ethiopia's coffee export performance report - fiscal year 2011-12 by alemseged assefa general...

F/Y 2011/12 Coffee Export Performance Report

Alemseged Assefa

General Manager, ECEA

Addis Ababa August 2012

`

Ethiopian Coffee Exporters Association

Table of Contents Page

1. Introduction ……………………………………………………………………..……......…. 1

2. F/Y 2011/1012 Coffee Export Business Performance ……………..…..... 3

2.1 Comparison of ICE Price Movements of F/Y 2010/11 and F/Y 2011/12 ………………………………….…..….

4

2.2 Export Volume Movement ……………………………………….……… 5

3. An Overview of F/Y 2011/12 Coffee Export Performance..................... 6

4. F/Y 2011/12 Coffee Export Marketing Behavior ……….…..……….……….. 8

4.1 Coffees Export Markets ………………………………………..…….......

4.2 Coffees Export by Type …………………………………………..……..…..

4.3 Coffees Shipment ……………………………………….…….……..…….....

10

13

17

5. Summary and Conclusion ……………………………………………..…............... 20


Ethiopian Coffee Exporters Association 1. Introduction

Ethiopia, the birth place of coffee, is the world’s seventh largest coffee producer &

Africa’s top producer, with estimated 500,000 metric tons during the coffee or

marketing season for F/Y 2011/2012. Half of the produced coffee is assumed to be

consumed locally and the country with a per capita consumption of 2.30 kilogram

leads the African continent in domestic consumption. And up to 20 percent of the

population, directly or indirectly, for generations depends for a living on coffee

production and trading.

Coffees, therefore, the most significant agricultural produce in the Ethiopian

economy in which millions of farmers grow the crop for a living, hundred of

thousands of middlemen are involved in the collection of the crop from farmers

and supply to the export and domestic market, and a sizable amount of foreign

exchange accounting up to 30 percent of the total yearly export income is derived

from. It is thus a very important agricultural commodity with a significant

contribution to the growth and functioning of the economy and the social stability

of the country as the main source of the income to tens of millions of small-scale

farmers, workers and traders.

However, despite being the birth place of coffee with diversified landscape and

suitable climate for growing large quantities of coffees and being a country that

produces high quality coffee with a distinct flavor, and where one of the highest

valued coffees in the world called “Mocha” is produced in the country and is the

leading exporter of the famous Arabica coffee; the coffee sector has not developed

fast and the export volume has not shown a rapid growth. As a result, the

country’s export represents about 1 percent of the world exports and the coffee

industry accounts for 2.5 percent of the country’s gross domestic product.

F/Y 2011/12 Coffee Export Performance Report 1


The unique natural endowments and the special famous much varieties of coffees

produced in the country that are highly valued by consumes in the importing

countries tells that the country has not tapped properly its natural potential and

has, therefore, not been able to maximize its export income likewise what other

countries with a similar natural endowments and less quality coffee have been able

to benefit much from the global coffee industry. Although coffee is still the

dominant foreign exchange earner to the Ethiopian economy, the coffee sector

when compared to other major coffee producing countries in Latin America and

the South East Asia has not, therefore, experienced significant development and

growth.

In this report, the coffee export performance for F/Y 2011/2012 will be reviewed

and discussed in brief with the view to give a comprehensive and broader

information on how the coffee export business performed during F/Y 2011/2012

and pin point issues that need to be addressed to enhance the coffee industry and

increase significantly the export volume earning more export return or income to

the economy.


2


2. F/Y 2011/1012 Coffee Export Business Performance

Considering the rise in coffee production and export volume trend, the many

exporting firms and individuals involved in the coffee sector, a higher volume

export and export return was planned for F/Y 2011/12 with export volume at

270,000 metric tons and revenue generation at more than USD$ 1.12 billion. The

plan figure when compared with the actual export volume of 196,118 and export

value of USD$ 841.6 million in the previous fiscal year was higher by 37.7 and 30

percent, respectively. The plan was envisaged taking into consideration the coffee

sector fast growth and the five-year Growth and Transformation Plan of the

government (2010/11 – 2014/15).

