have been willing to lose money on coffee exports because they used their foreign exchange gains to import goods into the country. Those who did not import, sold their dollars. Last year, an exporter could expect to use 70% of the foreign exchange generated by exports. In September, this percentage fell to 50%, then 20%.
Put simply, this means that coffee exports are no longer sufficiently profitable and foreign exchange earnings have suffered a substantial drop. This phenomenon, in addition to world prices, is a strong catalyst for coffee price inflation. But it is not the only one, we are also witnessing various regional situations where coffee export prices have come under pressure locally due to the cost of cherries.
In the south, in the Yirgacheffe, Sidama and Guji appellations, we have observed various phenomena that have pushed the price per kilo of cherries to unprecedented levels. The first is a lack of rainfall, which impacts both fruit quality and yields. In addition, some farms in the Sidama region have been hit with coffee berry disease. Given the changing regulatory environment and global inflation, prices for the kind of quality that Belco seeks are high.
→ Despite this, our partners have done their utmost to find quality fruit and develop new origins (kebeles of Chancho and Alo) and new processes (honey, anaerobic).
In the west, in the Jimma, Kaffa and Nekemte / Kelem Wallagga appellations, the increase was less dramatic due to larger harvests. Belco’s partner producers, including Mustafa Mohamed Ali, Khalid Shifa, Nazimu Abachesa, Genet Seyfu and Yidinekachew Dabessa in Jimma, and Negussie Tadesse, Zinabu Abamecha, Habtamu Abebe and Ephrem Mulugeta in Kaffa, have played along and kept prices down by assuming part of the inflation in production costs.
In Wallagga, which has been a warscarred region since 2018, Habtamu Aga and Sisay Abebe have had to cope with a difficult harvest while trying to maintain quality. In these areas, Belco is continuing to nurture its relationship with direct producers to further increase quality and traceability while spotlighting their sustainable