January 13, 2022

Why does Ecuador import so much coffee?


Ecuador is the 20th largest coffee producer in the world, but its coffee imports actually outstrip its production figures by some way. In the 2018/19 crop year, it produced around 500,000 60kg bags of coffee, but imported even more than that (714,000)

The trade of green coffee between producing countries is nothing new. It’s an interesting phenomenon which accounts for everything from internal demand to specific industry needs. But few import quite as much as Ecuador. Why?

I spoke with two regional coffee experts to get a better idea of why Ecuador imports so much green coffee, what is being done with it, and what this means for the country’s coffee industry and its producers. Read on to learn more.

You may also like our article exploring Ecuador’s specialty coffee scene.

coffee farm in ecuador

An overview of Ecuador’s coffee industry

In 2019/20, Ecuador produced roughly 500,000 60kg bags of coffee, representing only a slight decrease in production from 2018/19. 

However, its import and export figures are far more significant. For instance, from October 2020 to February 2021 alone, Ecuador exported roughly 198,000 60kg bags of coffee. In the 2018/19 crop year, it re-exported 572,000 60kg bags of soluble coffee, mostly to Germany and Russia.

Tomas Bodniza is a coffee quality technician from Ecuador. He explains that most of these re-exports are soluble coffee, which is a profitable opportunity for Ecuadorian brands.

He explains that Ecuador mainly grows coffee in the highlands of the Andes, but production is by no means limited to the mountains. 

“Ecuador produces coffee mainly across four regions,” he explains. “The Sierra is the one region that mainly focuses on producing specialty coffees, including Typica, Caturra, Bourbon, Typica Mejorado, and even SL-28.”

Meanwhile, he says, the Amazon and coastal regions are better known for robusta, especially in the areas of Los Rios, Santo Domingo de Los Tsachilas, Sucumbios, and Orellana.

He adds: “In Ecuador, you also have low-altitude arabica in Manabí, which is on the Ecuadorian coast, and Morona Santiago in the Amazons.”

These regions are occupied by some 75,000 coffee producers, who altogether cultivate 85,000ha of arabica and 110,000ha of robusta

Ecuadorian specialty coffee is often characterised by its moderate acidity, juicy body, and notes of citrus. However, Tomas says that commercial and soluble coffee are understandably much bigger businesses. 

“The market for soluble is much bigger than anything else,” he says. “Ecuadorian coffee is particularly present in Russia, which is a significant buyer of our soluble coffee.”

milling coffee in equador

Production vs importing

Throughout Ecuador’s history, coffee prices have historically not been favourable for coffee farmers. Low profitability, other more appealing crops, and high costs of production have led to a decrease in production. Just ten years ago, in 2012, Ecuadorian production volumes were significantly higher – closer to 650,000 60kg bags.

Things only worsened when the Ecuadorian economy was dollarised in the early 2000s. The country’s ties to the economy of the US have meant that goods prices and wages have increased. This means the cost of labour has become more expensive for coffee farms.

“Depending on the area, the cost of labour can be around US $20 per day per coffee collector,” explains Tomas.

In turn, this means that Ecuadorian coffee is more expensive for traders and roasters to buy, without the reputation for quality that many other origins enjoy. As such, many Ecuadorian coffee producers struggle to be competitive in the international market.

This is one reason why many coffee professionals in Ecuador have instead started to import green coffee to resolve supply issues.

Miguel Rendón Fontaine is the CEO of Escoffee. He agrees with Tomas, and says that dollarisation has had an adverse effect on the country’s coffee industry.

“Unlike other Latin American producing countries, our dollarised economy naturally caused a big increase in the price of goods and services, such as harvest labour costs.

“Because of this, many producers need to have a strong focus on quality to match the high costs that will be associated with producing these coffees.”

This isn’t the only issue that Ecuadorian coffee production faces, however. There is also a growing generational gap – something which is increasingly affecting many coffee producing countries around the world.

The average age of a coffee producer sits around 60 years old, and younger generations are not succeeding them. Many young Ecuadorians choose to opt out of the coffee sector entirely in favour of other more profitable industries, or to leave the country altogether to work overseas. 

This means knowledge about coffee production is becoming rarer and rarer in Ecuador.

Finally, Tomas says that for many, it’s simply a question of opportunity. “The cost to import green coffee is significantly lower than growing high-quality coffee here in Ecuador,” he says.

Ultimately, these factors altogether mean that importing and re-exporting green coffee has become incredibly attractive over the past few years. 

In nearly all cases, this large-scale business model is made profitable through the processing of green coffee into soluble coffee. But why is this so popular in Ecuador specifically? And how is it done?

ecuadorian instant coffee

Rebranding imported coffee

Much of the coffee Ecuador imports is processed into soluble coffee and re-exported elsewhere around the world to major consuming countries. But how is this achieved?

Well, in 2007, Ecuador passed “Regimen 21”, which allows for the temporary admission of raw products for “inward processing”

For the coffee industry, this means companies are able to import green coffee from elsewhere on the condition that they will be processed into another product (i.e. soluble coffee) and then exported.

As well as being cheaper to import than to grow, this process is also incredibly efficient, and there is plenty of international demand.

“Regimen 21 allows importing under a figure in which the product enters the country for improvement,” explains Tomas. “This is the transformation and re-export of the transformed product.”

He adds that as far as he knows, the soluble coffee industry is the only industry using this law to its advantage.

“It has allowed the industry to be even more competitive,” he says. “It means they make huge savings in taxes when importing.

“It also grows their market, too. This way, Ecuadorian coffee companies can attract clients who produce lower-quality coffee from other Latin American origins. They then transform their coffee and then re-export it. 

“This ultimately creates a service, rather than a product: Ecuadorian coffee brands transform coffee and make it soluble.”

Miguel also explains that part of this process is effectively a “rebranding”. Regimen 21 allows products that enter from elsewhere to be exported and labelled as Ecuadorian, provided some form of inward processing takes place in the country itself.

As a result, he tells me that the majority of the green coffee imported into Ecuador is from Vietnam, Brazil, and Colombia. 

“In turn, these coffees are processed as soluble coffees and then re-exported as a nationally branded instant coffee from Ecuador,” he adds.

Issues with this model

While this might seem like an excellent opportunity for coffee companies, experts have posited some drawbacks. Firstly, Tomas says there has been a decline in the productivity of the domestic coffee sector.

“It puts some producers at a disadvantage,” he explains. “Especially those who are focused on producing high-quality coffees.”

There is also the issue of Ecuador’s reputation as a coffee producer, too. While the country’s production volumes have declined since dollarisation in the 2000s, there is still scope for it to recover in the future if there is a major economic shift.

However, there is the argument that exporting lower-quality non-Ecuadorian coffee which has been relabelled could lead to negative connotations about quality. This could be a barrier for the country’s coffee production sector in the future.

ecuadorian coffee picker

Coffee producing countries trade green coffee for a number of reasons. However, Ecuador’s case, thanks in no small part to its huge soluble market and Regimen 21, is clearly unique.

For those in the Ecuadorian coffee industry who are struggling to profit because of the high cost of production, it makes perfect sense to look elsewhere for a new source of income. The processing of green coffee into soluble instant seems to be the current solution, but time will tell whether this has an irreversible effect on the country’s wider coffee industry.

Enjoyed this? Then read our article on five reasons why specialty coffee is taking off in Ecuador.

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