However, as the coffee export business is mainly characterized with stiff competition,

price volatility, messy market and a host of domestic factors that affect the coffee

supply, auctioning, delivery from warehouse, transport and export shipment; the

year ended with a low export performance.

As a result, total coffee exported during F/Y 2011/12 was 169,392 metric tons and

the export value amounted to USD$ 832.9 million, significantly lower than the plan

figure by 100,608 metric tons (37.3%) and USD$ 279 (25.1%). The outturn when

compared to F/Y 2010/11 coffee export performance was also less by 26,726

metric tons and USD$ 8.7 million.

The domestic and external factors that contributed to the lower export volume and

value will be discussed later in the report in detail.



2.1 Comparison of ICE* Price Movements of F/Y 2010/11 and F/Y 2011/12

During the coffee export business period of F/Y 2010/11, the ICE price starting at

165.2 cents/lb in July 2010 kept, more or less, rising gently reaching to 285.6

cents/lb in April 2011. After April 2011, ICE price tended to decline sharply dropping

to 262.5 cents/lb in June 2011, which was even lower than the price 274.1 cents/lb

registered for March 2011 trading at the New York Coffee Exchange.

In F/Y 2011/12, the ICE price for the first month of the marketing year July 2011

started at US cents 255.9/lb and kept rising during the first quarter up to September

2011. From September onwards the ICE price suffered a persistent fall and

plummeted to 159.9 cents/lb in June 2012. The June ICE price was so low that the

price showed a nose dive of close to 100 cents when compared to the ICE price of

255.9 cents/lb registered at the beginning of the fiscal year, July 2011.

When analyzing the ICE price movements of the two recent fiscal years, it is

observed that the ICE prices for the first six months of F/Y 2011/12 (July – December

2011) were higher than the ICE prices of the corresponding first six months of F/Y

2010/11 (July – December 2010).

The ICE price movements for the second half of F/Y 2010/11, however, moved the

opposite direction as the prices of the second half six months (January – June 2011)

were significantly higher than that of F/Y 2011/12 second half six months (January

– June 2012).

In general, the ICE price movements of F/Y 2010/11 and F/Y 2011/12 were observed

to move in the opposite direction as the ICE prices for F/Y 2010/11 starting with


* Inter-Continental Exchange coffee Price of New York for Arabica. 4


165.2 cents/lb in July 2010 ended at a higher price of 262.5 cents/lb in June 2011.

Contrary to this positive movement, the ICE prices for F/Y 2011/12 beginning at a

relativity modest price level of 255.9cents/lb in July 2011 ended at a much lower

price of 159.9 cents/lb in June 2012, exhibiting a sharp fall by 37.5 percent.

The ICE price trend during F/Y 2011/12 was, therefore, highly volatile and messy

making the global coffee industry to be very unstable, unpredictable and a very risky

business.

2.2 Export Volume Movement

The export volume, too, was volatile exhibiting a fall and a rise each month over the

two past fiscal years, F/Y 2010/11 and F/Y 2011/12.

Monthly shipped coffee during F/Y 2010/11 started with a higher volume of 20,091

metric tons in July 2010 but the volume in the subsequent months showed a decline

and a rise, significantly dropping to 11,224 metric tons in December 2010. In January

2011, the volume picked up to 13,684 metric tons and generally kept rising

culminating to 18,449 metric tons by June 2011.

However, despite the general rise in shipped volume in the second half of the six

months of the year (January - June 2011), the highest volume registered was that

shipped in July and August 2010, totaling 20,091 and 20,567 metric tons,

respectively.

Similarly, the export volume in F/Y 2011/12 began with 12,658 metric tons in July

2011 and generally kept on declining, falling to 7,037 metric tons in January 2012.


5


In February 2012, the volume picked up to 10,968 metric tons and continued to show

a significant growth reaching 29,175metric tons in June 2012. So, the year ended

with a considerably higher export volume of 29,175 metric tons in June 2012 from

12,669 metric tons at the beginning of the fiscal year, July 2011.

