Coffee is the most important agricultural commodity and beverage in the world, generating up to $14 billion annually for producing countries. More than 18 countries, including Ethiopia, grow coffee, which is exported as raw, roasted, or soluble products to over 165 countries. This industry provides a livelihood for an estimated 100 million people globally.
Ethiopia is known for its coffee-growing regions, where many types of coffee are famous. However, how does this reputation translate into coffee prices?
Ethiopia’s Unique Coffee Market
Ethiopia is special because it consumes almost 45% of the coffee it produces. This means that a lot of coffee stays within the country. Recently, local coffee prices have gone up, and many Ethiopians are struggling to afford it due to high inflation, which hit 34.8% in September 2021.
With higher local prices, more coffee traders might choose to sell their coffee within Ethiopia instead of exporting it. Selling locally is becoming more profitable and easier than exporting. This could lead to more coffee being sold in the country, possibly lowering local prices a bit. However, less coffee available for export could make export prices rise.
On the bright side, higher prices mean that farmers are earning more. This extra income helps them invest in their farms, families, and communities. The government has also set higher minimum prices for coffee cherries, ranging from 21 to 28 birr per kilogram (42 to 56 US cents), which is higher than usual. Farmers are often getting even more than this due to strong competition. However, it’s uncertain how long these high prices will last, as financial issues are affecting many coffee processing stations.
Why is Ethiopian Coffee Usually More Expensive?
Ethiopia is known for its amazing coffee with unique flavors. Here’s why Ethiopian coffee often costs more:
Limited Supply
Even though Ethiopia is a big coffee-growing country, most of the coffee is grown by small farmers who only produce small amounts. Because they grow less, they can focus on making high-quality beans. However, because there isn’t a lot of it, the coffee becomes more valuable. When something is rare, it usually costs more
High Demand
Coffee lovers and specialty shops around the world are crazy about Ethiopian coffee because it tastes so good and has unique flavors. Since so many people want to buy it, the demand goes up. When demand is high, the price also goes up. This is why Ethiopian coffee can be more expensive.
Traditional Processing
Hey, it’s all about tradition! Ethiopian coffee is often made using old-fashioned methods. One common method is sun-drying the beans with the fruit still attached. This process is not easy. It takes a lot of time and effort. Because it’s more work, it costs more to produce the coffee, which makes it more expensive.
Traceability and Certification
Many Ethiopian coffee producers make sure their coffee can be traced back to its origin and is certified for quality and ethical sourcing. Traceability means you can see exactly where the coffee came from and how it was produced. Certification involves meeting certain standards to prove the coffee is high quality and produced fairly. These extra steps require time, effort, and money, which makes the coffee more expensive.
Specialty Quality
As already mentioned, no compromise on quality. Ethiopian coffee is often very high quality, known as specialty-grade coffee. This means it tastes and smells better than regular coffee. Because it’s so good, people are willing to pay more for it. This superior quality is why Ethiopian coffee costs more than regular coffee.
Local economics
Economic problems in Ethiopia, like inflation, can affect coffee prices. Inflation means that the cost of goods and services goes up. When this happens, the local prices of coffee also increase. To make more money, coffee producers might choose to sell their coffee to other countries where they can get higher prices. This helps them earn more despite the economic issues at home.