Ethiopia’s Effort to Export Value Added Coffee Should Be Intensified

Ethiopian coffee, which has achieved historical success in terms of production, quality and revenue, is increasingly in demand in the domestic and international markets. It is stimulating the country’s export trade. In particular, its competitiveness and demand at the international level have increased significantly more than ever before.

The reform carried out in the sector has played a major role in the significant changes that have occurred in the coffee sector. Many indicators show that this reform work carried out in the coffee sector over the past five years is achieving encouraging results. One of the main achievements is increasing production and productivity; from the 833 thousand tons of coffee production capacity in the last fiscal year, it has been possible to create a capacity to produce 1.1 million tons of coffee, according to the Ethiopian Coffee and Tea Authority.

In terms of coffee export revenue, it was also between 700 and 800 million Dollars; since the reform efforts, this figure has climbed to a record level of over 1.4 billion Dollars. This figure is expected to reach two billion this year. Many projects are underway to double this income and earn between 2 and 4 billion Dollars from the export trade of raw coffee alone in the coming years.

From the previous situation of exporting less than 300,000 tons per year, more than that amount has been exported in recent years; this year, data indicates that efforts are being made to increase this figure to 450,000 to 500,000 tons.

However, it is always stated that Ethiopia, which introduced coffee to the world, is not getting as much benefit from the sector as it should. One reason for this is that the country supplies only raw coffee beans to the world market.

Data indicate that many countries that buy Ethiopian coffee use the coffee as a flavoring agent and mix it with other coffees and market it, thereby benefiting more than the producing country.

The government always urges concerned actors to benefit from this market; and some efforts are being made in this regard. In particular, various efforts have been made by the Coffee Growers Exporters Association. Following this, it is also stated that a situation has emerged in which value added coffee has changed from its previous perspective. However, the government has not gone far enough in terms of attention. Ethiopia currently exports less than 1% of its total coffee exports as value added.

Kassahun Geleta, Chief Executive Officer of Market Development and Promotion of the Ethiopian Coffee and Tea Authority, said that there are many obstacles to supply value added coffee to the world market. However, efforts are being made to overcome these obstacles.

“For this, maintaining the quality of raw coffee comes first,” Kassahun said. Thus, reforms have been carried out to ensure that the quality of coffee supplied to the world market is maintained; an opportunity has been created for exporters to prepare quality coffee and supply it to the world market.

He pointed out that efforts are also being made in value addition, for example, work has been done to make the legal frameworks more convenient. Work has also been done for several times to create awareness about the country’s coffee by introducing it to guests and delegates who come to Ethiopia.

He said, in this regard, preparation of different packages and presenting roasted or roasted and ground coffee as gifts to guests is underway, so that they can get to know the true taste of Ethiopian coffee. Since this is one of the promotional methods, it has been possible to create an environment where guests coming to Ethiopia can easily identify the taste of Ethiopian coffee and show that it can be prepared with value addition. In this way, it has been possible to convey the message that Ethiopia is not only a place of coffee, but also a place where it can be prepared with value addition.

Such promotional work encourages foreign investors and creates an opportunity for them to add value to coffee in Ethiopia, and to supply it to the foreign market. In this regard, the government has now opened the door for investors to export raw coffee from Ethiopia. This will encourage the work being done on value addition.

Mentioning that the government has allowed foreign investors to participate in coffee development, Kassahun said, in the past three years, a favorable environment has been created for foreign investors who have registered a capital of 10 million Dollars and above to engage in coffee from development to marketing.

It is believed that it is more profitable to export not only coffee but also any product with value addition than in raw form. Therefore, providing value added Ethiopian coffee to the foreign market is more profitable and preferable, and many works are being done in this regard.

Although encouraging works have been done so far, many challenges are being faced, Kassahun said, noting that although the results of supplying coffee with value addition to the market are clear, it is a challenge to compete with developed countries. Since the countries know only raw Ethiopian coffee, they only want to buy raw coffee beans. Therefore, the international market has become the biggest bottleneck.

He mentioned that domestic investors are facing problems in domestic bureaucracy in addition to the international market; however, the domestic bureaucracy has now been able to be solved.

As he explained, foreign companies that buy raw Ethiopian coffee are increasingly benefiting from adding value to it, and blending it with other coffees and exporting it to other countries. Therefore, they do not want to miss out on this benefit; they are not interested in buying value added Ethiopian coffee.

According to him, although the biggest problem in exporting value added coffee is the international market, efforts are being made, believing that results will be achieved in the process. One of the efforts is to find new markets; for example, to enter new market destinations such as China and introducing it to other countries.

Currently, there are about 100 companies that export value added coffee. However, since large companies have already entered the international market, their brands are well-known and in demand, it is difficult to break into the market. Although the problem is widespread and global, efforts are underway believing that it can be solved with much effort.

According to him, Ethiopian consulates in each country are working to promote value added Ethiopian coffee in addition to raw beans. Government officials are also working to promote value added Ethiopian coffee by presenting it as a gift to high-ranking officials when they go abroad; such efforts should be strengthened.

Believing extensive work should be done on value addition, Kassahun mentioned that in 2023/24, 500 tons of value added coffee was exported, earning USD 4.2 million. This is not significant compared to the amount of coffee exported, but the beginning is encouraging. In order for the beginning to be sustainable, it is necessary to provide quality and standardized products to the world market.

Kassahun further said that if value added coffee can be prepared in a quality manner that is in line with the needs of the international market, it will be easy to find the market; he also pointed out that it is possible to benefit from preparing it with quality starting from the packaging. It is necessary and appropriate to provide various supports and incentives for this and incentives and supports are being provided to exporters engaged in value addition.