China Becomes the Leading Market for Ethiopian Coffee

Raw Common Coffee Bean

Published Oct 12, 2022

A large share of the coffee harvest in Ethiopia is exported every year. In the last FY, there was a YoY increase of 22% in Ethiopia’s coffee exports driven by increasing investment in coffee processing and lower arabica volumes from Brazil and Columbia. Exports to China showed tremendous increases, recording an 84% increase in YoY value. The rising demand and coffee consumption and to keep up with the demand, China will most likely increase imports from other countries as well.

Ethiopian Coffee is recognized for its quality, and demand has increased due to increased coffee consumption and decreased supply in Brazil. The country exports large volumes of coffee, contributing to the livelihoods of more than 15 million smallholder farmers and other actors in the coffee sector. For the upcoming marketing year (MY) October 2022 - September 2023, coffee production is forecasted to reach 495,00 MT. This YoY increase of 9% is primarily due to suitable weather conditions, minimum pests and disease pressure, and adequate rainfall. About 40% of the total coffee produced goes to the domestic market. The remaining 60% is channeled to the export market, of which around 80% – 85% goes through the Ethiopian Coffee Exchange (ECX), 5% –10% through direct trade by cooperatives, and 5% through commercial farms.

According to the Ethiopian Tea and Coffee Authority, in the last financial year (FY) (July 2021 - July 2022), Ethiopia exported 300,000 MT of coffee, generating a total revenue of USD 1.4 billion. It is stated that the amount of hard currency the east African country has generated surpasses the previous budget year by at least 22%. The higher exports are primarily driven by investing in state-of-the-art coffee training center's to deliver modular and practice-based training that aims to enhance the sustainability and value chain in the country's coffee sector. These center's provide training programs on the fundamentals of coffee, processing, drying and storage, trade, and maintenance of coffee processing equipment.

In addition, recurrent droughts and frosts in parts of Arabica coffee-producing areas of South America have affected the volume and quality of coffee supply in the global market. Ethiopia has recently expanded its reach in China, Pakistan, and the United Arab Emirates as demand in these countries rises. Out of these three, it is expected that China will be one of the main destinations for Ethiopian coffee soon. According to Ethiopian Coffee and Tea Authority (ECTA), Ethiopia exported 11,935 MT of coffee to China during the last Ethiopian fiscal year, which was worth about USD 65.31 million. The export revenue recorded a YoY increase of 84%, and China became the seventh major importer of Ethiopian coffee. The domestic coffee market in China is growing every year which has allowed Ethiopia to expand its sales even more, and it is expected that the trend will continue in the coming years.