Ethiopia's Coffee Export Performance Report - Fiscal Year 2011-12 by Alemseged Assefa General Manager, ECEA Addis Ababa August 2012

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


1. Introduction

Ethiopia, the birth place of coffee, is the worlds seventh largest coffee producer &
Africas 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
countrys export represents about 1 percent of the world exports and the coffee
industry accounts for 2.5 percent of the countrys gross domestic product.

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.

3


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 Ethiopias 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.

6


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.


7


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 worlds seventh largest producer of coffee and Africas 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
Export
Volume
In Tons US cents/lb

9


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 countrys 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: Ethiopias Exports of Coffee by Export Market
(July 8/ 2011 July7/2012)

10

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 Ethiopias
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, Ethiopias 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, Ethiopias 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

14


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

15


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

16


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 -

17


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.

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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.


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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

20


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 Ethiopias
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.

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Ethiopia's Coffee Export Performance Report - Fiscal Year 2011-12 by Alemseged Assefa General Manager, ECEA Addis Ababa August 2012

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