Maximizing Profit from Green Gold

(Fenet Hailu: ENA)

For centuries it has been told that coffee was first discovered in Ethiopia by the marvel of the shepherd Khaldi and his boppy goats. The nosy Ethiopian shepherd, Khaldi, spotted his goats grazing red berries plant he had never noticed before, after which the goats became playful. Then, Khaldi tasted the berries to offer the world with the astound beverage bean, Coffee.

Ever since its discovery, coffee has played a major role in securing the lion’s share of the Ethiopian economy and has promoted social cohesion and interaction among families, the neighborhood and the entire nation. Coffee ceremony has remained a traditional brand for unity, solidarity and peacemaking among Ethiopian people.

Besides its consumption, coffee production is significant to the Ethiopian economy as the source of income for about 30 percent of the general population; it is also among the top export commodity of the country. Despite the recurring fluctuation of prices at the global market, coffee still accounts for a major income at household level and for foreign exchange earnings.

Ethiopia produces first-rate organic coffees of dazzling Arabica varieties yet the country has remained largely detriment when it comes to the economic benefit. The hefty export volume failed to generate a proportionate increase in foreign exchange earnings due to a substantial turn down in the global coffee prices.

According to the Ethiopian Coffee and Tea Authority, the country earned about 838.2 million USD from coffee export in 2017/18, which was 882 million in 2015/2016 budget year. This means coffee export has declined by 44 million USD as compared to last year.

Commenting on the main factors that contributed to the declining of the exports, actors of the sector explained that the moribund of price observed in the global market especially since 2011, export of raw coffee without adding value, intervention of brokers at the multiple levels of the export process are some of the bottlenecks that have inhibited growth in the national export earnings from coffee.

To reverse the situation, stakeholders urged the country to reintroduce various mechanisms, like exporting value added coffee and streamlining the value chain through promoting adapting specialty coffee to create for producers and buyers.

Specialty Coffee:

S.A Bagersh PLC is a company established in 1943 and is engaged in exporting raw and roasted coffee to the international market. The General Manager, Abdella Bagersh, told ENA that it’s time to pick for alternative preferences that are crucial to break the market price.

 Abdella firmly advocates the need to work on specialty coffee and exporting the value added coffee bean as best options that his company learned from its experience. “We experienced that exporting specialty and value added coffee is the most preferred come out for maximizing export earnings from the sector,” he said.

His company exported about 100,000 kg value added coffee in 2018, and the demand for value added coffee at the international market is ever-increasing. However, Abdella urged that the government should work on modernizing the packing and branding process on the value added coffee, as branding plays a crucial role in raising the demand for quality coffee.

Azalech Coffee Company is engaged in roasting and packing coffee for local market since the past six years. As the market is promising, the company is getting ready to export value added coffee in abundance.  Owner of the company, Azalech Tesfaye, revealed that exporting value added coffee involves tedious processes, starting from selecting quality coffee bean from farmers all the way to market access with finest profit. But once you enter into the global market, it is gainful business.

“The work is very lucrative; especially if we work hard concentrating on the value addition part, we can overcome our limitations. So, I recommend that the need to boost our engagement on the production of quality value added coffee,” she said.

Market Development and Promotion Director at Ethiopian Coffee and Tea Authority, Dassa Daniso, believed that exporting value added coffee looks as if the best way trading, however, it shares only one percent from the general coffee export.

This is because the preceding coffee proclamation was discouraging for value addition. He insisted that the proclamation has discouraged Ethiopian coffee investors that exported value added coffee and forced them to buy raw coffee that has the least standard and quality on the market.

He enlightened that currently the government is working to change the tradition, “we launched coffee reform to encourage our investors and our reform started by amending our proclamation that banned our companies that engaged on value addition coffee to buy export standard coffee. So, they are now able to buy export standard raw coffee to prepare value added coffee.”

In line with this increasing the number of investors interested in value addition coffee and encouraging them to engage on specialty coffee is the other measure which is taking under the reform.

Market Linkage:

For most Ethiopian coffee growing farmers, getting lucrative and sustainable market access is a major challenge in coffee industry.

Niguse Woledesenbet, who is production quality and Preparation team leader at Keffa Wild Coffee Growers Cooperative Union, revealed that market access becomes a serious encumbers for the union since its inception 14 years before.

The union with 13, 000 members, is exporting about 21 tons of coffee annually, which is minimal in contrast with the country’s potential to export. “Our challenge is on quality and value chain,” he stated. So, he called upon the government to strongly work in creating market linkage on the top of enhancing quality coffee production.

Zinabu Aba Mecha is also coffee producer and exporter in Southern Ethiopia. He produces organic coffee on 100 hectare of land secured from the government. For Zinabu selecting profitable market linkage is a challenge that needs the intervention of the government and stake holders. “As one of coffee producers and exporters, getting the best market linkage is very challenging for me and now I am working with the government and other stakeholders to overcome the market challenge,” he said.

According to the Ethiopian Commodity Exchange, the institution is now helping producers by creating vertical market integration that could help the farmers to get extensive market linkage.

In light with this, Feed the Future Value Chain Activity is another project funded by USAID to create market linkage for coffee producers. The project that has been launched for five years from 2017-2021 is supporting about 45,000 framers to get value chain in the country.

However, increasing the number of facilitators that are closely work on creating market linkage and improving the capacity of coffee growers and exporters on coffee specialty and value addition is imperative to re-secure and maximize the back polar gain of the country from its green gold, coffee.