Ethiopia: Price shock continues despite ceiling

Ethiopian-Coffee

In a small shop last Thursday a middle aged woman bought a quarter kilo of coffee for 30 birr. If this doesn’t grab your attention consider that only two weeks ago an entire kilo of coffee was selling for 80 birr and only recently it was 50 birr for a kilo. That makes the 120 birr per kilo a one third increase in just a matter of weeks.
The woman feels the record prices are due to turmoil in North Africa and the Middle East. Though this probably has some validity there are other factors contributing to the steep rise in commodity prices.
One coffee exporter, who declined to give his name, thinks the price increase is actually due to shortage of supply for the local market. He said that the season’s coffee yield has been unexpectedly low.
“But this is not officially announced. I don’t know why this fact remains a secret,” he said.
One of the members of the Ethiopian Commodity Exchange (ECX), who is not entitled to give official information, said that the price of coffee has been increasing globally. Ethiopian coffee on the New York Commodity Exchange dramatically shot up to 6300 dollars per ton. Previously it had a price tag of USD 3,000 to 4,000.

Ethiopian-Coffee

According to this source the shortage of Arabica coffee on the international market is the major reason for the price rise. He said that the global market influences prices at the local level even though coffee for local consumption does not have as high a quality as the export.
This might not be so daunting if only coffee was increasing but other products are on the rise as well. In just one month, locally produced edible oil went up from 30 birr per liter up to 39 birr.
At Shola market, on Thursday March 10, the price per liter was 36 birr while at Ferensai area the same quality was sold at 39 birr. One worker at Shola Oil  said that the fasting season is one of the reasons for the price rise, when more vegetable and sesame oil is consumed. During the Orthodox and Catholic Easter fasting period of almost two months, the devout followers do not consume animal products. The other is the unavailability of imported oil on the market, for the last three weeks. He added that oil production at the Shola Oil company is stable,  Niger seed is also abundantly available on the market.
The disappearance of imported oil from the local market is not the exception. Some other commodities with government price ceilings have disappeared, one after the other. The first to disappear were the locally produced oranges when the government set the retail price at seven birr. Sugar was the second product to be out of the market when the price ceiling was set at 14 birr. However, it did manage to remain in the market for nearly one month following the price ceiling announcement on January 6, 2011.
Rice, beer, soft drinks, meat, and soaps are available in the market. But the price of rice and soap has gone up slightly. The five birr price ceiling for soap is now up to 6.50 birr. That was the price before January 6. Rice has also risen to 16 birr.

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1 Comment

  1. Dear Ocean, Thank you for searching this kind of Leggese Zienawis’ madness. It is a matter of time. His blood pressure will take him away sitting on his chair.

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