New crop fever is here. As soon as we roll into October, the excitement and light stress kicks in at Trabocca: what will Ethiopia’s new crop bring, and how do we make sure that you get the coffees you expect? This is a challenge every harvest – hence the ‘fever’, as some like to call it.
A hectic but exciting time for our entire team, and indirectly for you too. To give you some perspective on the new crop, we summed up a few noteworthy developments that make this harvest everything but typical. Let’s start with something we do not control (entirely), climate!
While en route to Yirgacheffe early December, we were surprised to find that growers had not started to harvest in the highlands (+1800 m.a.s.l.).
No pickers or packed mules to be seen, only empty washing stations. The harvest had not started in the highlands of the south.
Rains usually fall in January and stimulate flowering.
But in 2019, rains in the south arrived as late as half February.
Around mid-November you normally see droves of outgrowers moving their cherries to washing stations. So, why the delay? Our Agronomist and Quality Coordinator, Haddis Teka, answers that question. “Rains usually fall in January and stimulate flowering. But in 2019, rains in the south arrived as late as half February.”
The harvest season shifted to an ‘off crop cycle’. Everything is pushed back one month including arrivals in Europe and the United States. That being said, the western areas of Limu/Jimma have been less impacted by shifting weather patterns.
If you want to know more about the specific ETA’s for coffees, reach out to your trader.
The late and scattered rainfall in the south fragmented flowerings. Instead of one flowering, locals saw two flowerings. We think that the changing weather and the two flowerings have impacted the volume output of the south.
It is estimated that the volume is 30% lower in yield compared to last season. This is significant. Cherry prices have also spiked to new heights. From last season’s average of 18 Birr/kg cherries to 28 Birr/kg in some regions of Guji and Yirgacheffe.
The harvest is late but also lengthier. Some washing stations are still receiving cherries as we speak. We think this is good for quality because the late crop has been allowed to ripen and develop steadily. The rains of December nurtured the trees and the dry weather in January was favorable for drying parchment and naturals.
As you now know, cherry prices have spiked, but the weather and lower crop volumes are not the only factors in play.
Competition has increased in Ethiopia. More growers, washing stations, and exporters join the market. And on top of this, the Ethiopian Coffee and Tea Authority (ECTA) has introduced a new regulation that might spice up the competition for market share even more.
The ECTA recently enforced strict monitoring of ECX (Ethiopian Commodity Exchange) and FOB contracted prices. The regulation should prevent exporters from selling coffee at a loss just to get access to important foreign exchange. With foreign exchange, they fund their usually much more lucrative importing businesses.
Now, in response, exporters have diverted from the regulated ECX and bought or rented washing stations. This is their attempt to bypass the ECX and to access high volumes of coffee cherry at unregulated prices. This workaround opens up opportunities to sell directly without fear of authorities auditing their contracts. We find that this is one of the reasons for increased competition and higher prices in 2020.
On the 10th of January, another regulation was announced which aims to introduce a minimum price on the grounds of a ‘global weighted average’. What this means in practice is that the National Bank of Ethiopia will generate daily reports of the registered coffee contracts.
These contracts will provide a minimum price for each grade of coffee. If exporters book contracts below this minimum price, they can expect to receive a written warning for a first offense. If offenses are subsequent, a one-year trade ban will follow. It will be interesting to see how this impacts the market.
In Ethiopia, elections and political shifts can hinder and delay the trade and movement of coffee. That is why we are happy to tell you that the elections for the ‘House of Peoples’ Representatives’ in May have been postponed until August. This gives us valuable time to move your coffee out of the country without any further delay.
We hope we’ve given you a fresh perspective on Ethiopia’s new crop. Above all, we are eager to share the results of the stock and pre-shipment samples we are tasting at the moment.
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