As a result, coffees shipped in June 2012 showed a record volume as the highest

volume exported during the past three consecutive fiscal years (F/Y 2008/09 –

2010/11) was that of the June 2010 export, standing at 28,576 metric tons. In all, it

appears that the coffees export volume and value of the fourth quarter of the fiscal

year generally tended to be higher than the earlier quarters. This tells that the fourth

quarter is the pick season for coffee supply and marketing in the country. However,

coffee exports of each month tended to be very unstable and highly volatile in line

with the strong international market fluctuations and a host of domestic factors that

affect the coffee marketing business.

3. An Overview of F/Y 2011/12 Coffee Export Performance

Coffee has been one of Ethiopia’s most important agricultural exports for several decades

and continues to be the most singular agricultural produce that earns more than 25

percent of the total foreign exchange the economy generates.

]

However, although foreign exchange earned over the past five fiscal years 2008/09 –

2011/12 has been on the rise, where the export volume rose from 133,591 metric tons in

F/Y 2008/09 to 196,118 metric tons in F/Y 2010/11, and the export value grew

considerably to USD$ 841.7 million in F/Y 2010/11 from USD$ 375.8 million in F/Y

2008/09, the coffee export volume and value recorded in F/Y 2011/12 were significantly

lower compared to the plan figure. Moreover, the export volume was also considerably

less than last fiscal year by 26,726 metric tons. Foreign exchange obtained, however,

showed a benign drop of USD$ 8.7 million.



The low performance can be attributed to a host of domestic and external factors.

Coffee supply, fair auction price, transport service, warehouse safety and service delivery,

timely shipment of the export in quantity and quality as agreed in the contract, regulatory

measures taken by the government on coffee trading and transactions can be mentioned

among the domestic factors that affect the coffee sector business in the economy.

As the major markets for Ethiopian coffee are the European Union member countries

accounting for about half of the exports and East Asia representing about a quarter and a

significant exports to North America, the economic situations and coffee demand by

consumers in these countries greatly determine the price level in the New York Coffee

Exchange trading. And following the financial and economic crisis of the U.S in 2008 and

the subsequent financial and economic challenges faced by the European countries which

still remain as big headwinds to their economies, the ICE coffee prices, over the past four

years, have remained very unstable and unpredictable. In addition, the world coffee

supply variability and the bumper coffee harvest of major coffee producing countries,

mainly Brazil, Vietnam and Colombia has contributed to the ICE price instability and

volatility.

The external economic factors coupled with the increased coffee production of the leading

coffee exporting countries have therefore caused the ICE price to become vulnerable to

strong market fluctuations destabilizing the global coffee industry. As a result, the coffee

export business has recently become more risky and very unstable in supply, quality and

value.



There is, therefore, a need to closely watch the economic situations of the major coffee

Importing countries, the production and supply level of major coffee producing

countries and consumer behavior in the major coffee consuming developed economies in

undertaking the coffee business.

4. F/Y 2011/12 Coffee Export Marketing Behavior

Ethiopia is the world’s seventh largest producer of coffee and Africa’s top producers. In

the coffee season for F/Y 2011/12, production of coffee is assumed to reach about

500,000 metric tons. But as half of what is produced is consumed locally and the country

leads the African content in domestic consumption, the rest half of the production is

taken to be used for the export market.

However, as discussed in the report the export volume and value during the fiscal year

was disappointingly low in which the export volume declined to 169,392 metric tons,

from 196,118 metric tons in F/Y 2010/11. As a result, total export value earned

amounted to USD$ 832.9 million, which compared to the export income of the previous

fiscal year (USD$ 841.65) is less than by USD$ 8.7 million (1.03%).

The export income when seen against the backdrop of the export volume declined by

13.67 percent shows a smallish fall. This can be attributed partly due to large volume of

coffees shipped in the last five months of the fiscal year (March-June 2012) totaling

105,176 metric tons representing for 62.0 percent of the total exported coffee, which

contract sales may have been made at a relatively better earlier ICE prices.

