We have been rather keen to get coffee on boats in the past 2 weeks. However, we are being frustrated by shipping lines closing containers out because they have no space even when containers are positioned for shipment. Normally this is a busy time of the year for Ethiopia shipments and the current pandemic is making timely shipments more of the essence!
The Ethiopia Government has asked it’s employees to work from home as much as possible and encouraged employees of private companies to follow suit. Concurrently the Ethiopia Government has been keen to stress that Export industries have to continue operating, therefore warehouses, mills and transporters are to operate as much as possible, normally. There are restrictions on the movement of private individuals across the borders with Sudan and Djibouti but not for import or export of goods.
Other East African countries have started to also implement social distancing measures with a view to slow the spread of the pandemic among the population. Uganda has taken the most draconian measures of all coffee exporting countries in the East Africa region resulting in stopping the export of coffee for at least 2 weeks. Fortunately, neither Ethiopia nor Djibouti Governments have intervened to stop shipments, however, we see Governments around the world taking unprecedented measures restricting economic activity so we must be mindful that this could happen in the countries where we operate.
We continue to not have any major issues with export logistics or export documentation, however, the quality of pre-shipment samples has been an issue that has slowed shipments. We are getting very frustrated with shippers, particularly with the quality of pre-shipment samples of Naturals (Djimmah 5 and Lekempti 5); currently, the ECX has big volumes coming through the trading floor and prices have decreased considerably in the last 5 weeks from 1,270 to 1,050 Birr per Ferasula for UIB6 (Illubabor Grade 6) the main component of Djimmah 5, a drop of 17% in price in Birr, nearly 20% in USD; below we convert the current ECX price for UIB6 to Djimmah 5 FOB Djibouti.
| ECX Price in BIRR per FERASULA ( =17kg ) | 1,050.00 |
| Exporter Costs (Birr per KG Green Coffee) | |
| Transporting coffee from upcountry to Addis (Birr 80 per 100kg) | 0.80 |
| Processing cost (Birr 1,045 per MT Green Coffee) | 1.05 |
| Cost of bags for local storage (Birr 55 per 60 Kg) | 0.92 |
| Cost of bags for export (Birr 65 per 60kg) | 1.08 |
| ECX commission charges @ 0.49% | 0.30 |
| Cost of insurance (Birr 1200 per 19200 kg) | 0.06 |
| Weight loss 1% | 0.62 |
| Transit cost (Birr 15,000 per container) | |
| =>cost of transit for shipping &stuffing | 0.78 |
| Transporting coffee to Djibouti port | |
| (between 55-90 Birr per 100 kg, average Birr 65 per 100 kg | 0.65 |
| Cost of financing | |
| financing 3 months per kg | 1.96 |
| (Financing at 11.5% p.a.) | |
| Rejects 5% sold in the local market | |
| Value of the Rejects in local market | -3.53 |
| (Reject price on average Birr 1200 per Frs* of green coffee) | |
| FOB Djibouti in Birr/kg (including 5% Reject) | 70.20 |
| FOB Djbouti in USD/lb | 0.98 |
| Exchange rate Birr 32.5 to 1 USD |
NBE Forex 3rd April 2020: Birr 32.88 = USD 1
by Charles Seara Cardoso
Leave a Reply
Want to join the discussion?Feel free to contribute!