Currency and Coffee

Coffee growers in Ethiopia are facing yet another year of galloping inflation

Alexander Hansen
November 19, 2021
Ethiopia


Despite Ethiopia’s official reasoning to drive economic growth, real inflation, foreign currency shortage and unemployment are the major factors driving the devaluation of Ethiopian Birr. According to the Ethiopian Central Statistics Agency, year on year inflation as of September 2021 inflation reached 34.8% while food inflation saw a staggering increase of 42.0%. Currently, 4th of November 2021, the country has seen another 23% increase in inflation, hitting a record high 48 Birr/USD, leading to soaring coffee cherry prices.

Fig: Official exchange rate USD to Birr (Tradingview)



Cherry price evolution:

2019: 10-15 Birr per kg of cherry

2020: 21-28 Birr per kg of cherry

2021: 32-40 Birr per kg of cherry

Cherry prices have become increasingly expensive and volatile as more and more exporters take advantage of partnering with existing station owners to create a vertically integrated supply chain and various financing options to expand their geographic footprint. Competition between stations is fierce in many of the areas most well known for incredible coffee, and we expect this competition to continue. Are we going to see 50Birr this year already?

Alex's past roles have covered many responsibilities including supply chain, quality, sales, buying and management.