Also, as the export volume of July and August 2011 was relatively higher compared to the

volume shipped in the subsequent months up to February 2012,


8


the export contract sales of the first two months of F/Y 2011/12 (July and August

2011) may have been made at the higher ICE prices registered in the fourth quarter

of F/Y 2010/11. Moreover, the ICE price of July and August 2011 were significantly

better than the ICE prices recorded for the nine months of the fiscal years standing at

255.9 cents/lb. and 260.4 cents/lb., respectively. The best price of the marketing year

was the price registered in September 2011, at 261.4 cents/lb.

The coffee export and ICE price movements of the twelve months of F/Y 2011/12 is

shown in the graph 1 below to see the coffee export trend of the year.

Graph 1: ICE Price Movements and Export Volume of Twelve Months of F/Y 2011/2012

0.00

50.00

100.00

150.00

200.00

250.00

300.00

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12

ICE Price

ExportVolume

In Tons US cents/lb



4.1 Coffees Export Markets

The Ethiopian coffee is exported to more than 50 countries. The European Union

countries account for 58 percent of the exports, East Asia about 7 percent, Middle

East account for 20 percent, North America for about 7 percent, and others 8

percent in which Sudan accounting for 5.3 percent was the biggest market of the

rest countries.

The country’s coffee export by importing countries is shown in the following table

to see where the export markets for the Ethiopian coffee are found.

Table 1: Ethiopia’s Exports of Coffee by Export Market (July 8/ 2011 – July7/2012)


