We are touring some of the more prominent coffee growing areas this week and next to get a feel for how the harvest is progressing. This week we were in Sidamo and Yirgacheffe, the lower lying areas have come to the end of the harvest and during December picking will peak in these 2 important growing regions. We have visited many washing stations and what has struck us most are the small volumes of parchment in the stations and small warehouses dotted around the countryside. Two main reasons explain the small production of washed coffees:
- Farmers perception that a price of 50 to 60 Birr per kg cherry is low!
- Lack of cash distributed by Exporters to their washing stations and agrabe partners to finance cherry buying
Focus is on producing high quality coffees for the specialty market that attracts higher prices and higher commercial coffees that will command a premium over normal Grade 2 coffees. There seems to be small appetite by washing station owners to produce commercial grade 2 coffee in these regions since the price that would need to be achieved to make a margin is in excess of 300 c/lb FOB (50 birr per kg cherry equates to 6 USD/kg Clean => 272 usc/lb + 30 usc/lb (Farmgate to FOB cost) = 302 usc/lb FOB).
On the other hand there will be plenty of Naturals since the crop is good (higher than 21/22) in these regions and the proportion of Naturals vs Washed will be higher, as explained above.
Next week we are in Djimmah and Limu so more to come on the harvest there!
In other news, Ethiopia is doing its bit to mitigate climate change, having banned the importation of vehicles, the country now allows the importation of electric vehicles at a much reduce import tax while maintaining the ban on importation of internal combustion cars.
Birr 53.00 = USD 1
Have a good weekend.