Ethiopia’s new export season is off to a faster stride. After selling 20% more coffee in the 2023-2024 cycle and earning the country a record US$1.43 billion, the government is now setting an even higher target: US$2 billion. Ambitious? Sure. But 2024 was a year full of announcements that promise to reshape Ethiopia’s economy as a whole and the coffee sector in particular.
Last year was a bit of a mess. What’s changing?
Before we jump into it, let’s rewind to last season—a year that was anything but smooth. Tensions in the Red Sea set logistics off course, creating shipping delays that left buyers scrambling. Dry mills were bottlenecked by a strong demand, and quality took a hit for some shipments after July. Addisu Gobana, our Producer Success Manager in Ethiopia, recalls that most exporters had sold out by August. That’s unheard of.
The waters are calmer this year. There’s more stability in the Red Sea, and the conflict that was brewing with Somalia seems to have been resolved, so we’re not expecting the same unpredictable shipping delays. But demand is still running hot, and here’s the thing: the harvest started early—in Jimma, cherries were picked as early as September, about a month ahead of schedule. If you’re a roaster, take note: you might want to move your buying timeline forward.
A lower index of currency desperation
On the coffee front, things are looking good—really good. Producers are reporting favourable weather for picking and processing, and early cuppings are showing “promising results,” according to Zelalem Fisseha of Fair Coffee. There are no quality issues, no insect damage, just good yields and ripe cherries.
Ethiopia’s climate is still changing though, and this year’s early harvest is a sign. Heavy rains and warmer temperatures between March and July sped up bean development. Addisu explains the usual rhythm of light rains, a dry spell in April, and then heavier rains capsized. The result was faster bean filling and earlier ripening.
The government is liberalising the coffee sector. It started with the birr
To make things better, exporters are not under the same pressure to sell as much as possible this year, thanks to a change in policy. Last year, Zelalem told us they could only keep 20% of their foreign currency earnings, forcing them to sell large volumes, often at the expense of quality. Now they can retain 50%.
That’s just one of the changes in Ethiopia’s coffee sector this year. The government has been introducing economic reforms to attract foreign investors and stabilize a wobbly economy. After defaulting on debt in late 2023, Ethiopia entered discussions with the IMF (International Monetary Fund) for a bailout.
The backdrop to this deal is an economy that has been strapped of foreign currency for years since the Tigray war scared investors away, and COVID-19 pushed inflation up. Loosening state control over currency exchange was part of the deal, and the government devalued the Ethiopian birr by 30% in July.
Farmgate price, FOB price, and the C-price
The birr, which was tightly controlled by the government, has been determined by the market since July. Since the change, its value has collapsed—US$1.00 used to be worth 57 birr, but now it’s closer to 130. Naturally, this had an impact on internal coffee prices. At the start of last season, a kilo of cherry cost 30 birr, rising to a peak of about 85 birr. This season, prices began at just under 60 birr per kilo, climbed to 70 in November, and are now nearing 100.
In dollar terms, prices have actually dropped. Last year, 60 birr was about US$1.00. Today, it’s roughly US$0.50. Even at 100 birr, the kilo of cherry is still at US$0.78—half of last year’s peak.
If you’re a buyer that keeps tabs on how much you pay FOB every year—pretty easy on Algrano as all the prices you paid are listed on your account—you’ll find that the FOB is a bit higher this year. So, if the farmgate is lower, why is the FOB higher? Well, the market…
The Ethiopian Coffee and Tea Authority sets minimum export prices every week. They’re based on the futures price with differentials per grade, region, and processing method. Every exporter has to sell above those minimums. And this could help put local exporters in a better position ahead of next year. We explain why further down.
These changes haven’t gone unnoticed in the country. “Exporters had to work hard for currency last year,” says Mebrahtu Aynalem of Boledu Coffee. “We thought many would go under before the birr devaluation. But now, coffee is profitable again, and we’re seeing a lot more exporters operating.”
Why liquidity problems reduce production of Fully Washed coffees
More competition on the ground also means more people fighting for credit. Liquidity is still an issue even if “banks are a bit more cooperative this year”, as Zelalem puts it. Funds are being drip-fed rather than handed out at once to finance the whole harvest.
“Banks gave many loans before the war and stopped getting returns when the conflict started. Now the government controls that. We don’t get all the money we need at once anymore. The bank releases it every few weeks,” Mebrahtu adds.
The moderate influx of credit slows down cherry purchases, which in turn reduces the volume of coffee being processed at once at washing stations. The silver lining? Less volume means it’s easier to maintain high processing standards, and tends to result in better quality coffee. On the flip side, more farmers end up drying their own coffee, so we’re likely to see more Naturals again this season. That said, it’s not as dramatic as before, and there’s no risk of shortage of Fully Washed.
Foreign investors are coming. Here’s what we know (we mostly don’t)
Looking ahead, two government reforms could transform Ethiopia’s coffee sector. The first, announced in July, opens the door to international investors. The second, in December, allows foreign banks into the country to fund those very investors. Both measures aim to liberalise the sector and attract money— and they were received with mixed opinions by exporters.
Zelalem predicts “obvious” challenges for small players, while Mebrahtu sees potential benefits in standards for logistics and warehousing. Both are wary of competition though. “It’s a problem if they flood the market and the competition will be tough for local exporters,” says Mebrahtu.
Foreign investors are unlikely to run washing stations themselves—they lack the local know-how and would struggle to earn producers’ trust—but they could partner with Ethiopian companies to buy stations. Addisu ponders that this could bring some stability to the value chain (by solving current issues with vertical integration) but it could also push smaller businesses out.
“Vertical integration is becoming a problem,” Addisu explains. “Washing station owners who don’t have an export license sign contracts with exporters but don’t always deliver the full volume to chase better prices.” If exporters start buying more stations with foreign backing, they’ll have better cash flow and lower processing costs.
A parallel can be drawn to Rwanda, where foreign companies flush with cash dominate the coffee sector, paying better wages to workers and driving local exporters to the edge. “In Rwanda, multinationals have the cash to import machinery, cut costs, and trade in bigger volumes,” says Addisu. “If that happens here, Ethiopian exporters will need government support to stay competitive.”
We’re coming too, just for a visit
For now, the outlook for this year’s harvest is optimistic. Logistics are smoother, and quality is looking good. Buyers might want to keep an eye on their timelines—demand is strong, and the window for securing contracts isn’t as wide as it used to be.
Our team is heading to Ethiopia this month to cup coffees, visit washing stations, and align with exporters on quality and milling standards. We’re flying back with samples on January 20th, and offers will be live shortly after.
Early shipping remains critical—not just to catch the best quality but to secure any coffee at all. In other words: if you’re thinking of waiting for the market to drop to place your order, don’t. The answer to the higher cost of green will have to come from somewhere else.
Important dates
Sample availability
Shared shipments
Vollers Bremen - Germany
Four consolidated shipments:
Boledu Coffee and DIMTU
Closing 15/02; release from August
Closing 03/06; release from November
Closing 01/02; release from August
YCFCU (Yirgacheffee Coffee Farmers Cooperative Union)
Closing 01/05; release from October
Continental, New Jersey - USA
Boledu Coffee and DIMTU
Closing 01/06; release from November
*More shared shipments will be added soon for Unravel Coffee Merchants and Ardent Coffee.
Custom shipments
Individual orders with 150+ bags can be shipped at the times that suit you best, starting in February.
Feature photo: Farm near Worka CWS, member of YCFCU
