The impact of Covid-19 on the coffee supply chain has been well-documented. Alongside café closures, roasters have experienced a dip in wholesale and coffee producers have suffered with logistical delays and fluctuations in demand.
However, although everyone across the coffee supply chain has been affected in some capacity, precisely what that effect is will vary from country to country.
In Ethiopia, the impact of the pandemic on the coffee supply chain has been unique. Particular consequences have included widespread labour shortages, transport delays, and contract cancellations across the country.
To learn more about precisely how the Ethiopian coffee sector has been affected, I spoke with Atrie Weno from Daye Bensa, an Ethiopian coffee exporter. Read on to find out what he said.
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Covid-19 And Ethiopian Coffee: An Overview
Each and every coffee-producing country across the world has had its own experience of the Covid-19 pandemic. In general, while consuming countries have predominantly been affected through café closures and changes in home coffee consumption, producing countries like Ethiopia have largely seen the following effects:
- Contract cancellations
- Labour shortages
- Logistical delays
- Fluctuating production costs
- Shifts in market demand
To understand how the country was specifically affected, Atrie says that it’s important to appreciate how Ethiopia was positioned in the global market before the pandemic.
“In March and April, when the world started going into lockdown, our harvest was basically over,” he says. “At that time, coffee was being moved from the farms to warehouses in Addis Ababa.
“During this movement, there were cancellations and postponement of contracts. At that time, the risk was already taken off the producers and put into the hands of exporters.”
As a result, the initial impact for the Ethiopian coffee sector was that many exporters (like Daye Bensa) were left with an oversupply of coffee that they would have otherwise sold.
This meant that producers had generally been paid for the previous harvest, and had started investing in next year’s crop as a result. Atrie says me that consequently, because the 2020/2021 harvest has been projected to be even bigger than the 2019/2020 harvest, many producers have been trying to hire an even larger workforce than usual.
However, as a result of social distancing measures, he says that he does not anticipate that this will be particularly achievable.
Breaking Down The Impact Of Covid-19 Across The Supply Chain
Aside from general workforce challenges for producers and an oversupply among exporters, Atrie tells me that at each smaller stage of the coffee production process, Covid-19 has had an impact.
He outlines harvesting, processing, transportation, and payment as four key areas that have not only affected producers, but caused something of a “domino effect” across the rest of the supply chain in Ethiopia.
The harvest season in Ethiopia runs from October to December. It is labour-intensive and requires relatively free movement of people throughout the entire harvest season to make sure that cherries can be picked when they are appropriately ripe.
However, the pandemic made the movement of people a major difficulty not just in Ethiopia, but all around the world.
“While the movement of people in Ethiopia was not as affected as it was in other countries, there has still been a shortage of labour across the country as we get closer to the peak of the [2020/2021] harvest,” Atrie explains.
“We are typically used to hiring lots of workers and are able to provide temporary housing during the harvest season. However, now, as a result of social distancing measures, we have to limit [numbers] and be more cautious about social distancing.”
Atrie also tells me that maintaining health and safety protocols specific to Covid-19 is expensive for producers. Implementing social distancing measures is complicated and costly to organise, and the cost of establishing proper hygiene measures also falls on farm owners.
“We have to exercise caution financially,” he says. “It is ultimately more expensive to hire workers [to pick coffee].”
After harvesting, there has also been a bottleneck with processing as a result of the labour shortage. While this is also a direct result of Covid-19, the effects have been exacerbated by the fact that the volume for the 2020/2021 harvest is noticeably higher than it has been in recent years.
Atrie says: “At the farm and processing level, there just aren’t enough workers to process the coffees quickly enough for transportation to major exporters.
Furthermore, much like they do during the harvest itself, Atrie says that “social distancing measures still need to be met at processing facilities”.
Shipping and transit delays have been prevalent in coffee producing countries all around the world throughout 2020. However, Atrie tells me that although there have been minor delays, transport across the Ethiopian supply chain has not been as affected as it has in other countries.
He adds that these delays weren’t due to social distancing measures, but instead because drivers tested positive for the virus and quarantined as a result.
“The biggest impact on transportation we faced came in situations when some drivers tested positive for Covid-19 and were then required to quarantine for [the mandatory] 14 days,” he says.
“Obviously, this puts massive stress on transport companies in Ethiopia, and even Djibouti if we are transporting to the ports there.
“But these are only minor [problems] compared to the contractual problems we’ve experienced.”
Once the coffee leaves the farm, Atrie says that payment and contract cancellations have had a significant impact on coffee producers and exporters in Ethiopia.
Naturally, when the pandemic first spread in the early months of 2020, green coffee buyers were cautious of their outgoing costs in the face of a dip in demand from their clients. As a result, many of them postponed existing contracts, while others cancelled them outright.
Atrie explains that exporters like Daye Bensa were among the most affected when this happened. In Ethiopia, the pandemic became an issue after the harvest had been completed but before the coffee had been shipped. At this point, exporters had already paid farmers for their coffees and effectively taken the risk into their own hands.
Atrie explains that when these contracts were then cancelled and postponed, exporters were left with an oversupply of coffee. This meant they had invested a significant amount of money into stock but were confronted with a huge decrease in demand. He puts it very simply: “Market demand slowed while our costs went up.”
How Did The Sector Adapt?
With each day that passes, the world and the coffee sector learns more about how to mitigate the impact of Covid-19. Stakeholders across the supply chain are implementing improved social distancing measures and increasing their use of personal protective equipment (PPE).
Atrie says that Daye Bensa has been a leader in adapting across the Ethiopian supply chain, and that the exporter seeks to support producers to deal with the pandemic in the best possible way. To this end, he says that they have developed a “Covid awareness” training courses, and have also distributed more than 70,000 face masks to local farmers.
“Even though there’s [still] the challenge to find the demand for our coffees amid growing expenses, we still need to invest in the health and well-being of our communities,” he says. “Without healthy communities, we can’t obtain the best that Ethiopian coffee [has to offer].”
It’s also important to note that adapting to the impact of Covid-19 will depend on the exporter and the specific process that they will use. While historically, it has been mandatory to use the Ethiopian Commodity Exchange (ECX) to trade coffee in Ethiopia, vertically integrated direct trade has been approved in recent years. Depending on the trading model that exporters and other supply chain actors use, there will naturally be differences in how the supply chain is affected.
Atrie says that while Daye Bensa uses a direct trade model, the oversupply of coffee was a massive issue for the ECX and those who traded through it. He says that in ECX warehouses in particular, the oversupply was most noticeable. As a result, green coffee was delayed for far longer than it should have been.
“More companies will need to consider a more vertically integrated approach,” Atrie says. “This will allow them to have more control of the movement and sale of their coffees.
“Thanks to our vertically integrated model, we can have a closer relationship and direct communication with our buyers.”
Covid-19 has had a noticeable impact on the coffee sector in Ethiopia, although this impact has been different for actors at each stage of the supply chain. While many assume that in producing countries, it was the producers themselves who felt the impact of the pandemic first, in Ethiopia, this was not the case. Thanks to the timing of the harvest and the market uncertainty that followed because of Covid-19, many exporters bore the brunt of the pandemic’s impact.
Despite this, there is a way forward. As the peak of the 2020/2021 harvest in Ethiopia draws near, careful planning means that producers, buyers, and exporters in the country are all prepared for and aware of the impact of the pandemic. Whether or not things will be different in the months that follow the harvest remains to be seen.
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Photo credits: Daye Bensa
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