Ed's Note: the story below suggests that 15 million smallholder farmers
grow coffee in Ethiopia. This is inaccurate. The estimated number of farmers growing
coffee is actually 1.5 million. Approximately 13-14 million additional people
also make their living on the coffee trade by engaging in auxiliary activities,
such as harvesting, washing and hulling, transportation, etc. This brings the
total number of people who depend directly or indirectly on the crop for their
livelihood to approximately 15 million. The Reuters story seems to be confusing this number with the number of coffee growers. - Wondwossen
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Highlights of the story:
* Farmers, traders worry over late rains, hoarding persists
* Big export jump last year
* Govt forecasts further rise, calls crop
"satisfactory"
* ICO has trimmed Ethiopia crop outlook, Ecobank forecasts
fall
By
Aaron Maasho
April
24, 201
CHOCHE,
Ethiopia, April 24 (Reuters) - Making his way through the wild bushes that
flank the village of Choche, farmer Temam Abdurahman hacks away burnt twigs and
thorns with a rusty machete along a mud trail he says Ethiopia's coffee traders
have used for centuries.
Fifteen
million smallholder farmers grow coffee in the misty forested highlands in the
country's west and southwest, where some are worried over late rains, hoarding
and fluctuating prices this year after record earnings in 2010/11.
"Rains
arrived late again this year," Temam said as he approached the two
hectares of land where he grows coffee.
"Our
supply to the market was long overdue, by two months."
The
Horn of Africa nation this year hopes to build upon its record exports, but
farmers and exporters have their doubts.
"We
have four months left before the end. It's very difficult to meet last year's figures,
or the projected figure for this year," coffee exporter Hailu Gebrehiwot
said.
"Crops
were late this year due to adverse weather in some producing parts of the
country."
The
government is forecasting a rise in export revenues to $1.3 billion from last
year's $841 million, when output rose to 7.50 million 60-kg bags.
Exports
reached almost 200,000 tonnes, jumping 59 percent helped by high global prices
and a domestic commodity exchange market.
Yet
hopes of building on that success have faltered, with just 75,000 tonnes
shipped in the first eight months of this fiscal year.
On
the production side, the International Coffee Organisation (ICO) has lowered
its forecast for Ethiopia's crop to 8.3 million bags from 9.8 million.
While
that is in line with officials who expect a bumper crop topping 500,000 tonnes,
even the ICO's lowered number appears bullish compared to a forecast for a 14
percent fall in production from banking group Ecobank Transnational
Incorporated.
BIRTHPLACE
OF COFFEE
Ethiopia
sees itself as the birthplace of coffee, where at a place near where Tamam
farms an unwitting herder 1,000 years ago is said to have seen one of his goats
twirl with delight after eating wild cherries in a story that gave birth to the
industry.
Yet
the trouble with having a valuable crop is that when prices falter, farmers and
traders tend to start hoarding, loath to sell for lower prices.
Last
year's jump in prices makes that a problem now, with arabica coffee prices on
ICE last month down about 40 percent from their peak in May 2011.
After
that peak, farmers sold their beans at higher rates, but their buyers, the
intermediaries who sell on to exporters, were then stuck.
"When
the coffee was brought to the market, they didn't get the price that they expected,"
a coffee exporter told Reuters.
"They
started hoarding the coffee and bringing out a reduced amount to the ECX
(Ethiopia Commodity Exchange)."
Prospects
of a global surplus in 2012/13 have further dented investor appetite.
HOARDING
PROBLEM
The
ECX trades coffee, maize, sesame and white pea beans through an open outcry
system set up in 2008.
Its
chief executive, Eleni Gabre-Madhin, hopes to introduce forward and future
contracts within the next two years, a move that could help with the problem of
hoarding.
It's
a worry which the Prime Minister Meles Zenawi has personally intervened in,
threatening at a private meeting with industry players in 2009 to "cut off
their hands" if they did not release stocks held back in the hope of
better prices.
Meles
wants Ethiopia to boost its agricultural output by 2015, including raising
coffee exports to over 600,000 tonnes, or three times last year's results.
"We
have introduced improved coffee varieties and a better trading structure, while
high prices are encouraging production," said Tamrat Tsegaye, a chief
agronomist at the agriculture ministry.
"As
for climate change, yes, there was erratic rainfall, but only in pockets of
areas. Production this year is satisfactory."
Yet
not everything the government has tried has worked.
In
a bid to modernise, authorities in November said all shipments should be made
in bulk containers but the scheme was scrapped within weeks.
"The
government wanted Ethiopia to sell its coffee in bulk. Our buyers want
Ethiopian coffee in bags," exporter Hailu said. "Buyers got confused
and this had an impact."
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Editing by James Macharia and Jason Neely