The tiny, open-air porch where Nadia serves coffee to her patrons at Bethel area is almost never empty, even when the adjoining bar is quiet. Most of her customers are regulars.
Nadia is one of a countless number of people (mostly women) in Addis Ababa and other urban centers in Ethiopia who rely on small, makeshift coffee shops to make a living.
Despite the steady flow of clientele, Nadia says she has been struggling to keep her business afloat of late.
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Prices for the coffee beans she roasts traditionally are climbing, forcing her to charge more for her cups. Customers have complained, Nadia says, but she has no other option.
“It has always been hand-to-mouth, but now it is getting a little bit too hard,” she told The Reporter Magazine.
A couple of years ago, Nadia would have paid between 350 and 400 birr for a kilogram of green coffee beans. Today, she has to shell out as much as 700 birr for the same volume.
The rising prices are part of a major shift in global coffee consumption, but to Nadia and the countless women who depend on their traditional coffee shops, market dynamics mean little. Few among her and her peers realize their businesses form just a tiny part of a global industry worth billions of dollars a year.
Reports indicate that no less than 124 million people worldwide depend on coffee for their livelihoods. Conservative estimates put this number in Ethiopia at 25 million. All told, from farm to cup, between 600 and 800 million people across the globe work in the coffee industry, which continues to grow.
According to the Global Coffee Report (GCR), for the first time ever, the demand for coffee worldwide has surpassed supply, driving prices significantly upward. Coffee updates for 2025 already show a 12 percent increase in the price of coffee in the last six months, with the price of a pound of the green beans jumping to as high as USD 7.50 in January.
It is more than three times the USD 2.40 a pound registered in August 2024, which, according to reports, was a 13-year high.
Domestic Impact
“While that is the case, the 70 to 80 percent increase in international coffee prices has not applied to exporters in Ethiopia. That applies only to exporters in South American countries such as Brazil and Peru, who are listed on the New York Commodities Exchange. We in Ethiopia do not have accounts with the New York Commodities Exchange. We supply to the international market on the basis of fixed prices determined on the trading floors of numerous coffee trading outlets across the country,” Kenean Assefa, deputy CEO of Daye Bensa Trading, a major coffee exporter, told The Reporter Magazine.
But even on the basis of fixed rates, coffee prices in both international and local markets have grown substantially.
Over the last few years, industry regulators have largely abandoned the previous system of trading coffee through the Ethiopian Commodity Exchange (ECX), enabling suppliers to sell directly to exporters in a new regime dubbed ‘vertical integration.’
Coffee exporters like the Kerchanshe Group report revenues of up to USD 100 million a year.
Strapped for Cash
Buoyed by the favorable market conditions, stakeholders engaged in the production, supply and marketing of the much-loved stimulant are rushing to take advantage of the record-high prices. However, cash, or the lack of it, is making things difficult for exporters.
In August 2023, regulators at the National Bank of Ethiopia (NBE) imposed a 14 percent annual credit growth cap on commercial banks in a bid to rein in spiralling inflation rates. They recently relaxed it to 18 percent, but exporters say they are still struggling to access loans.
“This has been the most pressing problem for those engaged in coffee export,” said Kenean.
Mulugeta Girma, head of legal affairs and public relations at Kerchanshe, had more to say.
“The situation has the effect of slowing coffee cargo forwarding and clearing activities at ports; and we are being led to pay unnecessary dues in demurrages as a result,” he told The Reporter Magazine.
Demeke Tsegaye is a banker with substantial experience in coffee export financing. He also works as a coffee financing consultant. He explained the financing problems began around five years ago, when banks were hit with a crippling liquidity crunch.
“Ethiopia’s coffee export is seasonal,” Demeke said. “Exporters need considerable cash for the harvest and trading season. They enter into contracts after having purchased the coffee; entering into one without a purchase is very risky and may lead to significant losses for everybody along the value chain. If and when the losses happen, the damage is pervasive.”
Banks came up with specific products, such as a pre-shipment loan facility, to fill this gap, protecting everyone in the value chain (farmers, collectors, suppliers, and exporters) from the risks posed by blind contract deals.
“Under this package, the bank offers 70 to 80 percent of the total cost required by coffee exporters to meet an export contract target. The bank only has to make sure there is a bona fide buyer at the other end and that the overall contract is auspicious. The exporter commits to return the advance loan upon meeting the contract target and receiving payment from the buyer,” Demeke told The Reporter Magazine.