No. Country

Export % Share Cumulative %

Share

Volume(In Tons) Value(USD) Volume Value Volume Value

1 Germany 53,305 239,859,243 31.5 28.8

2 Saudi Arabia 27,364 139,346,602 16.2 16.7 48 46

3 France 11,299 50,801,511 6.7 6.1 54 52

4 Belgium 10,398 52,347,523 6.1 6.3 60 58

5 United States 9,662 61,516,136 5.7 7.4 66 65

6 Sudan 9,048 32,926,689 5.3 4.0 71 69

7 Italy 8,426 42,962,261 5.0 5.2 76 74

8 Japan 7,172 33,833,677 4.2 4.1 81 78

9 Sweden 5,157 25,118,907 3.0 3.0 84 81

10 United Kingdom 3,888 25,504,210 2.3 3.1 86 85

11 South Korea 3,444 19,089,344 2.0 2.3 88 87

12 Jordan 2,890 14,956,962 1.7 1.8 90 89

13 Australia 2,789 15,697,093 1.6 1.9 91 91

14 Russia 2,333 10,586,212 1.4 1.3 93 92

15 Spain 2,063 13,241,628 1.2 1.6 94 93

16 Israel 1,505 6,957,506 0.9 0.8 95 94

17 Canada 1,397 7,701,519 0.8 0.9 96 95

18 Finland 1,253 7,278,646 0.7 0.9 96 96



11

19 Netherlands 696 4,819,836 0.41 0.58 97 97

20 Switzerland 633 3,400,678 0.37 0.41 97 97

21 Greece 604 2,629,329 0.36 0.32 98 97

22 China 472 2,381,918 0.28 0.29 98 98

29 Syrian 218 714,150 0.13 0.09 99 99

30 Mexico 199 1,333,984 0.12 0.16 99 99

31 Denmark 124 684,424 0.07 0.08 100 100

32 Egypt 95 429,849 0.06 0.05 100 100

33 Slovenia 94 532,755 0.06 0.06 100 100

34 Lebanon 76 315,839 0.04 0.04 100 100

35 Singapore 64 343,383 0.04 0.04 100 100

36 Swaziland 58 200,636 0.03 0.02 100 100

37 Hong Kong 58 246,584 0.03 0.03 100 100

38 Ireland 58 325,068 0.03 0.04 100 100

39 Bulgaria 38 187,938 0.02 0.02 100 100

40 Libyan 38 186,048 0.02 0.02 100 100

41 Indonesia 36 217,462 0.02 0.03 100 100

42 Yemen 33 133,371 0.02 0.02 100 100

43 Djibouti 29 11,875 0.02 0.00 100 100

44 Algeria 19 96,720 0.01 0.01 100 100

45 Cyprus 19 131,218 0.01 0.02 100 100

46 Portugal 19 101,165 0.01 0.01 100 100

47 Malaysia 18 95,239 0.01 0.01 100 100

48 Morocco 18 53,175 0.01 0.01 100 100

49 Ukraine 18 87,633 0.01 0.01 100 100

50 Kenya 4 25,000 0.002 0.003 100 100

51 Ghana 0.1 800 0.0001 0.0001 100 100

Total 169,392 832,911,522 100 100 - -


As indicated in table 1, the European Union countries accounting for 58 percent of the

total export imported 98,449 metric tons of coffees earning USD$ 477.2 million to the

country. Of the European Union countries, Germany was the biggest consumer

importing 53,305 metric tons worth USD$ 239.9 million. France the second biggest

buyer with 11,299 metric tons accounted for 11.5 percent of the exports to European

Union. So, the European Union countries have remained as the permanent market for

the Ethiopian coffee export. Outside the European Union countries, Saudi Arabia has

become the second largest buyer of Ethiopian coffee importing 27,364 metric tons

worth USD$ 139.4 million.

Two big markets in Asia, Japan and Korea are also important customers of Ethiopia’s

coffee. Japan imported 7,172 metric tons worth USD$ 33.8 million and Korea bought

3,444 metric tons valued USD$ 19.1 million representing 4.2 and 2.0 percent of the

total coffee exports, respectively.

Accounting for over 90 percent of total coffee exports, Ethiopia’s market still remain

mainly limited to European Union Countries, Saudi Arabia, United States, Sudan &

Japan. Compared to Vietnam where its coffee beans are exported to over 90 countries

and tentative, Ethiopia’s export market remains dependent on traditional markets

necessitating the need to explore more new markets. There is therefore a need to

have a diverse and sustainable market looking for new markets so as to export bigger

volume with the rise in better quality coffee production and faster development of the

coffee industry.


12


Graph 2: Top 15 Ethiopian Coffee Importing Countries

4.2 Coffees Export by Type

Although the country produced varieties of coffee with distinct flavor and taste,

Lekempti grade 4 & 5; Djimmah grade 5 & under grade; Sidamo grade 2, 4 & under

grade; Yirgacheffe grade 2; Limu grade 2; Harar grade 5 & 4; Godere grade 2;

Ghimibi grade 5 and Teppi grade 2 are coffees that were exported in large

quantities during F/Y 2011/12 accounting for 95 percent of the total coffee exports.

The total coffees export by type is indicated in table 2.


13


Table 2: Ethiopian Coffee Export by Type

(July 08/2011 – July 07/2012)

