The recent surge in Arabica coffee futures on the New York Stock Exchange, which yesterday reached an all-time high of $3.75 per pound, has complex implications for African coffee producers. While economies such as Ethiopia, Kenya or Rwanda will benefit from higher prices, small farmers, who account for 90% of African coffee producers, often struggle to capitalise on these gains. Factors such as rampant inflation, high input costs and reliance on middlemen reduce their potential profits.
In Ethiopia, 6 kg of cherries are needed to produce 1 kg of green coffee, the price per kilogram of cherries is still low compared to the price achieved by coffee futures on international markets. During the 2024-25 harvest that just ended, the average price per kg of cherry on the local market has fluctuated between 80 to 90 birr per kilogram (approximately $0.5 to $0.55 USD), which represents a fraction of the value that coffee futures fetch on the global market. This is partly due to the intermediation structure in the Ethiopian market, where farmers often rely on local cooperatives and traders who buy the cherry at lower prices before it reaches the international market.
Added to this are environmental challenges, especially those associated with climate change, which significantly affect the coffee industry. Issues such as droughts in Ethiopia or excessive rainfall in Kenya are jeopardizing the stability of coffee yields and creating difficulties for farmers, who struggle to meet the growing demand for coffee while trying to benefit from rising prices.
While rising future coffee prices might seem like good news for Ethiopian producers, the reality is that smallholder farmers, who make up the majority of the country's producers, often do not directly benefit from this increase. Cherry prices do not always reflect global market fluctuations due to factors such as lack of storage infrastructure, transportation costs, and limited access to international markets. In addition, farmers face challenges such as climate change, which affects the production and quality of beans, and difficulties in accessing financing to improve their farming methods.
While rising future coffee prices might seem like good news for Ethiopian producers, the reality is that smallholder farmers, who make up the majority of the country's producers, often do not directly benefit from this increase. Cherry prices do not always reflect global market fluctuations due to factors such as lack of storage infrastructure, transportation costs, and limited access to international markets. In addition, farmers face challenges such as climate change, which affects the production and quality of beans, and difficulties in accessing financing to improve their farming methods.
RSS Feed