However, the liquidity crunch forced banks to tighten policies on pre-shipment loans. Repeated instances of exporters failing to repay the loans, with large sums sometimes “vanishing” into thin air, only exacerbated the problem, according to Demeke.
“What the banks had to do then was to limit the pre-shipment loans to a very few exporters with a good track record,” he said.
Then the NBE’s credit growth cap came along, making financing that much harder to access for Ethiopian exporters.
Trade Risks
A lack of credit is not the only challenge facing the coffee export trade.
Recent reports describe heavy congestion at the coffee quality certification center run by the Ethiopian Coffee and Tea Authority in Hawassa. Trucks loaded with coffee have little choice but to sit and wait in line to see their loads assessed and cleared. Exporters say the wait times are damaging their goods before they hit the central market.
Berhanu Semie, an official at the Authority, has been quoted as saying that the problem arose due to larger-than-usual traffic brought on by a substantial growth in supply this season.
A few years ago, the renowned athlete-turned-entrepreneur Haile Gebreselassie complained that large coffee consignments were all but laid to waste on roads as petty officials took to stopping coffee-laden trucks for arbitrary searches. Sometimes, the trucks would be forced to remain stationary for hours, or even days, spoiling their cargo.
New Forex Regime, Real Profits
Demeke observes that profits in the coffee export trade have seen a dramatic turnaround following the liberalization of the foreign exchange market six months ago.
Prior to the reforms, exporters rarely made any profit from coffee exports, instead relying on the foreign currency they earned from the trade to fund other, more profitable businesses.
Demeke explained that exporters used to buy washed coffee cherries from farmers for approximately 60 birr a kilo. They would need to purchase 100 kilos to produce 17 kilos (a unit colloquially referred to as a feresula) of the marketable green coffee beans. With labor, transport, and other costs, the 17 kilograms would end up costing somewhere around 7,000 birr to produce—a little over 400 birr per kilo.
Pre-reform, the amount was the equivalent of USD 7.50 per kilo. Contrast that with the best-possible international prices for Ethiopian coffee at five dollars per kilo, and it translates to significant losses for exporters.
“There were two ways the exporters offset their imminent losses. Either they sold the dollars they earned to importers on wide margins, or they imported goods, such as vehicles, themselves and sold them at high prices in the local market,” said Demeke. “This was not a normal trading practice, and it prevented our coffee from being competitive in the international market.”
The lack of competitiveness played a large role in dwarfing the coffee export industry, which accounts for a third of Ethiopia’s total export revenues.
However, the forex reforms of mid-2024 have transformed the trade, and Ethiopian coffee exporters are now beginning to see real profits as a result.
The cost for producing one feresula of coffee has jumped to around 8,000 birr, but, at the new exchange rates, this is the equivalent of around USD 3.30 per kilo, or around half the international market rate.
However, Demeke remarked that the dramatic turnaround in profitability does not reach downstream actors in the value chain, such as farmers and collectors.
“This is unlike the reality in Brazil, the world’s leading coffee exporter. There, farmers get up to 80 percent of the total transaction, while the exporters get 20 percent, which is a big margin on its own,” he said.
Mulugeta begs to differ.
“It is Kerchanshe Group that helped farmers get as high as 200 birr per kilo from only 20 birr or thereabouts a few years back. We did that despite vehement opposition from brokers, suppliers, and other exporters,” he told The Reporter Magazine.
Nonetheless, experts in the field fear that grassroots coffee growers in Ethiopia face the risk of being pushed out of the business in the future, as more and more large exporters begin operating their own farms.
Mulugeta does not agree with this assessment.
“The demand for Ethiopian coffee in the international market is vast, and new market frontiers, such as demand from Chinese buyers, are assurance enough for Ethiopian farmers to stay the course,” he said.
In addition to domestic factors, the Ethiopian coffee market has now become subject to trade laws and restrictions from markets such as the European Union.
In 2023, the EU Commission introduced anti-deforestation legislation that prohibited the import of commodities such as coffee, cocoa, and palm oil originating from deforested land, land acquired forcibly from local or indigenous communities, or whose cultivation involves labor or human rights abuses.
The law was meant to go into effect at the end of 2024, but has since been pushed back following an uproar from exporters across Africa. However, it is by no means off the table, and actors in the coffee business in Ethiopia would be wise to put their houses in order before it takes effect.