In ‘000

No Coffee Type Volume in

Ton

Value % Share

USD Birr Volume Value

1 LEKEMPTI GR-5 COFFEE 43,710.2

182,204.1

3,200,389.3

25.80

21.88

2 DJIMMAH GR-5 COFFEE 24,605.0

104,499.0

1,831,689.4

14.53

12.55

3 SIDAMO GR- 2 COFFEE 22,735.3

136,461.2

2,386,821.3

13.42

16.38

4 SIDAMO GR 4- COFFEE 18,713.6

93,892.0

1,630,501.1

11.05

11.27

5 DJIMMAH UG COFFEE 11,441.5

43,955.9

767,120.4

6.75

5.28

6 YERGACHEFFE GR- 2 COFFEE 8,717.2

56,414.8

986,941.0

5.15

6.77

7 LIMU GR- 2 COFFEE 7,971.5

44,184.0

775,801.3

4.71

5.30

8 HARAR GR-5 COFFEE 7,540.2

44,530.4

775,242.3

4.45

5.35

9 DJIMMAH GR-4 COFFEE 4,702.1

20,362.1

357,803.1

2.78

2.44

10 HARAR GR-4 COFFEE 4,463.7

28,301.6

492,526.8

2.64

3.40

11 LEKEMPTI G-4 COFFEE 3,903.7

17,822.2

312,614.6

2.30

2.14

12 GODERE GR-2 COFFEE 932.4

4,109.3

72,773.1

0.55

0.49

13 GHIMIBI GR-5 COFFEE 824.4

4,043.2

70,237.5

0.49

0.49

14 TEPPI GR-2 COFFEE 668.2

3,197.7

56,321.2

0.39

0.38

15 SIDAMO UG COFFEE 646.0

3,362.8

57,903.8

0.38

0.40

16 YIRGECHFFE GR-3 COFFEE 540.7

3,278.0

57,760.0

0.32

0.39

17 YIRGACHEFFE GR-1 COFFEE 524.6

3,601.7

63,194.8

0.31

0.43



18 SIDAMO PB COFFEE 482.6

2,775.4

48,115.4

0.28

0.33

19 SIDAMO GR- 3 COFFEE 434.8

3,085.4

53,676.4

0.26

0.37

20 LEKEMPTI G-2 COFFEE 293.2

1,498.1

25,990.0

0.17

0.18

21 HARAR UG COFFEE 243.1

1,473.1

25,558.6

0.14

0.18

22 BEBEKA G-2 212.5

1,126.5

19,538.9

0.13

0.14

23 GEMADRO GR-4 COFFEE 194.4

970.7

16,841.9

0.11

0.12

24 GEMADRO GR-2 COFFEE 166.8

880.9

15,586.2

0.10

0.11

25 LIMU GR- 3 COFFEE 161.3

760.8

13,528.2

0.10

0.09

26 KAFA FOREST GR-2 COFFEE 154.9

832.9

14,650.0

0.09

0.10

27 LIMU UG COFFEE 145.3

707.0

12,176.0

0.09

0.08

28 YIRGACHEFFE GR-4 COFFEE 112.2

859.5

14,826.4

0.07

0.10

29 DJIMMAH GR-3 COFFEE 98.4

548.9

9,515.9

0.06

0.07

30 YIRGACHEFFE UG COFFEE 91.2

467.2

8,162.5

0.05

0.06

31 SHEGITU GR-4 90.0

398.8

7,008.3

0.05

0.05

32 HARAR(D) GR-5 COFFEE 90.0

455.4

8,104.7

0.05

0.05

33 AMARO GAYO GR-3 COFFEE 89.8

410.2

7,251.8

0.05

0.05

34 BENCH UG COFFEE 72.0

238.1

4,257.2

0.04

0.03

35 LEKEMPTI UG 72.0

342.0

5,906.3

0.04

0.04

36 AMARO GAYO GR-2 COFFEE 59.2

456.5

7,985.1

0.03

0.05

37 KAFA GR-5 COFFEE 55.2

321.8

5,624.1

0.03

0.04

38 BALE GR-5 COOFFEE 52.0

309.4

5,457.7

0.03

0.04



39 YIRGACHEFFE PB COFFEE

43.4

295.5

5,080.1

0.03

0.04

40 DJIMMAH PEABERRY

36.0

163.5

2,814.3

0.02

0.02

41 LIMU GR- 4 COFFEE

36.0

200.4

3,458.7

0.02

0.02

42 KEFA GR-3 COFFEE

23.1

144.0

2,534.3

0.01

0.02

43 NEKEMPTI GR-1 COFFEE

18.0

132.9

2,322.2

0.01

0.02

44 SIDAMO GR-1 COFFEE

18.0

158.7

2,825.9

0.01

0.02

45 ABYSINIAN MOCCA GR-4COFFEE

16.8

74.1

1,269.0

0.01

0.01

46 LEKEMPTI GR- 3 COFFEE

15.2

102.3

1,810.3

0.01

0.01

47 HARRAR GR-1 COFFEE

12.0

100.0

1,783.4

0.01

0.01

48 BENCH MAJI GR-3 COFFEE

7.9

26.5

466.2 0.005 0.003

49 ARSI GR-4 COFFEE

6.0

36.4

621.6 0.004 0.004

50 HARAR GR-3 COFFEE

2.8

20.0

343.9 0.002 0.002

51 Mixed Coffees

2,710.1

16,177.2

283,301.7

1.60

1.94

52 Others

435.7

2,141.5

37,378.1

0.26

0.26

Grand Total 169,392 832,912 14,571,413

100.00

100.00



4.3 Coffees Shipment Behavior

