Ethiopian Coffee: Challenges and Opportunities

1 1 Ethiopian coffee : Challenges and OpportunitiesEthiopian coffee Export Conference8 9 November 2012 AddisAbabaEthiopiaInternational coffee OrganizationAddis Ababa, EthiopiaJos D. SetteHead of demand consumption to the coffee sector in for the coffee sector in International coffee OrganizationEthiopia2 World coffee productionCrop years 1980/81 2012/13*140160406080100120 Million bagsInternational coffee Organization020* ProvisionalShare of Robusta (%) in World ProductionCrop years 1980/81 2012/13*40%45%10%15%20%25%30%35%Internat ional coffee Organization0%5%* Provisional3 Production in AfricaCrop years 1980/81 to 2011/12255101520 Million bagsInternational coffee Organization0 EthiopiaAfrica% share of Africa & Ethiopia in world productionCoffee years 1980/81 to 2011/1225%5%10%15%20%International coffee Organization0%EthiopiaOther Africa4 Africa.

2 coffee Production(Averages in thousand bags)1980 891990 992000 092010 12 TOTAL AFRICA19 88816 07815 37215 712 Ethiopia3 1282 9734 9046 450 Uganda2 7242 8112 9243 002C te d'Ivoire4 3383 4482 6921 291 Cameroon1 7711 022821845 Tanzania875779796686 International coffee OrganizationCongo, 6101 019383681 Kenya1 7261 377766669 Madagascar1 092780490566 Others2 6251 8681 5971 522 Africa: coffee Exports(Averages in thousand bags)1980 891990 992000 092010 12 TOTAL AFRICA16 66414 63611 54610 676 Uganda2 4483 0022 7692 939 Ethiopia1 3701 4812 3682 927C te d'Ivoire3 8063 8232 3931 311 Tanzania851783766709 Kenya1 6311 363747661 Cameroon16431050741515 International coffee OrganizationCameroon1 6431 050741515 Guinea59123344373 Burundi508483321304 Rwanda594336303254 Others3 7552 1937936835 World coffee Consumption2001 2011(In thousand bags)

3 20012011 % changeAbsolutechangeAverage annualgrowthratechangegrowth rateWORLD TOTAL109 581 139 countries27 799 42 markets64 300 70 coffee OrganizationEmerging markets17 482 25 Trends: Traditional Markets Quality: specialty coffee revolution IiilhiRTD Innovation: single serve machines; RTD etc. Sustainability: certification/verification Fairtrade / Rainforest Alliance / Utz Certified / 4Cs / organic / othersfhb(International coffee Organization Strong competition from other beverages (water juices, tea, energy drinks etc.))

4 6 Key Trends: Emerging Markets & Producing Countries Rising income levelsAiti ll Aspirational values Large populations Affordability Soluble 3in1 International coffee Organization 3 in 1 Marketing Generic promotion coffee and healthWorld Consumption Outlook(1970 to 2020) 1979 1989 1999 2011 bagsInternational coffee Organization020 ActualLow Medium High 7 Challenges (1)1. Structural Challenges : Lack of competitiveness (low yields & productivity);p(ypy); Poor access to market & long supply chain; Lack of infrastructure; Inadequate access to services (particularly financial services, risk management etc.)

5 ; Lowvalueaddition;andInternational coffee Organization Low value addition; and Inadequate technology transfer & research ( coffee genome, conservation, biodiversity etc.). Challenges (2) environment: Low levels of public investment in agriculture; Disengagement of the state in production & marketing activities; Liberalisation/agricultural reforms historically ltddInternational coffee Organizationpoorly executed; and Weak institutional framework in many (3)3. Sustainability: Adaptation and mitigation to climate change (and other adverse weather events) Conservation of biodiversity Social sustainability.

6 Empower women and tt tthInternational coffee Organizationattract youth Competition for land (subsistence farming, biofuels)Price paid to growers as % of export valueCalendar years 2000 2011100%20%40%60%80%International coffee Organization0%20%2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 EthiopiaUganda (Arabica)Costa RicaGuatemala9 Opportunities (1)The Ethiopian coffee sector has brightprospects:pp The country has suitable altitude, amplerainfall, optimum temperatures, appropriateplanting materials, low labour costs andfertile soil.

7 The country can sustainably produce andInternational coffee Organizationsupply fine specialty coffee , with potentialof producing all coffee types of the variousworld coffee growing (2)Grounds for optimism: Strongpotentialtoincreasesupply Strong potential to increase supply capacity/yields (transfer of technology) Promote value addition Differentiation through brand awareness ( Yirgacheffe, Sidamo etc.)International coffee Organization Importance of traceability10 Opportunities (3)Create an enabling policy environment: Supportagriculturalresearchand Support agricultural research and development Improve access to price risk management tools Sustainable developmentInternational coffee Organizationp Promote a strong institutional framework to better coordinate policy Macroeconomic policyExchange rate of Ethiopian birr to US$Monthly averages 2000 Birr/US DollarInternational coffee 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201211 Stimulate local consumption.

8 Opportunities (4) Ethiopia is not only the birthplace, an important producer, and a leading exporter of Arabica coffee , but also a heavy consumer. Ethiopians are the highest coffee consumers in AfricaInternational coffee OrganizationAfrica. coffee is strongly ingrained in Ethiopian culture ( coffee ceremony ). ThankyouThank rio Oliveira SilvaExecutive Director