Ethiopia's coffee exports will lose nearly 1.4 billion yuan!

According to media reports, at least six people were killed in another serious security incident in the Horo Guduru area of Olomi, Asia (Kiremu district), Ethiopia.

The site of the conflict is about 96 kilometers away from Shambu, where the district government of the Horo Guduru region is located. According to local residents, the clashes occurred between the militia and the armed group OLA in the area, and the two sides exchanged fire for several hours, resulting in at least six deaths. Security forces and an Oromo Liberation Army militant were among the victims.

It is reported that the federal and regional governments have been claiming that the security situation in the region has improved and have been repatriating thousands of displaced persons who were previously threatened to leave the area. But for nearly two years, there have been reports in the region that the Oromo Liberation Army (OLA) has been killing and kidnapping civilians.

According to reports, a religious priest, his wife and three children were killed earlier in the area, in the the Mojo area district of Oromia State, less than 100km from the capital Addis Ababa. And since July, four buses full of passengers from the Amhara region to the capital Addis Ababa have been kidnapped near the area.

However, the Oromo Liberation Army armed group and other groups claimed that it was local government officials in the region who were involved in the kidnapping and massacre, kidnapping civilians and demanding millions of Ethiopian Bill ransom in the name of the Oromo Liberation Army armed group.

Although the government has been claiming that the security situation in the western part of Addis Ababa, the capital of Ethiopia, has improved, there have been constant reports of conflicts and kidnappings in the area, as well as casualties. It is understood that the western region is Ethiopia's Lekempti coffee producing area, which is Ethiopia's main commercial coffee producing area, famous for its output, with an average output of 500000 bags (60 kg / bag). At present, the region has been affected by the conflict, which will have an impact on the country's coffee production.

Although, according to data released earlier by the Ethiopian Coffee and Tea Administration, Ethiopia exported 42322 tons of coffee in August, generating a record profit of more than US $196 million, coffee exports increased by 165 per cent and additional income increased by 143 per cent. However, it has been reported that international coffee prices have soared because Brazil and other major coffee-producing countries have reported a reduction in production due to the weather. Ethiopia's frantic devaluation of the Ethiopian currency Bill as a result of the earlier government reform of the new policy, but the price of Ethiopian coffee has not increased significantly, so international coffee traders can buy Ethiopian coffee at a cheaper price.

However, there are many traders worried that according to a report by the British think tank ODI, the European Union issued the non-deforestation Act (EUDR) in December 2022, which will come into effect in large coffee companies on December 30, 2024.

The Act stipulates that no individual or enterprise can sell products related to deforestation, including coffee and cocoa, in the EU market. This has a significant impact on the coffee interests of some non-developed countries, especially in African countries. It is said that without a dedicated component of support for the project, African countries could face significant economic consequences, adding 10 per cent to the cost of compliance in Ethiopia and potentially reducing Ethiopia's GDP by nearly 1 per cent.

At present, Ethiopian coffee is mainly exported to the European Union, the United States, Saudi Arabia, Japan and China. The European Union is Ethiopia's largest coffee market, accounting for more than 30 percent of its coffee bean exports. However, most of Ethiopia's coffee production is difficult to meet EU requirements, so exports will be seriously affected.

It is reported that some large corporate coffee traders will abandon African countries and buy more coffee from countries such as Brazil because they have more tools to prove their coffee compliance. The market predicts that the economic loss of Ethiopian coffee exports will be at least 1.4 billion US dollars, which will seriously damage the development of the Ethiopian coffee industry, and the Ethiopian government has not taken any action on this.

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