As discussed in the preceding section, total coffee export for F/Y 2011/12 ending at

169,392 metric tons was significantly lower by 160,608 (37.3%) metric tons when

compared to the plan figure, forecasted at 270,000 metric tons.

To see if there is any kind of behavioral relationship in the export volumes of the

twelve months of the year, a comparison of the last two fiscal years export volume is

tabulated in table 2 below.

Table 3: Coffee Shipment Trend of F/Y 2010/11 & F/Y 2011/12

(In metric tons)

F/Y 2010/11 F/Y 2011/12

No. Month Export Volume

Share in In %

Cumulative In %

Export Volume

Share in %

Cumulative In %

1 July 20,091 10.2 - 12,698 7.5 -

2 August 20,567 10.5 20.7 12,985 7.7 15.2

3 September 14,863 7.6 28.3 10,573 6.2 21.4

4 October 15,632 8.0 36.3 8,472 5.0 26.4

5 November 12,725 6.5 42.8 7,307 4.3 30.7

6 December 11,224 5.7 48.5 5,144 3.0 33.7

7 January 13,684 7.0 55.5 7,037 4.1 37.8

8 February 13,790 7.0 62.5 10,968 6.5 44.3

9 March 18,058 9.2 71.7 18,531 10.9 55.2

10 April 17,561 9.0 80.7 19,977 11.8 67.0

11 May 19,474 9.9 90.6 26,585 15.7 82.7

12 June 18,449 9.4 100.0 29,175 17.2 100.0

Total 196,118 100.0 - 169,392 100.0 -



Table 3 indicates that coffee shipped during the first two months (July & August) of both

fiscal years were of similar quantity level representing for 20.7 and 15.2% of the total

exports, respectively. As coffee exports towards the fourth quarter of each fiscal year

normally tend to be significant, about 38 percent of the total coffee exports during F/Y

2010/11 were shipped from March – June 2011. Similarly, in F/Y 2011/12 coffee

exported during the four months March – June 2012 was considerable in volume

accounting for nearly 56 percent of the total exports.

As a result, coffee exported during the eight months of F/Y 2010/11 (June’ 10 –

February’ 11) represented about 62.5 present of the total export of that year, while that

of F/Y 2011/12 accounted only for 44.3 percent indicating a lesser quantity of coffee

shipped during the eight months of the fiscal year. The quantity exported in each month

therefore exhibited high variability during F/Y 2011/12 ranging from 5,144 to 29,175

tons.

The export volume of F/Y 2010/11, however, was less variable as the lowest quantity was

11,224 metric tons and the highest was 20,567 metric tons. In other words, there was a

wide variability of 24,031 metric tons during F/Y 2011/12 and 9,343 metric tons in F/Y

2010/11 between the maximum and minimum level of coffee shipped over the twelve

months of both fiscal years.



In total, the coffee shipment trend of the last two fiscal years (F/Y 2010/11 and F/Y

2011/12) shows that despite the ups and downs of the export volume, there are some

similarities that can be observed from the shipment months. However, noting the

similar behavior observed in the shipment trend, there is a need to take a lesson from

the trend so that the variability in the coffee shipment can be reduced and more

coffee exports are not delayed until the fourth quarter of the fiscal year causing

unnecessary strain on coffee suppliers, the marketing operator, exporters,

transporters, port service providers, freighters, export permit service providers, etc.



