Farmers at risk as coffee prices plummet

There is growing concern in Ethiopia over the impact of a continued decline in world coffee prices, according to a report by USAID and the European Union (EU). The report, produced by USAID's Famine Early Warning System (FEWS) and the EU's Local Food Security Unit (EU-LFSU), highlighted the fact that coffee exports generate 60-70 percent of Ethiopia's foreign exchange earnings. More than 700,000 households are dependent on coffee production, and up to 15 million more people are partly dependent on the coffee economy. According to the International Coffee Organisation, world coffee prices have reached a 30-year low, having declined by more than 70 percent in the last four years alone. This is largely due to an excess supply of coffee consistently outstripping consumption. Over the last three years, Ethiopia has lost almost US $167 million in export revenues as a result of the slump in coffee prices - an amount equivalent to almost half the country's annual export earnings. "The impact of depressed prices has been considerable at the household level," the report said. Many coffee farmers have been forced to sell assets such as cattle and to cut down on essential expenses, including food. The report said coffee producers also suffered because they lacked accurate and timely information on price trends on the international market which sometimes led them to hoard large stocks of coffee. The government of Ethiopia, in a bid to boost coffee exports, is considering revoking a 6.5 percent surtax on coffee exports, the report added.