(Ecofin Agency) - In an increasingly speculative market context, subject to many prices fluctuation factors, it will be profitable for Africa to get onto the specialty coffee market, Edward George, research manager at Ecobank, told Ecofin Agency.
According to him, this orientation on a segment which represents only 10% of the world production is crucial because the continent can no more compete with others in terms of volume on the market of bulk coffee. This is due to a decline in production in the past few decades.
Indeed, even if Africa was confirmed as one of the largest coffee producers in the 70s with countries such as Ethiopia, Côte d’Ivoire, and Uganda, it has been outperformed by Brasilia which now produces five times more than in the 70s, and Vietnam which was only a marginal supplier of commodities at the time. The two countries now supply 82.8 million of bags out of 160.5 million bags between 2016 and 2017, or more than half of the global production.
So, the specialty segment is more profitable than the bulk coffee market, whose prices depend on supply and demand, because of its high quality.
. “African coffee producers should especially consider the price they can get on specialty coffee market and develop their own brand and coffee origin. The challenge is higher than the worldwide coffee prices’ issue. The continent should get its suitable place in the global coffee value chain” explained Edward George.
Despite Ethiopia being the current largest producer of specialty coffee in Africa, countries like Tanzania and Kenya are the largest exporters. Indeed, Ethiopia consumes part of its products locally and exports only to Saudi Arabia.
In West African where Côte d’Ivoire is the largest producer, a large volume of the stock is directed to niche markets on the Mediterranean side. “Ivorian coffee is particularly popular in Algeria, Tunisia, Italy, and Spain, countries that consume about 80% of the production", Edward George says.
The outlooks for 2017/2018 are optimistic. “I think investments in specialty coffee will significantly increase across Africa. It could be the one produced in a specific area, very high-quality coffee, certified one or with a particular taste that can add value”, he indicates.