Ethiopia’s Minister of Agriculture, Addisu Arega, has ordered a nationwide inspection campaign starting this Saturday targeting the speculative hoarding of coffee by suppliers and exporters, which he says is severely hampering the country’s coffee export performance. The move comes amid growing frustration that Ethiopia is failing to meet its export volume targets despite favorable global coffee prices and significant government support to the sector.
Speaking at a high-level discussion on October 27 about the first quarter implementation of Ethiopia’s coffee export plan, Minister Addisu expressed deep dissatisfaction with the sector’s performance. While Ethiopia’s export revenue surged by 47% compared to the same period last year—exceeding revenue targets by 23%—the actual volume of coffee exported reached only 75% of planned levels. This shortfall, the minister noted, threatens to undermine the nation’s ambitious export goals.
“The sector is receiving substantial government incentives and support, yet the delay in achieving volume targets is disappointing at a macro level,” said Minister Addisu. “The main issue is not related to funding or global price volatility, but the failure to hit our annual volume target of 600,000 quintals.”
Sources from coffee exporters attending the ministry meeting confirmed the sense of frustration within the industry, emphasizing that while prices have driven higher revenues, the volume lag is attributed largely to hoarding and speculative trading practices.
Minister Addisu highlighted that some farmers and suppliers appear to be withholding their coffee from the market, anticipating even higher prices. More concerningly, reports suggest that some exporters and intermediary brokers are deliberately buying and stockpiling coffee to manipulate supply and prices artificially.
“To tackle this, we have instructed immediate inspections across the country beginning Saturday night to ensure the flow of coffee into central markets,” the minister said. He called on the Ethiopian Coffee and Tea Authority (ECTA) to strengthen penalties against those found hoarding coffee or otherwise harming the market and the product’s quality.
During the meeting, which included over 140 exporters and sector experts, stakeholders acknowledged speculation as a problem but pointed to deeper systemic issues. Many blamed illicit brokers and disruptions in the supply chain and tax systems as driving uncertainty and market distortion.
An exporting company insider told Capital: “Legitimate exporters are hesitant to purchase coffee due to price volatility and supply chain challenges. Meanwhile, illegal brokers masquerading as farmers flood the market with stockpiled coffee. This distorts prices and disadvantages compliant traders who comply with tax obligations.”
Industry representatives revealed that some individuals claiming to be farmers export exceptionally large coffee quantities, indicating that brokers are bypassing regulations to exploit gaps in the taxation and inspection systems.
“There is a transparency problem in the market,” one exporter said. “A farmer legally permitted to export five thousand kilos can end up exporting up to seventy-eight thousand kilos through brokers.”
The price dynamics exacerbate uncertainty. Some coffee-producing zones reported farm-gate prices soaring above the official “90 to 110 birr” price ceiling set by ECTA, reaching as high as 150 birr per kilo. These asymmetric price variations have disrupted the market, discouraging timely coffee sales.
Despite the speculation issue, many stakeholders emphasized that farmers, suppliers, and exporters are driven by the hope of fairer profits amid fluctuating prices and challenging market conditions.
Minister Addisu reaffirmed the government’s commitment to protecting farmers by strengthening the minimum farm-gate price policies and enhancing mechanisms to modernize and streamline the supply chain. The ministry also plans to attract more producer-exporters and offer incentive packages to stimulate private sector investment in coffee production and export.
The government highlighted that over the past seven years, billions of birr have been invested to restore and expand coffee plantations, planting billions of seedlings annually to boost productivity. More than 11 new high-yield coffee varieties have been identified by research institutions, with potential productivity increases of up to three times.
To further modernize the sector, the ministry intends to establish a system where exporters can directly engage with farmers to buy coffee, reducing reliance on intermediaries and supporting more competitive pricing.
Minister Addisu also proposed increasing penalties on those holding coffee stocks for long periods, calling the existing 2% fine insufficient compared to the scale of illicit profits. He advocated for measures including confiscation of stock to deter malpractice.
Looking ahead, the ministry envisions boosting Ethiopia’s coffee export revenue from the current $5 billion level to $10 billion annually, with coffee alone projected to contribute $3 billion.
Aligning with the Prime Minister’s directives, the Ministry of Agriculture will prioritize greater private sector participation as a cornerstone of agricultural transformation, marking a pivotal shift from traditional approaches toward more market-driven strategies.
In conclusion, Ethiopia’s coffee sector is at a critical juncture. While export revenues have surged due to favorable global markets, volume targets remain unmet due to internal challenges such as hoarding, speculation, and structural weaknesses. The newly announced nationwide inspections and regulatory reforms aim to unblock supply chain bottlenecks and foster a more transparent, efficient, and profitable coffee market for all stakeholders.