5. Summary and Conclusion

The coffee export performance for F/Y 2011/12 ending at 169,392 metric tons

shipment worth USD$ 832.9 million was considerably low compared to the planned

export volume at 270,000 metric tons worth USD$ 1.12 billion. Moreover, the

shipped quantity was less by 26,726 metric tons while the export earning showed a

modest decline by USD$ 8.7 million when compared to F/Y 2010/11 coffee export

turnover. The slight fall in export earning can be attributed to the relatively higher

volume of sales at a better price during the first quarter of the fiscal year (July –

September 2011) and large export volume during the fourth quarter of the fiscal year

(April – June 2012).

The ICE price for the fiscal year beginning at US cents 255.9/lb in July 2011 generally

tended to fall slumping to US Cents 159.9/lb in June 2012. The market with the

instability in the macro-economic conditions of the developed countries who are

responsible for around 80 percent of world coffee consumption was very unstable

and unfavorable to the global coffee industry.

The instability in the global economy and a host of domestic factors that affect the

coffee supply, trading, warehousing, delivery, transport, shipment, etc..., have

contributed to the low performance of the coffee export during F/Y 2011/12. The

fiscal year, therefore, ended with a decline in export volume and value resulting in a

stock of coffee beans in the country.

During the fiscal year, the Ethiopian coffee was exported to 50 countries in which 16

countries, namely, Germany, France, Belgium, Italy, Sweden, United Kingdom,

Spain, Saudi-Arabia, United States, Sudan, Japan South Korea, Jordan, Australia,

Russian and Israel accounted for 95 percent of the total exports. The coffee markets



do not seem to have shown any change and the country dreadfully is, therefore,

dependent on the European Union countries, Saudi Arabia, United States, Sudan and

Japan for its coffee markets where the economic conditions in these countries and the

consumption behavior of their people will generally determine the coffee price in the

international market. There is thus a need to look for other new markets in Asia,

North Africa and other Middle-East countries and also maintain previous markets as

exports to Latvia, Poland, Estonia, Libya, Nepal, etc was not made during F/Y

2011/12. Although small in quantities these and other countries bought 1,136 metric

tons of coffees in F/Y 2010/11. Also, efforts should be made to maintain the export

volume levels to traditional markets in the European Union, North America and East

Asia.

The export volume of the twelve months showed a swing in the fiscal year ranging

between 5,144 & 29,175 metric tons. This is a big swing that can affect the export

volume trend and the export earning. It is therefore necessary that exporters

following closely the developments in the international coffee production,

consumption, economic conditions in the developed economies, the coffee producing

countries trading and export system, importing countries coffee supply and delivery

requirements, etc. obtain contract sales in time and undertake their export business

meeting their commitment and delivery obligation.

According to the U.S.A Department of Agriculture data, coffee production in F/Y

2012/13 is forested to grow due to the increased production of Brazil, Honduras and

Peru in Latin America; Vietnam and Indonesian in Asia; Uganda and Ethiopia in Africa

and others. World coffee production is therefore anticipated to surge to 148.0 million

bags (each bag containing 60 kilos) and world consumption is expected to


21


reach 142.0 million bags. Given the production and consumption forecast and the

importing countries economic conditions, it is necessary to examine where Ethiopia’s

coffee market will position in the global coffee market.

In summary, as the global coffee market is increasingly becoming very competitive

and getting complex because of the uncertainty and instability in the world economy

and the faster growth of the coffee industry in the major coffee producing countries,

it is important that coffee suppliers, exporters, the Ethiopian Coffee Exporters

Association, the Ethiopian Commodity Exchange, the Ethiopian Commodity Exchange

Authority, the Ministry of Trade, etc. review carefully the fiscal year coffee export

performance, develop a common understanding on the problems that are affecting

the growth of the coffee industry and take timely appropriate measures for the sector

to exhibit a vigorous growth and development.


ethiopia's coffee export performance report - fiscal year 2011-12 by alemseged assefa general...

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