11/9/23 Update - Birr/kg prices for 2024 harvest
Sources: Zelalem Girma Bayou, ZEM Founder, Exporter, & Coffee Producer / Bekele Kachara, Coffee Producer in Sidama / Beti Berhanu, Coffee Producer & Exporter in Yirgacheffe / Lemma Mamo, Coffee Producer in Keffa
Written by: Emily McIntyre, ZEM CEO
TLDR; Coffee cherry prices are opening much lower than last year, and producers are struggling due to trickle down effect and bad acting by exporters.
ACTION TO TAKE: Initiate a coffee forecasting meeting with Charley or me (emily@zem.coffee / charley@zem.coffee). It’s time to overview your dream coffee lineup, as shipment looks early this year!
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Lots of moving parts this week in Ethiopia, as we are in full swing in Keffa, starting harvest in Yirgacheffe, and kicking off in the lower-elevation areas of Sidama like Hache and Dembi.
Everyone wants to know what prices are looking like, and the primary metric driving eventual FOB pricing is the birr per kg price for red cherry. After record heights and a kind of market insanity which caused many Ethiopian buyers to rethink their menus for the past couple years, the market is snapping back. Word on the ground is:
Keffa birr per kg currently at 32, expected to cap no higher than 40.
Yirgacheffe (Dumerso area), currently at 35 birr and not expected to go no higher than 45. Last year for context it was around 65 birr per kg.
Lower-elevation Sidama (particularly Hache and Dembi) is opening in the 25-30 birr per kg range… last year it hit the 65 range.
High-elevation Sidama cherry markets such as the Bensa area aren’t open yet, but are expected to open much lower than their last year high of 105ish, perhaps even as low as Hache/Dembi, though that’s not too likely.
This means a few things, including that FOB pricing will be much more achievable for the 2024 export season, and that smallholders who sell their cherries to washing/drying stations who over the last few years actually got ahead of inflation are seeing a huge hit to their cash potential for the year. This means they will struggle more to send their children to school, purchase red cherry from their neighbors, and just get through the year.
As to how the lower pricing will impact quality, obviously we shall see. However high prices did not incentivize quality practices across the board, as they were volume-based incentives, so interestingly we expect to see an overall quality improvement from Ethiopia this year. We do identify that quality premiums for quality cherries and parchment will go further and provide more motivation this year, so that is good for incentive-based relationships.
Last year’s frenzy, and the many factors coming with it, continue to cast a long shadow over Ethiopian producers of all types, particularly the smaller ones who have limited financial resources. We are hearing widespread reports that exporters in many cases have STILL not paid the producers for the parchment or dried cherry they bought… sometimes because they themselves are struggling to sell their long inventory and sometimes because they are shitty human beings who build their businesses on other people’s resources.
